03. May 2021
To transport goods internationally, companies usually choose the sea route, Dobas is no exception. But the waters are choppy. The ocean freight market has to overcome some challenges.
Anyone who works with Dobas receives everything from a single source. This also means that we take care of the transport of our interior fittings produced in Central Switzerland and ensure that all the individual parts arrive at their destination on time.
We usually choose the sea route for the international transport of goods. Dobas AG ships about 25 containers a year – in a normal business year, anyway. However, «normal» was definitely not an accurate description of the world situation in the past few months. The Covid-related exceptional situation of course also had an impact on cross-border transport. Suddenly, punctuality – a core value for Dobas – became an unpredictable variable.
We spoke to Patrick Rodenburg about the latest challenges facing the ocean freight market. He works for our logistics partner Agility as Director Ocean Freight Switzerland.
Let's first start with a classification: How relevant is the sea route for international trade?
Patrick Rodenburg (PR): According to the International Chamber of Shipping (ICS), around 90 percent of cross-border trade in goods takes place by sea. In 2019, over eleven billion tons of goods were transported in this way. This corresponds to almost 1.5 tons per person and year.
Recently, the blockade of the Suez Canal made headlines. What concrete effects did the blocked «Ever Given» have for the sea freight market?
PR: The Suez Canal is one of the most important trade routes and the «Ever Given», with a length of 400 meters, is one of the largest container ships in the world. The ship holds around 20,000 twenty-foot standard containers. The blockade lasted for almost a whole week. As a result, both import and export goods were only delivered with delays. Our import customers had to expect seven to 14 days of delay. More and more trading companies are adopting a «just in time strategy». If an event like the blockade of the Suez Canal occurs, inventories may be depleted. The problem was not solved when the canal was opened, as about twice as many ships as usual subsequently passed through the Suez. The result was congested seaports in Europe and anchored ships.
The Covid crisis also had a major impact on global trade and transport. What challenges arose from the pandemic?
PR: In addition, more people were shopping online than spending money on services or vacations. From summer 2020, there was strong demand on the Far East-US line, and later for the Far East-Europe line. Among other things, this meant that there was a shortage of shipping space and also containers. The American terminals were clogged and could no longer keep up with unloading containers. There was also a shortage of trucks and chassis. In Los Angeles, more than 25 container ships were waiting to be unloaded at the end of 2020. A similar picture was seen in England and Australia. With the shortage of capacity, ocean freight prices were trading as if on the stock market. The price of a container from Asia increased sixfold from January 2020 to January 2021. Prices from Europe have only been rising since January 2021. As we have also been suffering from capacity and container bottlenecks in Europe for several months.
In the political arena, there have also been events in recent years that have had an impact on global trade, such as the trade dispute between the U.S. and China. Can you explain what they mean for ocean freight?
PR: The trade dispute between the U.S. and China, among other things, has led to an increase in exports from other countries such as Vietnam. Ships from the Far East to America continue to be fully booked. However, demand for the reverse route, i.e. ships from America to the Far East, is lower and costs are correspondingly lower. Shipping companies in the current situation have to transport containers empty from America to the Far East in order to generate revenue on the trade with the high demand. In general, it can be said that prices have become much more volatile over the past year due to all the challenges. We used to have binding monthly prices that were set two weeks in advance. At the moment, we receive a rate validity for a maximum of 14 days. These rates are communicated to us only shortly before the validity starts.
When can the situation be expected to ease?
PR: The major shipping companies have placed the largest container order in 15 years. It can probably only be assumed that the situation will ease when these containers are delivered and/or demand falls.
There were and are many challenges for the logistics industry. Are there also opportunities arising from the developments?
PR: Logistics was perceived as an important part of trade due to the negative events and their effects. Without transport, there would be no international trade in goods. This would have a considerable impact on our prosperity.
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