Bridging the gap – What modern technology means for logistics

Digital technologies have advanced more rapidly than any other innovation in history, having become nearly ubiquitous today. Studies predict a 45% increase in the number of active Internet users in India in the next five years and, with there being 622 million Indians online already, the society is steadily edging towards digital connectivity being a necessity instead of a luxury. As part of the Digital India initiative, many transformative digital platforms have come up rapidly – UMANG, GSTN and BHIM-UPI to name a few – all with the aim of creating digital security and trust amongst Indians. As the platforms gained greater traction in recent years, this led to a rise in on-demand consumerism. Looking back on the last few years, the preferences and expectations of the average Indian consumer has shifted drastically in response. 

Changing the way we pay

A key success story pertaining to the technology revolution in the country over the past 5 years has been digital payments, with India firmly establishing itself as one of the global leaders in financial technology. UPI is one of the flag-bearers of this transformation, along with the rise of payment gateways, facilitating seamless payments. When UPI was initially launched, the total number of UPI payments was 6% compared to 36% card payments. However, in FY 2021, UPI’s share expanded to 63%, while the percentage of card payments shrunk to 9%. That too with a massive reach – it is estimated that India’s digital payment volume has climbed at an annual average rate of around 50% over the past five years. This success story has had direct repercussions on the logistics industry, easing payments across the logistics lifecycle, both for consumers and logistics suppliers.

The untapped potential of the logistics industry

India’s logistics sector is massive, accounting for around 14% of our GDP, and is expected to grow from around $250 billion in 2021 to around $380 billion in 2025, growing at a compounded annual rate of 10-12%. Furthermore, more than 90% of the logistics sector is unorganised 90% of the logistics sector is unorganised, including the likes of small owners (fleet size less than 5 trucks), brokers or transport company affiliates, small-scale warehouse owners, freight forwarders, and more recently the gig workforce. And, as with any large unorganised play, comes a huge opportunity for technology to make an impact. We have seen this more noticeably in the last-mile sector in recent years.

One of the biggest challenges in the current unorganised logistics sector is scalable match-making between the consumer and the transporter at efficient costs. The challenge is with the long tail of SME and retail consumer use cases (beyond the enterprise use case), which were classically solved through small brokers and transporters with limited reach and speeds. This model is not cost-sustainable at large scales. 

The evolution of logistics 

Modern age platforms have been able to ensure that these transporter networks are digital, immediately available and come without limitations on reach or access. One of the key success stories here is the on-demand intra-city last-mile logistics model. This model has lower ticket sizes due to shorter distances, and, in order to be sustainable, it demands highly efficient match-making costs on the back of seamless discovery, allocation and shipping. And some of the new-age technology platforms are doing a commendable job at this, which directly translates to massive improvement in vehicle utilisation, higher earnings per transporter vehicle, and savings for the customer.

The impact of eCommerce 

The past decade has seen a rapid rise of e-commerce and on-demand consumerism, which has directly influenced the logistics industry, putting high standards on ad-hoc, timely and speedy delivery, causing significant shifts in first-mile, middle-mile and last-mile delivery. This has led to the rise of notions like dark stores and the 2-wheeler gig worker, which were almost non-existent before. We now have an entire industry around the 2-wheeler gig worker, which is a massive long tail workforce, and key technology interventions around onboarding, tracking, payments, etc. has allowed this industry to hit unprecedented scales today. Also, e-commerce is only going to accelerate its growth in the future, thanks to the advent of direct-to-consumer commerce. This allows small businesses to reach a wide audience digitally and sell their products. It will be quite compelling to see how the logistics industry reacts to this change.

The influence of Government intervention 

The Government of India has also invested heavily in India’s logistics sector, with a vision to build an integrated, seamless, effective, dependable, green, sustainable and cost-efficient logistics network that makes use of best-in-class tools, procedures and qualified personnel. And one of the key policies it has introduced in this direction is the National Logistics Policy (NLP), which aims to reduce the logistics cost, from 14% currently to 9-10% of the GDP. Technology initiatives like the United Logistics Interface Platform (ULIP) form a key backbone of the NLP, using a rich database of information related to logistics and resources available with various Ministries to provide functionalities like driver and vehicle verification, consignment tracking, route planning, inventory management, etc.

