• 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 March 2

19:00 Zelenodolsk Plant lays down two high-speed passenger hydrofoils of Project 03830, Meteor-2020
18:45 Crowley promotes Dan Warner to Chief Financial Officer
18:05 The RSS Sir David Attenborough delivered to LR Class
17:54 Manufacture of auxiliary drilling modules for ice-resistant platform LSP “A” is underway
17:47 TORM purchases eight MR product tankers with chemical trading capabilities from TEAM Tankers in a partly share-based transaction
17:39 Inchcape’s new Port Cost Estimator is missing link in voyage cost puzzle
17:28 CMA CGM acquired a 50% interest minus one share in TTIA container terminal in Algeciras, Spain
17:25 First hydrogen filling station opened in Amsterdam port
17:21 Framo will supply pumping systems for foundations of Scotland’s largest offshore wind farm project
17:06 Haldor Topsoe joins Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping as Strategic Corporate Partner
16:21 USCG, partners rescue two pilots from downed aircraft off Lanai
16:15 The Prax Group agrees exclusive crude oil supply arrangement with Trafigura
15:48 Ardmore Shipping takes on commercial management of four Carl Buettner chemical tankers
15:47 Ocean Infinity acquires MMT
15:00 Bunker sales at Vladivostok port in 2M’2021 fell by 34% YoY
14:38 Tenderers sought for upcoming Port Hedland channel marker project
14:22 Local contractor wins Mt Bassett water reservoir demolition job
13:46 Mega RO-RO vessels handled in record time thanks to investment by PSA Zeebrugge
13:16 Wallenius Wilhelmsen returns three more vessels from cold lay-up
12:08 CMA CGM introduces PSS for cargo from Pakistan to North Europe, Scandinavia, Poland, Adriatic, North Africa, Morocco & the Mediterranean
12:01 Port of Antwerp carries out the first trial for increasing draught on the Western Scheldt river
11:42 Throughput of port Azov in 2M’2021 surged by 68% YoY
11:09 Four companies join forces in HAV Group ASA
10:55 Port of Tallinn comments on the claim filed by Tallink
10:38 Tallink Grupp brings legal action against Port of Tallinn
10:09 Port of Vancouver cargo throughput increased by 1% to 145.5 million metric tonnes in 2020
09:51 Oil shipments via CPC Marine Terminal in 2M’21 fell by 8.4% YoY
09:49 MABUX: Bunker market this morning, Mar 02, 2021
09:34 Oil prices go down in expectation OPEC+ meeting
09:18 Ports of Bremen container throughput down by 1.4 per cent to 51.1 million tons in 2020
09:09 Baltic Dry Index as of March 1
08:00 TORM purchases eight MR product tankers
07:53 Diana Shipping announces time charter contract for m/v Ismene

2021 March 1

17:39 Depth 2021 competition opens in the framework of the International Army Games
17:17 Vitol launches Green LNG offering
16:48 CMA CGM introduces PSS for cargo from/to North Europe to/from the Mediterranean & Black Sea
16:12 World’s largest steel company, China Baowu Steel Group, and Sibanthracite Group become strategic partners
15:34 NUTEP terminal sets new record of container handling
15:30 APM Terminals Kalundborg now operational
15:26 SEACOR Marine signs the Neptune Declaration on Seafarer Wellbeing and Crew Change
15:11 RF Navy’s small missile ship Orekhovo-Zuevo passes the Black Sea straits towards the Mediterranean Sea
13:33 Average spot market price for Russian M100 product climbed to RUB 22,193 pmt
13:12 Port of Antwerp to launch a new shipping guidance system
12:46 MOL to expand sharing of ship operation data
12:37 Finnlines announces bunker surcharge for Malmö-Travemünde-Malmö
11:48 China ports container volume rises 13.2% in January of 2021Ningbo Containerized Freight Index keep rises in February
11:46 Russian Railways' network loading declined by 0.9% in 2M’2021
11:23 Global maritime leaders to exchange ideas at Singapore’s Annual Maritime Public Leaders’ Programme
10:59 Nevskaya Environmental Dredging Company supports 4th International Congress “Hydraulic Engineering Structures and Dredging” as its Sponsor
10:41 New research: unlocking a triple-win for UK ports and shipping
10:25 MABUX: Bunker market this morning, Mar 01, 2021
10:10 Austal Philippines delivers largest high speed ferry constructed in The Philippines
09:28 Week starts with oil prices increase
09:12 Baltic Dry Index as of February 26

2021 February 28

16:13 ADNOC Logistics and Services announces strategic fleet expansion with acquisition of 6 VLCCs
15:41 Deltamarin introduces the new LNG-powered Kielmax Container Feeder design
14:07 USCG Cutter Kimball conducts maritime presence patrol in Pacific
13:29 Solstad announces contract awards in Australia
12:46 Rauma Shipyard restarts production gradually with stricter controls in place
11:03 JAXPORT to host free virtual training event for Northeast Florida small businesses