• 2021 January 21 13:11

    Ocean carriers battle the Covid cargo crunch

    The unparalleled disruptions to the international supply chain experienced over the last year are not caused by one party in the chain; they are the result of sudden and radical changes to the demand for goods due to the impact of the Covid-19 pandemic. Industry analysts, observers and participants agree on that. To get through this time and stabilize supply chains all parties need to work together, taking a constructive approach rather than assigning blame.  

    Pulling out all stops
    Ocean carriers are taking all available measures to improve the speed and efficiency of cargo movement including employing all available vessel tonnage. When demand dropped some 20-30% in Q2 2020, carriers curtailed services and idled vessels. However, as cargo volume rose, carriers redeployed those assets as quickly as possible. Alphaliner concluded at the end of 2020 that the inactive fleet was at just 2.5%, and more than half of that (62%) represents ships that are in shipyards for repair and other services. Mid-January normally marks the beginning of capacity reductions in anticipation of the Chinese Lunar New Year holidays when factories in Asia close, but that is not the case this year, indicating that carriers will make best possible use of this time to clear volumes out of Asia.

    Further, carriers are sharing capacity to maximize efficiency. Vessel sharing agreements are extremely important during times of high demand for vessel capacity. They ensure that all available slots are used even when an individual operator does not have sufficient demand from its customers for a particular sailing. With a vessel sharing agreement, that capacity can then be made available to other partner carriers to offer to their customers.   

    Contrary to some suggestions, carriers are not abandoning capacity investments for the future. Just recently, Alphaliner concluded that: “despite the fears of a market collapse at the time of the Covid-19 outbreak, 2020 concluded with a significant increase in ordering activity,” with the global order book for new container ships growing to 10% of global capacity.

    Factors affecting service reliability
    The pandemic has severely impacted access to containers and equipment. As inland transportation, port and warehousing operations have been hit by lockdowns, labour shortages and volume overloads, the positioning, use and return of containers within the global supply chain has slowed. In addition to maximizing vessel capacity, carriers are working to improve access to container equipment. They are speeding the repositioning of excess empty containers and purchasing, leasing, repairing, and dispatching all available containers. Unfortunately, more containers are simply not immediately available, so all steps must be taken to improve the utilization of the existing container fleet.

    The delays occurring on land have a direct impact on carriers’ ability to dock and unload ships according to schedule and on carriers’ ability to provide empty container equipment when and where it is needed. It is important that all users of the equipment, including customers and inland transportation providers, promptly return empty containers in order to make that equipment available for the next customer.

    Rates fluctuate with demand
    Despite actions to increase available vessel capacity, the demand for capacity far exceeds supply.  As in any free market, this puts upward pressure on rates. Shippers and forwarders are understandably not pleased, but one must not forget that this is the same market fundamental that kept rates very low for several years. History shows that rates fluctuate over the years as supply and demand shift, moving from high levels fairly quickly as market conditions stabilize.  

    This pattern is quite evident when looking at Drewry’s average global rate index for the past decade. Rates rose in the second half of 2010 during the recovery after the recession years of 2008 and 2009.  As vessel capacity and cargo demand came more into balance after that the rates declined steadily until reaching a low in 2016.



     

     

     

     

     

     

     

     

     

     

    Time to collaborate
    In global supply chains, manufacturers and retailers normally operate with months and years of forward planning. Carriers invest billions of dollars in vessels and other assets based on expectations for the next 25-30 years. No part of the supply chain is geared to managing the extremes currently occurring, and calling for regulation in such an abnormal situation will not solve our current issues.  

    All parties are doing what they can to manage their way through this unprecedented pandemic. Unfortunately, they may unknowingly cause issues for other parties in the chain. Closer dialogue is necessary for us all to better understand how to support each other and collaborate for better outcomes. To remove bottlenecks, container velocity must increase, forecasting must be more accurate, and transparency must increase across the supply chain. Ocean carriers are doing their utmost to manage the supply chain disruptions caused by Covid-19 and invite all parties to engage constructively to do the same.

    About World Shipping Council
    The World Shipping Council is the united voice of liner shipping, working with policymakers and industry groups to shape the future growth of a socially responsible, environmentally sustainable, safe, and secure shipping industry. We are a non-profit trade association with offices in Brussels, Singapore and Washington, D.C.


