Pandemic effect on shipping costs!

Cargo transport, shipping, and freight costs for returning home expatriates that have gone ballistic, thus adding to the pain of the departure. Significant numbers of freight forwarders, shipping, and logistics agencies have made media statements blaming several issues for the rise in container transport costs. Now any one of these could be argued as a meaningful contributor to a rise in costs, but there is an increasing litany of excuses that veritably contradict and confuse, which is probably their purpose. But, having dwelt further... the plot thickens.

Rising demand for shipping services is touted as a reason, yet shipping companies had cut capacities on major routes, in reaction to the pandemic, but now, as global trade is re-opening, and ocean freight capacity intensifies, demand has become stronger, and logistics agencies are prioritising big business, which has the financial clout to demand priority. In fact, most large retailers and manufacturers sign annual deals with the ocean carriers to lock in their container freight rates. Gordon Downes, CEO of the New York Shipping Exchange, an online cargo platform, said that “larger businesses can often secure better shipping rates thanks to the size of their orders.” Smaller ones, however, are at the mercy of spot rates, price increases and surcharges that can be attributed to anything from weather and ship congestion to the cost of fuel and raw materials.

Container stocks have fallen globally. Of course, they have... PortaStore USA estimates that there are between 42 and 73 million containers, in use, at any time around the world. Forgetting the inanity of that disparity (which screams: ‘We don’t know’), they also identify two thirds of those as out-of-service which begs the question of the industry’s ability to oversee its operations effectively... if they don’t know where 20 million of their containers are? There is an example of the mind-boggling incompetence that has dogged the shipping sector forever... yet society always bails them out! To be fair, ‘Sea-Intelligence, ING’ states that the new containers and container vessels onstream for current roll-out, may not improve the resource situation until 2023.

Charter prices for containers have risen. Well of course, they must pay for all those ones that they can’t find, and it’s no wonder... You can find 974 of them for a start, at the Ras Abu Aboud Stadium is located on the waterfront of the downtown West Bay area with views of the Corniche in Doha and is currently nearing completion as one of eight host venues for the 2022 Football World Cup showpiece. According to bifa.org 1382 were lost at sea last year, and to top it off, Shipping container architecture is now a legitimate form of architecture using ‘steel intermodal containers’ as the chief structural element, which is referred to as ‘cargotecture’ or ‘arkitainer’ design.’ Buildwithrise.com estimates most of the 14 million ‘unused’ containers around the world are re-purposed in this way. Short of containers? I wonder why?

Ship availability and capacity is restricted. No, it is not! The United Nations Conference on Trade and Development, whose slogan is, ironically, “Prosperity for all,” says, “Globally, capacity has recovered to levels before 2020.” Cancelled port calls had cut 10 per cent of scheduled capacity during the first quarter, but signs of improvement point to a 4 per cent. They also commented “that global ports and terminals need to track and measure performance as port performance metrics enable sound strategic port planning, investment and decision-making,” and in doing so, clearly submit that if the shipping industry has issues, they also have a responsibility to fix them, themselves.

For higher value products, say Baltic Exchange, one of the world’s largest shipping derivatives contractors, air transport has been the preferred alternative, but with the severe reductions in airline operations, most have been forced towards the seafaring alternative. So, the reality is that the big bully boys in the playground are running the show. It is despicable. It may be nobody’s fault here, but given expatriate job losses, and higher electricity tariffs, it feels a bit like we are being sent, with a kick up the backside to go with the earlier black eye, and bloody nose.