Page 21: of Maritime Reporter Magazine (January 2022)

neta Shipping Index (XSI) for the contract market revealed and port worker shortages will only worsen as the populations a monthly increase of 16.3% month-over-month. This repre- in North America, the UK, and the EU continues to age out. sented the largest month-on-month jump since July and took Consumer and retail pressure will also push carriers to take the benchmark to 121.2% higher than the equivalent period of climate change seriously. The future fuel debate will likely be 2020 and the end of last year. resolved (methanol and LNG), but the cost of such fuel and its

Shippers are willing to pay more to secure deliveries and get effect on rates has yet to be determined. ahead of the key Christmas trading period with shortages of As port congestion worsens and the big carriers increase goods still looming. Others are ? nding more creative ways to their hold on rates and services, agile-minded companies battle the in? ating costs, Maersk recently announced that it’s will turn to multi-sourcing strategies to build more stability rerouting services to multiple small ports, while other carriers into their supply chains. Central and South America, Eastern are turning to more blanked sailing. Coca-Cola is shipping Europe and Africa will be considered as alternative areas to 60,000 MT of product in bulk tankers instead of containers. source from. Nearshoring will also rise as another alternative

In addition to consumers experiencing product shortages for keeping the ? ow of cargo stable during challenging times. and higher prices, the supply chain’s current state also has un-

Long term outlook (2030 and beyond) intended consequences. A container ship was responsible for causing a recent oil spill that has polluted more than 24 miles The higher wages needed to continue attracting drivers and of the California coastline. The more backlogged the ports be- dock workers will cause shipping rates to climb. From a poli- come and the longer ships have to wait to dock, the greater the cy perspective, US lawmakers could target pro? table carriers risk of error and adverse incident. with ? nes and fees in response to public outrage to the never-

More than ever, shippers need to remedy the short, medium ending supply chain debacle. It’s not uncommon for the gov- and long-term factors affecting the container market to create ernment to levy hefty ? nes on corporations the public deems a healthier supply chain. as bad actors. One only needs to look at the penalties imposed on American tech giants for a recent example.

What to expect next: Short term outlook (2021-2025)

Under intense scrutiny from policymakers, retailers and

Unfortunately, there is little hope that container rates will consumers, pressure will mount for carriers to meet the In- drop back to pre-pandemic levels, and surcharges will continue ternational Maritime Organization (IMO) emission standards; as well. In addition, schedule reliability will only become more via LNG, methanol, or both. But regardless of which fuel be- questionable as supply chain problems worsen. We’ll also con- comes the new standard, the new builds will still be forced to tinue to see images of backlogged vessels waiting near port. deliver into ports that lack suf? cient workers, infrastructure

However, that’s only half of the story; the truth is far more and equipment. However, companies that have executed their complex. We’re in the midst of the perfect storm, created by a multi-sourcing and nearshoring strategies might regain con- combination of a worldwide driver shortage, equipment short- trol of their supply chain by bypassing still-choked ports. age, pandemic-related port congestion issues, container car- Although the above scenarios are based on the assumption riers’ disregard for signed contracts and an in? ux of exports that rates will continue to climb, proactive measures by carri- from Asia into the US. And another storm cloud is that big ers to help course-correct global supply chain woes will go a carriers are buying up port facilities and freight forwarders, long way in preventing future blowback. Today, investments enabling them to have a ? rmer grip on rates and services. in remedies will help prevent the inevitable repercussions of

Smaller carriers are moving cargo from China into the EU shortsighted planning, including nearshoring, increased gov- and US West Coast to circumvent some of this. However, they ernment regulations, and intense public scrutiny. are running into the same port issues as the big carriers, so cargo isn’t moving inland any quicker. And discussions of nearshor- ing show promise, but these are long-term decisions that take time to implement. As such, relocating to Mexico or Eastern

Europe will not relieve the supply chain crisis any time soon.

The Author

Beyond the short term: Mid-term outlook (2025-2030)

Massive new build programs might launch in time, but the

Berglund supply chain problems will remain. If anything, additional car-

Patrik Berglund is the CEO and Co- go sitting outside the US, Northern European, or main Chinese

Founder of Oslo-based Xeneta, an ocean ports will only add to the paralysis, as budget and approval for and air freight rate benchmarking and port expansions get backlogged in government red tape. Driver market analytics platform.

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