What the future holds 

In conclusion, these are very promising times for the logistics landscape in the country, with the rapid rise of consumerism putting higher demands on logistics at sustainable costs. And technology is playing a very crucial role in solving this problem, aiming to address reach, discovery, inventory management, shipping, tracking, payments, etc. at large scales and efficient costs. This has seen the advent of many new-age technology-based logistics organisations and is also seeing significant investment by the government through policies and initiatives like NLP and ULIP. It would be very interesting to see how this industry evolves and adapts further over the coming years 

UNCTAD's Review of Maritime Transport 2022

Maritime transport essential items like food and medicine cannot flow, key supply chains for energy and commodities cannot function, and affordable prices are almost impossible to maintain.

But – for the last two years – the maritime industry has suffered from tremendous disruption. COVID-19, the war in Ukraine, Climate change and geopolitics have clogged ports, pushed up prices and closed entire shipping routes.

The logjam in global logistics has affected all of us.

Those especially hard-hit are the economies far from the main lines of trade – small island developing states, landlocked developing countries, and some countries in Africa and Latin America have also suffered.

To ensure global trade benefits all, we need to be better prepared to cope with shocks to global supply chains.

We need the maritime industry to improve efficiency, invest in infrastructure and reduce its carbon footprint.

This report comes with four key messages for policymakers and the millions of people who work in the shipping trade and make the essential lifeline of maritime trade possible.

First, some important data updates:

Maritime trade recovered in 2021, but for 2022 and beyond faces a complex operating environment fraught with risk and uncertainty

International maritime trade bounced back strongly in 2021 with an estimated growth of 3.2 per cent, following a 3.8 per cent decline in 2020.

Growth was driven primarily by increases in demand for container cargo. Fiscal stimulus packages in major economies, coupled with lockdowns, resulted in a high demand for goods rather than services, which drove the growth in this area.

As a result, container freight rates also rose last year. Freight went up seven-fold between October 2019 and January 2022.

For 2022, UNCTAD projects maritime trade growth to moderate to 1.4 per cent, and for the period 2022–2027 to expand at an annual average of 2.5 per cent, a slower rate than the previous three-decade average of 3.3 per cent.

These projections are the consequence of strong macroeconomic headwinds. In addition, faced with rising inflation, consumers are spending less, while also switching back expenditure from goods to services as COVID-19 lockdowns ease. Geopolitical tensions and the war in Ukraine are adding to these downturn projections.

As a result of this, freight rates have also dropped since the second half of this year. Increased capacity not matched by increased demand – with the onset of the global economic slowdown – is a leading reason why. Also, key port bottlenecks (such as the one we saw last year in Los Angeles) have eased in recent months.

However, container spot rates are still one third higher than the pre-covid long-run average. And freight rates remain high for oil and gas tankers due to the energy crisis.

We think that in the medium to longer term freight rates will remain higher and more volatile than pre-covid averages, given increasing geopolitical uncertainty, extreme market consolidation, and patchy environmental regulation. I will refer to this in a minute.

Maritime industry can play a key role in alleviating the current cost-of-living crisis, by helping us implement the two Istanbul grain and fertilizer agreements, that we signed this year with Ukraine, Türkiye, and the Russian Federation.

Shipping can bring prices down and ensure the world has enough food and fertilizer next year.

UNCTAD – particularly our teams working on maritime logistics – has supported these initiatives with data, intelligence, analysis, and policy guidance.

But much more needs to be done.

This review calls for stronger transport infrastructure, improved connectivity, expanded warehouses and fewer shortages of labour and equipment.

In short, we need to tackle the many sources of inefficiencies at ports and in land transport networks.

This review also calls for better implementation of transport and trade facilitation solutions at ports and borders.

At UNCTAD, we work very closely on facilitation through different programs on ports and customs like ASYCUDA and the ports management program. These are our largest technical assistance projects going to really dozens of countries around the world.

This report also calls for a faster transition to smart and green logistics systems and to the widespread use of electronic documents in international trade.

All of these are solutions to reduce logistic costs, which in turn translate into lower prices for the world.

This is not rocket science, very concrete things can be realized with political will and with the necessary financing to take on board the needs of the countries to make this happen.

