The trio that changed literally everything in maritime transport
A covid-19 pandemic, a blockade in the Suez Canal and bad weather.
Last year, China's major ports saw a decline in the number of containers handled in January-November compared to the same period in 2020. The reason for this was not lower demand at all. The real reason was the sum of negative factors that have accumulated over the past two years and which have caused huge problems in transport worldwide. Their consequences go far beyond the field of logistics. Imported goods are unavailable, much more expensive and the prospect of improvement is uncertain.
According to Dominik Skulski, Head of Sales and Customer Service at Geis Cargo International Poland, the complications began in early 2020: "The first big problems appeared after the Chinese holidays in 2020, when companies suspended operations overnight, production stopped and airports closed. Major restrictions and difficulties were also caused by a lack of people to work. Once production was able to resume in Asia, blockades began in the United States and Europe."
In the spring, the biggest problem that no one could have foreseen was the blockade of the Suez Canal by the container ship Evergreen, which ran aground in Egypt. This maritime incident resulted in more than 200 ships on both sides of the canal being blocked. Once the canal was reopened, problems could be seen in European and Asian ports. Ship calls were extremely irregular and port terminals were extremely crowded. The capacity of the Yantian port in Shenzhen, China, was limited for a month. The result was huge traffic jams, with up to 40 container ships at anchor outside the port. Shipowners started to use nearby ports, but transport times increased nonetheless.
In contrast, the summer of 2020 saw an unprecedented recovery in demand. However, shipowners continued to keep their finger on the pulse, keeping an eye on the dynamically changing situation in Germany, photo PRAGUE MORNING on all continents, and limited the capacity of their services. A shortage of staff and other spare capacity, the introduction of restrictions, meant that it was not possible to ensure the timely return of unloaded containers to the ports and thus accommodate new arrivals. Problems also began with a shortage of containers, which in some regions are still in short supply today.
Another factor causing the problem to escalate was the bad, highly changeable weather - fires, floods, gales, which affected people in Europe, Asia and Australia. Due to typhoons in China, some port terminals were closed for several days. As Dominik Skulski puts it: "The main cause of the transport crisis, however, remains covid, hand in hand with the introduction of zero tolerance in China, which significantly affects staff capacity. Drivers are accompanied to the unloading point by a police escort and are not allowed to get out of the car. They are also not allowed to pick up import containers at terminals and deliver them for unloading. Containers destined for export must remain in quarantine for 14 days. This increases the pressure on surrounding alternative ports."
At sea around the world, nearly 400 container ships stand in front of ports, waiting from a few days to up to a month to enter and unload. The situation is particularly critical in US ports.
"Operational traffic management is severely hampered by the dynamically changing situation - information changes from day to day and it is not easy to coordinate everything so that customers receive the first-class service they are used to. The whole transport chain is significantly disrupted and the delivery of goods extends by several weeks. The lack of available equipment and ship space, and the consequent huge increases in transport costs, are the main challenges currently faced by importers and exporters around the world." - says Dominik Skulski of Geis Cargo International Poland. The maritime and air transport experts at Geis Group try to minimise these problems through an individual and highly personalised approach to their customers. Each of them can count on a thorough market analysis of the transport directions they are interested in and an individual action plan based on the best logistics solutions possible at any given time. "This approach allows our customers to maintain their supply chains, minimise potential delays and, just as importantly, optimise costs." - Dominik Skulski adds.
What will happen next?
The level of maritime transport rates is the result of a changing and uncertain global situation. Unfortunately, it cannot be expected to decrease at this point, or at least come close to the level of two years ago. A significant reduction - if it occurs - could take place in the second quarter of 2022, or only in 2023, when more new large-capacity vessels arrive at the various shipowners, and especially when the ports can be cleared of the accumulated number of containers. All this, however, provided that China relaxes its zero tolerance strategy.
Dominik Skulski does not forget another aspect of possible problems: "It will be interesting to follow the same strategy of shipowners, who still enjoy the highest ratings in history and will certainly do their best to maintain this exceptional period for as long as possible. On several occasions they have analysed the expected profits, which have shown that they are achieving incredible numbers. Thanks to the high rates, they have doubled what they earned between 2010 and 2020 in the first three quarters of 2021."
It must be added, however, that high sea freight prices are prompting an increasing number of importers to seek suppliers closer to their production facilities, which could have an impact on the volume of demand for sea freight. However, whether this will prompt shipowners to lower their prices and possibly when this will happen is difficult to answer today. Every day you have to monitor the situation in the industry and be ready for possible changes in your business strategy.
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