2021 February 25

10:13 BC Ferries releases its third quarter results
09:59 CMA CGM implements FAK rates from the Mediterranean, Adriatic, North Africa & Black Sea to the Indian Subcontinent
09:50 BC Ferries' fifth battery hybrid-electric vessel launched
09:28 Oil market sees mixed price movements
09:12 Baltic Dry Index as of February 24

2021 February 24

18:06 Parkwind selects DEME Offshore for foundation EPCI contract at Arcadis Ost I
17:47 Ministry of Transport of Dagestan looks into organizing sea cruise tourism in Caspian Sea
17:26 ABS to class first ever Jones Act wind turbine installation vessel
17:16 Yangtze River Protection Law will come into force on 1st March, 2021
16:59 Admiral Kasatonov frigate of RF Navy’s Northern Fleet performs long range campaign tasks in Aegean Sea
16:28 Port of Antwerp deploys autonomous drones for safety enforcement
16:15 DFDS aims for greener ferries from alternative fuel project
15:51 Mordraga supports 4th International Congress “Hydraulic Engineering Structures and Dredging” as its Sponsor
15:29 Maersk backs plan to build Europe’s largest green ammonia facility
14:25 Vostochnaya Veft shipyard starts building yet another floating berth for RF Navy’s Pacific Fleet
14:03 Cargill and Maersk Tankers combine volumes and market expertise to launch new bunker procurement service
13:44 Chuvash Republic to be provided with RUB 330 million for purchase of river transport
13:12 Contractors selected to construct the quays in the Amalia Harbour
12:31 Port of Oakland cargo volume off due to crowded ports
12:27 Corvette Stoyky of RF Navy’s Baltic Fleet entered Oman on business call
11:57 Bureau Veritas joins the coalition for the energy of the future
11:23 MPA joins industry in ammonia fuelled tanker JDP
10:31 MABUX: Bunker market this morning, Feb 24, 2021
10:28 ASPO tests main propulsion plant of chemical tanker PortNews
10:09 The Grimaldi Group orders six ro/ro multipurpose vessels
09:27 Crude oil futures go down in response to growth of US resources
09:20 MPA and Yara join to Ammonia-fuelled tanker Joint Development Project
09:11 Baltic Dry Index as of February 23

2021 February 23

19:35 Braemar to repeat record-breaking voyage of Corinth Canal in 2022 with new cruise unveiled by Fred. Olsen Cruise Lines
16:19 Cutter Thetis returns from a 43-day Caribbean Sea patrol
15:11 Meyer Werft starts construction on Arvia for P&O Cruises
14:18 The Coalition for the Energy of the Future unveils its first seven concrete actions and welcomes three new members
13:35 New JOSCAR accreditation: UK office approved for UK defence projects
12:08 MABUX: Bunker market this morning, Feb 23, 2021
11:21 Port of Gdansk lands first delivery of post Brexit fish

2021 February 22

15:12 Hamworthy Pumps wins pump contract for new Royal Navy frigates
13:37 Atlantic Shores announces monumental six-union agreement to train and hire New Jersey union workers
12:24 APM Terminals Algeciras reaches all employees with a safety campaign
11:43 USCG medevacs man from tug boat 60-miles off Grays Harbor
10:37 MABUX: Bunker market this morning, Feb 22, 2021

2021 February 21

14:51 Port of Oakland names Julie Lam CFO
13:22 Guy Cowan takes helm at Port of Brisbane Pty Ltd
12:16 ABP gains international ISO 14001 Environmental Management Certification
11:04 JAX LNG and TOTE Services conduct their first ship-to-ship LNG bunkering of a foreign-flagged vessel at JAXPORT
10:53 Missing yacht found near Whangarei

2021 February 20

18:05 Sevmorzavod shipyard launches starboard pontoon for floating crane of Project ПК-700
16:59 The Panhellenic Crew Union to launch a 48-hour strike at the port of Piraeus in Greece
16:20 Average spot market price for Russian M100 product climbed to RUB 21,600 pmt
15:03 Conrad hosts steel cutting ceremony for GLDD
14:37 Busan Port's chain portal is introduced as a best practice in port digitalization
14:13 Rail subsidiary Metrans to expand network through investment in Hungary
13:48 Government of Finland proposed extension to validity of ships’ crew qualification certificates
13:06 Crowley integrates Jensen Maritime into new Engineering Services Group
12:54 Professor Horst Linde: Container terminal in Świnoujście will fill the gap between Hamburg and Gdansk
12:12 NAVTOR acquires vessel analytics and performance specialist Tres Solutions
11:13 NIBULON launches its sixth non-self-propelled NBL-91 Project vessel
10:49 LNG carrier Christophe de Margerie arrived in Sabetta
10:32 Maine Maritime Academy hires Capt. MacArthur as Master aboard T/S State of Maine
10:21 Globus Maritime announces the agreement to acquire a 2011-built Kamsarmax dry bulk carrier
09:30 Baltic Dry Index as of February 19