To succeed, we must work hand-in-hand with the private sector and the international community to ensure that the necessary investments are in place.

And you can count on UNCTAD every step of the way, as we have a program of technical cooperation for basically every single hurdle in the supply chain. From customs to port management, from trade facilitation to data collection.

Our third point in the report is this: “We need a resilient maritime industry for a more resilient world”.

The international community must mobilize resources for a long-term vision that promotes a resilient and sustainable maritime supply chains, especially in developing countries.

This entails five very concrete things.

First, building capacity in agile and resilient maritime transport systems. Second, investing in risk management and emergency response.

Third, bringing more women into the port industry. Among other things, this will help to deal with labour shortages that contribute to port congestion.

Fourth, creating more competition. Over the last 25 years, the top 20 carriers have increased their market share from 48 per cent to 91 per cent, almost double. Such concentration can lead to abuse of market power, constrained supply, and higher rates for shippers worldwide.

Fifth, and finally, to build resilience, we need to avoid a fragmented trade system.

Our final point in this review is that we need to support the maritime industry’s transition to a low-carbon future.

You know, we are just coming out of COP27, so, we need to stress this point very much because the report shows that, between 2020 and 2021, carbon emissions from the world maritime fleet rose by almost 5 per cent.

That number is heading in the wrong direction if we hope to meet the global climate goals.

We are also concerned about ageing ships, and what that means for the environment as ships pollute more as they get older.

We need a whole new generation of ships – ships that can use the most cost-efficient fuels and can integrate seamlessly with smart digital systems.

To support the industry, ports and ship owners need predictable global rules. We understand that.

In terms of green and climate regulation, we must move from the many and messy rules we have now to one system that can be good for all.

Universal and predictable regulation is key to encouraging investment, mobilizing finance, strengthening collaboration, and harnessing the opportunities of the energy transition.

This is critical given a highly uncertain environment with conflict risks, the resetting of supply chains and the unknown prices of carbon in the future.

The sooner that national policymakers and international negotiators deliver predictable multilateral regulations, the sooner the shipping industry will advance with the necessary investments.

US Rail Strike Averted

US Rail Strike Averted

In recent weeks, the United States was on the brink of its first national rail strike in 30 years. The walkout was averted only after President Joe Biden and Congress intervened, forcing rail workers to accept the terms of a new contract.

The bill, signed on Friday, blocks the strike and forces workers to accept the agreements union leaders made in September, even though four of the 12 unions — which include a majority of rail workers — voted to reject them.

The five-year deals that rail workers wound up with include 24% raises and cash bonuses. But concerns about the lack of paid sick time and the demanding schedules that unions say make it hard for workers to ever take a day off dominated the contract talks. The rail unions say they weren’t able to get more concessions out of the railroads because the big companies knew Congress would intervene. 

While they won’t stop fighting for more paid sick leave, they may have to wait for negotiations on the next contract beginning in 2025.

ATA CARNET

About ATA Carnet

ATA Carnet is an International Uniform Customs document issued in 79 countries including India, which are parties to the Customs Convention on ATA Carnet. The ATA Carnet permits duty free temporary admission of goods into a member country without the need to raise customs bond, payment of duty and fulfillment of other customs formalities in one or a number of foreign countries. The initials "ATA" are an acronym of the French and English word "Admission Temporaire / Temporary Admission".

chain provides reciprocal guarantees assuring customs administrations that duties and taxes due in case of misuse will be paid.

Why ATA Carnet?

The ATA Carnet is a simple customs document which is readily made out by the holder and checked by the customs.

For business people the ATA Carnet provides a simple and speedy way to travel abroad with business materials. It saves both time and money and this is a very important factor in international competition.

Trade circles, guaranteeing associations and customs administrations all acknowledge the excellent operation of the ATA Carnet System.

For the customs, the use of the ATA Carnet entails less administrative work and increased customs safety since the payment of import duties and taxes is guaranteed by the guaranteeing association affiliated to the WCF/ATA guarantee chain in the territory of the temporary admission.

The guarantee is automatic and the customs need not check its validity for each Carnet. In addition, the system does not affect the revenue of the nation since the goods covered by the ATA Carnets are intended for re-exportation and not at all for sale in the country of temporary admission. The system is "self-policing" in that should the Carnet holder fail to re-export the goods within the period of validity of the Carnet, duties become payable.

