News digest. 29 Sept
Power curbs in China suddenly disrupt the already sensitive shipping sector. Although Christmas is upon us, this is not the right stimulus to light up candles.
There already has been a lot on the plate in every sector but now, as winter approaches, gas prices are skyrocketing and the new wave of protests against high electricity bills washes over Europe, companies brace up for the consequences for shipping. Due to the recent power curbs in Chinese provinces, very soon the global markets will feel the pinch of a shortage of supply almost everywhere even more. As a result, many factories are planning to further delay deliveries of U.S. imports. Major clothing companies continuously report inventory increases and now the shutdowns of the factories created a gap to the flow of inventory. A lot of goods are at risk of not being delivered on time, therefore, Costco, has become the latest American brand to take shipping matters into its own hands and chattered three vessels. As there is no relief in sight and everyone promises things to get more tight, the Port of LA authorities are asking the federal government to reconsider the priorities in terms of port investment areas to help alleviate supply chain crunches hitting the nation’s retailers. In fact, the recent day shave been eventful in terms of different requests targeting the official from the US shippers. Another one concerns the pleas to reject the proposed Ocean Shipping Reform Act of 2021because of the unfair demurrage and detention charges applied in case the containers are not picked up within the agreed-upon timeframe. The agreement is almost impossible to follow with all the schedule disruptions.
Sensing where the wind is blowing, big players try to be ahead of the curve and announce the redaction in the number of port calls in an attempt to speed up schedules. They also advise to book slots in advance as Christmas approaches and warn that inventory levels are still at the lowest while demand keeps growing. In particular, Maersk has projectedthat global container demand growth from 6% to 8% in 2021.
The current year has granted not only the record increase in congestion and the crashing aftermaths of it but It has also broken through all S&P records despite the fact that 2021 is not over yet. Containership and bulker S&P prices are up by around 120% and 70% respectively since the start of the year. Analytics report that the industry is on track for 7.3% of the start year fleet to change hands this year, the highest since 2007.
While omitting ports can be one of the ways to deal with the increasing pressure, there is another one involving barges turned into floating storage platforms at the Port of Rotterdam. Initially, they were called in to fill their vessels with some number of TEUs of empties and find a way of connecting these to ocean carriers for evacuation from more congested Rotterdam to less crowded Antwerp, but long delays at terminals have pushed barge owners to find other ways of solving the problem. Everyone survives as best he can? Others hope for the government measures, thus in India the authorities decide to tackle the problem of container shortage by extending the deadline for the re-export of imported vessels lying at different domestic ports. To put it simply, less export of empty containers from the country will increase the availability of containers for trade. This comes at the same time with the shipping lines having repositioned 1.7 million empty TEU into India, at a huge cost. In addition, the CSLA member lines have placed orders for 500 new vessels. The fleet expansion seems to be one of the few strategies that might work against capacity shortage as not only Indian companies use it to their advantage. The Canadian vessel owner and operator, Seaspan Corporation has followed suit and entered into an agreement for ten 7,000 TEU scrubber-fitted new container ships. Meanwhile, another big acquisition has taken place with China International Marine Containers Ltd. taking over Maersk owned Container Industry reefer manufacturer. At the same time, the rail industry has experienced a similar move by Hapag-Lloyd.
It seems like the ice has cracked in the issue of drivers’ shortages in the UK. The government will suspend the competition law for the fuel industry to allow fuel companies to more easily share information and priorities areas of the country most in need of deliveries to petrol stations. In addition, a major breakthrough has been achieved – a new package of measures will grant visas to drivers, which has been the stumbling stone in recent weeks.
Experts continue to debate about the best approach in transition to an emission-free world. The areas of discussion include the sources of financing, the role of digitalization, etc. There is a high chance that terminals in countries with poor electrical grid networks may need to self-generate energy in the future. Each point is an ecosystem on its own, thus it will need individual efficiency that can be improved through investments and collaboration.