What can be carried & Who can use?

The main categories of goods temporarily imported under cover of ATA Carnets are the following :

Antiques, machinery, machine-tools, catering equipment, canned food, footwear, toys, computers, office equipment, transformers, electric generators, electrical/electronic and scientific equipment, surgical and dental equipment, jewellery and articles of precious metal/stones, "hi-fi", audio-visual, photographic and filming equipment, lasers, musical instruments and records, display material, aircraft, films, motor vehicles and accessories, racing engine machinery, heating and lighting equipment, agricultural machinery, furniture, crockery, paintings and other works of art, umbrellas, race-horses, suitcases, perfume, theatrical effects and sets, concert and musical instruments, leather and sports goods, clothing, yachts and boats, display stands.

The ATA Carnet service is available to business and sales executives, exhibitors at trade fairs and raveling professionals, such as film crews, architects, artists, engineers, entertainers, photographers, sports teams and many more.

Large companies, small companies, individuals on the move - all can benefit. Sales representatives with valuable samples and people with professional equipment are the largest users.

Virtually all goods can be included on a Carnet.

Rules and regulations vary from country to country. You are advised to communicate directly with respective customs authorities prior to your travels. This is provided as general information only.

Items which are excluded from the ATA Carnet System :

Perishable goods and items such as paint, cleaning materials, food, oils, leaflets and brochures, which are considered as "consumable items" and intended to be given away, disposed of, or utilized abroad, are excluded from the system as they would not ordinarily be re-exported.

Also excluded from the ATA Carnet system are the following :

Items already sold or offered for sale. Such

items are not considered samples.

Unmounted gems or gemstones; theatrical

make-up, etc.

Alcoholic beverages, tobacco and fuels, etc.

Goods intended for processing or repair.

Postal Traffic.

Why ATA Carnet?

The ATA Carnet System offers advantages to all concerned: the customs authorities and the trading community, i.e., individuals, enterprises, trade organizations who need temporary duty free importation facilities to prospect outlets for their products on foreign markets.

By replacing the national customs declaration normally required for the temporary duty free admission of goods in any given country the ATA Carnet does away with the need for a customs document at each border point. This means less paperwork for customs officials and Carnet holders.

Since all goods accompanied by an ATA carnet are thus covered by the international surety furnished by the guaranteeing/issuing Chambers, no further action regarding the guarantee need to be taken, either by the customs or by the importer at the time of temporary admission.

Thus, for businessmen the ATA Carnet does away with the need for the deposit of a personal or real guarantee at the border point of each country of temporary admission.

As the ATA Carnet constitutes at the same time the temporary admission document and the proof of the customs security for temporary admission it considerably simplifies and expedites the accomplishment of the formalities for temporary admission for both the Carnet holder and the customs: no further customs document needs to be completed nor any other security produced upon arrival in the territory of temporary admission.

Another advantage greatly appreciated by the trading community is that the ATA carnet is valid for one year. During this period its holder can use it- and abroad the goods covered- for as many trips as he wishes from his home country to one or more of the other countries applying the ATA System, provided the ATA Carnet contains the appropriate number of sheets required for each trip.

This is particularly useful if the holder of the ATA Carnet intends to import goods temporarily into various countries in the course of the same journey (e.g. if a commercial traveler wishes to show samples to a number of potential buyer in different countries).

There are many other cases where this facility is of advantage to the holder of an ATA Carnet.

For the customs, the use of the ATA Carnet entails less administrative work and increased customs safety since the payment of import duties and taxes is guaranteed by the Guaranteeing Association affiliated to the ATA guarantee chain in the territory of temporary admission. The guarantee is automatic and the customs need not check its validity for each carnet.

In addition, the system does not affect revenue of the nation since the goods covered by the ATA Carnets are intended for re-exportation and not at all for sale in the country of temporary admission. The system is "self-policing" in that, should the Carnet holder fail to re-export the goods within the period of validity of the Carnet, duties become payable.

Maersk Revamps Networks amidst lower demand

Major Chinese export markets are showing signs of a recovery after the steep post-Golden Week holiday decline, led by a rebound in demand for intra-Asia services, according to the latest Asia-Pacific market update from Maersk.

Nevertheless, the “new normal” could see Maersk and its liner peers forced to make radical changes to their networks, as they adapt services to meet a short-to-longer-term reduction in demand.

Maersk said the global economic outlook appeared to be deteriorating against a background of slowing growth and elevated inflation levels.

“As a result, global container volumes are continuing to fall, with negative growth in virtually all the main markets, causing Maersk to reduce capacity on major ocean trades from Asia to match demand,” says the report.

However, Maersk’s regional head of ocean management for the Asia-Pacific region, Morten Juul, remains positive. He said: “The demand for ocean transport is stabilising and we are adjusting our network to match the new reality.”

But the slump in demand resulted in a collapse in container spot rates. Indeed, the spot freight rate indices covering exports from China to Europe and the US have suffered several consecutive weeks of high double-digit losses, with, for example, short-term rates from China to North Europe plunging by about 75% since August.

Meanwhile, carriers serving the major tradelane have been obliged to offer their contracted customers “temporary rate reductions”, or, in some cases, waive contract terms altogether and allow shippers to make bookings via their digital platforms at substantially lower rates.

And, at least one of the alliances is considering a ‘winter schedule’ between Asia and North Europe that could see carriers take out a third of their weekly capacity leading up to the Chinese New Year holiday, beginning on 21 January.

A UK-based carrier contact informed that “something had to be done” to adjust supply to meet demand that would bring some stability to the market and enable shippers to plan their supply chains.

“At the moment, it’s complete chaos out there, and the last-minute blankings don’t help at all. But getting the partners to agree on a loop suspension is another matter,” he said.

However, Maersk said there were reasons to be optimistic about the world’s largest tradelane, intra-Asia, which had seen demand bounce back after the Golden Week holiday earlier this month.

“Demand rebounded quickly from China,” says the report, noting that Maersk’s Sealand Asia subsidiary had “maintained healthy utilisation levels” and was in the process of launching a new service connecting the ports of Busan in South Korea, Kaoshiung in Taiwan, Nansha in China and Haiphong in Vietnam.  And, Maersk said, “despite the gloom there are signs of buoyancy” in some retail sectors in the US, and called on shippers to plan their supply chains early.

Potential US rail strike could cost USD 2 Billion a day

Potential US rail strike could cost USD 2 Billion a day

Multiple rail unions, including the nation’s largest, have failed to reach a labor deal with freight railroads, raising the risk of a strike. The Association of American Railroads estimates that a nationwide shutdown could cause $2bn a day in economic losses. 

The alignment of the four unions that have voted not to ratify a labor deal has provided a clear timeline for strike prep plans among the freight railroads and with sensitive cargo including chemicals.

The Brotherhood of Railroad Signalmen (BRS) announced Tuesday it is extending its status quo period through December 8 to align with the BMWED (Brotherhood of Maintenance of Way Employees), SMART-TD, and the International Brotherhood of Boilermakers. If no agreement is reached by then, a coordinated strike could start on December 9. Railroad unions that voted for ratification have said they will not cross the picket lines and will support their fellow union workers, posing the risk of a nationwide freight rail shutdown.

According to federal safety measures, railroad carriers begin prepping for a strike seven days before the strike date. The carriers start to prioritize the securing and movement of security-sensitive materials like chlorine for drinking water and hazardous materials in the rail winddown.

The Impact

Consumers and nearly every industry in the US will be affected if freight trains grind to a halt next month. One of the biggest rail unions rejected a deal on Monday, joining three others that have failed to approve contracts over concerns about demanding schedules and the lack of paid sick time.

That raises the risk of a strike, which could start as soon as 5 December. It wouldn’t take long for the effects of a rail strike to trickle through the economy. Many businesses have only a few days’ worth of raw materials and space for finished goods. Makers of food, fuel, cars and chemicals would all feel the squeeze, as would their customers.

That’s not to mention the commuters who would be left stranded because many passenger railroads use tracks owned by the freight railroads.

The stakes are so high for the economy that Congress is expected to intervene and impose contract terms on railroad workers. The last time US railroads went on strike was in 1992. That strike lasted two days before Congress intervened.

Protesters with signs outside of the 2022 Berkshire Hathaway shareholders meeting.

US railroad workers prepare for strike as rail companies see record profits

An extended rail shutdown has not happened for a century, partly because a law passed in 1926 that governs rail negotiations made it much harder for workers to strike.

The expected impacts of a rail strike:

Billions of dollars a day

The railroads, which haul about 40% of the nation’s freight each year, estimated that a rail strike would cost the economy $2bn a day in a report issued earlier this fall.

Another recent report put together by a chemical industry trade group projected that if a strike drags on for a month, about 700,000 jobs would be lost as manufacturers who rely on railroads shut down, prices of nearly everything would increase even more and the economy could be thrust into a recession.

Chemical stockpiles run dry

Chemical manufacturers and refineries will be some of the first businesses affected, because railroads will stop shipping hazardous chemicals about a week before the strike deadline to ensure that no tank cars filled with dangerous liquids wind up stranded.

Jeff Sloan with the American Chemistry Council trade group said chemical plants could be close to shutting down by the time a rail strike actually begins because of that.

That means the chlorine that water treatment plants rely on to purify water, which they might only have about a week’s supply of on hand, would become difficult to source. It would be near impossible for manufacturers to make anything out of plastic without the chemicals that are part of the production formula.

Passenger problems

Roughly half of all commuter rail systems rely at least in part on tracks that are owned by freight railroads, and nearly all of Amtrak’s long-distance trains run over the freight network. Main commuter rail services in Chicago, Minneapolis, Maryland and Washington state have all warned that some of their operations would be suspended in the event of a rail strike.

Fears of a Food Crisis

It would take about a week for customers to notice shortages of foodstuffs such as cereal, peanut butter and even beer at the grocery store, said Tom Madrecki, vice-president of supply chain for the Consumer Brands Association.

About 30% of all packaged foods in the US are moved by rail, he said. That percentage is much higher for denser, heavier items like cans of soup. Madrecki said big food companies don’t like to discuss the threat of a rail strike since worries about product shortages can lead to panic buying.

Retail risks

Jess Dankert, vice-president for supply chain at the Retail Industry Leaders Association, said retailers’ inventories are largely in place for the holidays. But the industry is developing contingency plans. Retailers are also concerned about online orders. Shippers like FedEx and UPS use rail cars that hold roughly 2,000 packages in each car.

“We don’t see, you know, canceling Christmas and that kind of narrative,” Dankert said. “But I think we will see the generalized disruption of really anything that moves by rail.”

Automobile angst

Drivers are already paying record prices and often waiting months for new vehicles because of production problems in the auto industry related to the shortage of computer chips in recent years.

That would only get worse if there is a rail strike, because roughly 75% of all new vehicles begin their journey from factories to dealerships on the railroad. Trains deliver approximately 2,000 carloads of vehicles a day. Automakers may have a hard time keeping their plants running during a strike because some larger parts and raw materials are also transported by rail.

Too Many Containers : the new challenge faced by Global Shipping

While there was a shortage of containers at the height of the Covid pandemic, the global economy is now facing the opposite problem: too many containers. 

On top of falling freight rates, data shows container depots — used to house containers after they are unloaded — are now filling up or full. It points to more signs of falling global demand and an impending economic slowdown.

Traders and shippers say the decline in global consumer demand is not a sign the global economy is normalizing after a frantic post-lockdown consumption rush but a downward shift in consumption appetites.  

What has happened now is that the cargo is ‘on time’ again and hence you’ll see a slowdown in new ordering... “There is just not enough depot space to accommodate all the containers,” online container logistics platform Container xChange chief executive Christian Roeloffs said in an industry update this week. 

“With the further release of container inventory into the market, for example from the disposal of leasing fleets, there will be added pressure on depots in the coming months.”

Turning away new clients

Italian container depot owner Sogese chief executive Andrea Monti told Container xChange his depots are full.  “Whatever was coming in and out of, for instance, our Milan depot is quite stuck. And the container volume at the depots is increasing to an extent that we are returning some requests for depot service agreements.” 

“We are in a situation where we are not able to accept new clients for some locations.”

Monti told Container xChange that the peak season of goods shipments — as Christmas looms — “technically did not happen this year.” Retailers are cautious about the high level of inventory they have on hand, Monti said. 

“There is enough inventory with retailers,” Monti said. 

“What has happened now is that the cargo is ‘on time’ again and hence you’ll see a slowdown in new ordering as companies adjust to more efficient turnaround times in ocean freight delivery.”

To combat full and overflowing depots, ports such as the Port of Houston have started levying fees for empty containers sitting in terminals for more than seven days, according to global claims management provider Sedgwick’s national marine manager, Darin Miller. “What many don’t realize is a lot of the time, the containers within the depots are empty,” he told CNBC.

“Often left sitting for weeks on end, the sheer number of containers on ships or at ports, leaves us with insufficient depot space which only exacerbates our ongoing supply chain crisis as it impacts container repositioning and movement.”

Consumers can expect retailers to offer discounts in order to clear inventory, Miller added.

The latest Drewry composite World Container Index — a key benchmark for container prices — has fallen again to $2,773 per 40-foot container. That’s 73% lower than the peak rate in September last year.

Sailings canceled

Blank or canceled sailings are also on the rise in what is usually the opposite, as the year’s biggest spending period approaches.

A blank sailing happens when a shipping company decides to skip a port or an entire leg of its schedule to manage changes in demand and capacity. There is a significant dent in consumer demand which then leads to less demand for freight and cargo, and therefore, a proportionate dent in container demand globally.

In its latest canceled sailings analysis, Drewry said between late November and early December, 14% of sailings have been canceled across major container shipping routes.  Last week, major shipping group Maersk warned in its third-quarter results that freight rates have peaked amid easing supply chain congestion and falling demand. The company told investors to expect lower ocean shipping profits.

Nearly 60% of the 200 freight forwarders, traders and shippers that Container xChange spoke to in a survey last month said they were grappling with geopolitical, economic and political risks which have imposed downward pressures on consumption and therefore demand for containers.  

“We know already that the market is bearish on consumer demand because of multiple factors like recessionary fears and inflationary risks,” a Container xChange spokeswoman told CNBC. 

“So of course, there is a significant dent in consumer demand which then leads to less demand for freight and cargo, and therefore, a proportionate dent in container demand globally.”

Shipping liners are giving containers away to reduce crowding at depots while many have resorted to blank sailings, Container xChange added.

Global shipping costs fall, giving hope to exporters and farmers after COVID price-hikes

Global shipping costs fall, giving hope to exporters and farmers after COVID price-hikes

Container shipping prices are falling quickly after steep rises at the onset of the pandemic. The cost of sea freight is plummeting as countries raise interest rates amid fears of a global recession, but it may not necessarily result in cheaper imports for Australian consumers, stakeholders say.

Key points:

Global shipping costs are falling fast after spiking during the pandemic

Exporters hope to regain access to markets they lost due to prohibitive costs

Nearly 80 per cent of the world's trade is transported in 12-metre shipping containers but costs soared during the COVID-19 pandemic, peaking in September last year. 

Global shipping costs are now falling drastically, and are doing so in the lead up to Christmas for the first time in decades.  All these companies that were buying big and trying to bring in lots of Christmas stock have basically slammed on the brakes and cut orders, so there's heaps of extra capacity within the Ocean freight world. 

Shipping containers during the height of the pandemic were expensive and difficult to secure.  What that means is shipping lines don't want to send vessels half empty. They prefer them to be full, so the easiest way for them to gain business is to drop rates.  It seems that they tumbled a lot faster than when they went up a few years ago.

The biggest fall had been in trans-Pacific and trans-Atlantic freight  It previously cost up to $US20,000 [$31,894] to send a 12-metre container from China to the United States.  This had fallen to $US3,000 or $US4,000, which Mr Hack said was almost pre-pandemic levels. 

Freight rates falls are expected to continue

Prices have dropped significantly but it's not the rates that we had pre-pandemic.  We will probably see rates continue to fall, which is quite interesting for this time of year because it's pre-shopping season.  Normally rates are on the increase for this time of year and we have never seen them [dropping at this time of year] in decades! 

It would be interesting to see if freight savings were passed on to consumers, but the falling US dollar would negate some savings.

Relief for export businesses 

John Orr from Premium Grain Handlers Australia said it was a relief to see global container prices fall.  Mr Orr's business model involves buying grain from farmers and sending it to international markets in shipping containers. 

When container prices began rising at the end of 2020 and spiked last year, Mr Orr found himself priced out of his traditional markets in the European Union and Middle East. 

"Into India it's costing us $240 a tonne, relative to $50 a tonne [pre-COVID] just for the ocean freight component of our transport," he said. 

"Such a big increase in freight cost has a big impact on our ability to supply these markets." Mr Orr said prior to COVID, he was sending grain to the Middle East and Indian subcontinent regions, but when freight rates increased dramatically, many customers could not absorb price increases. 

Along with the increasing availability of containers, he said falling costs would help his company return to markets it had not been competitive in.

"The drop in freight rates will enable us to pass those international prices to growers, which is something I'm sure growers will look forward to," Mr Orr said. 

 

Bangladesh’s ocean freight charges have registered a 50% fall 

Bangladesh’s ocean freight charges have registered a 50% fall from the pandemic-led massive surges as global trade slows because of shrinking demand for goods paired with rising inflation and inventory excesses in destination countries.

Vessel operations on the Chattogram-Europe route now cost $6,000-7,000 per 20-foot container in contrast to $12,500 in December 2021 when the pandemic was at its peak. Similarly, a US-bound ship now charges $10,000 per 20-foot container, down from $20,000, according to the Shipping Agents’ Association.

The easing in supply chain disruptions, which had been built up over the pandemic, is also driving the significant fall in freight rates, industry people say. But businesses note that they are still paying at least three times more than they did before Covid-19 caused a snarling of global supply chains.

In pre-Covid times, shipment of a 20-foot container would cost $2,500 to Europe and $3,000 to the United States.

Syed Mohammad Arif, president of Shipping Agents’ Association, told that softening demand amid the ongoing global slowdown is a major reason behind a significant decrease in freight rates.

Consumers in Europe and the US have cut back on their spending on clothing and other luxury items under record-high inflationary pressure. That is why booking goods on shipping lines has now dropped by 30-40%, he noted.

G20 merchandise trade growth slowed markedly in value terms in the second quarter of 2022, as measured in current US dollars.

Exports and imports rose slightly by 2.1% and 2.6%, respectively, as compared to 4.8% and 6.2% in the previous quarter, according to G20 international trade statistics released by the OECD on Monday.

Almost 60% of British shoppers say they will cut back on non-food spending in the so-called “golden quarter” – the last three months of the year when most retailers make the majority of their profits, according to research by Retail Economics with the retail technology firm Metapack.

British shoppers are likely to spend £4.4bn less on non-essentials during this period, down 22% on the same quarter in 2021, the report said. This is a significantly larger drop than other European countries, with an expected drop in spending of 14% in Spain, 12.3% in Italy, 11.5% in France and 9.4% in Germany.

After two years of skyrocketing expenses, the reduction in shipping costs is good news for both exporters and importers. They hope this will have a positive impact on local markets.  But exporters cannot capitalise on falling freight charges because global demand for their goods has fallen in their destination countries amid soaring inflation fuelled by the Russia-Ukraine war, Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association, told TBS.

Rakibul Alam Chowdhury, vice-president of Bangladesh Garment Manufacturers and Exporters Association, said falling freight charges will take some pressure off apparel buyers who carry shipment costs. 

Meanwhile, export-import activities through Chattogram port fell in September this year. The port handled 1,11,493 twenty-foot equivalent units (TEUs) of imported goods in the month in contrast to 1,20,470 TEUs in the same time in 2021. On the other hand, the handling of exported goods stood at 63,803 TEUs, down from 68,891 TEUs the same month a year ago.

Khairul Alam Sujan, vice-president of Bangladesh Freight Forwarder Association, told that shipping companies had astronomically hiked freight charges, cashing in on the pandemic-led crisis, which eventually fed into prices of all essential products. But now the situation has changed a bit and the shipping charges are returning to a competitive state, he added.

Waste-to-fuel developer WasteFuel launches a new green technology the WasteFuel Methanol Module for Shipping

Waste-to-fuel developer WasteFuel, this week launched a new technology the WasteFuel Methanol Module 

The modular design of the process means it can be built efficiently where waste is located and scale production efficiently and rapidly

Shipping companies including Maersk, CMA CGM, COSCO, Stena Line, and Proman have committed to using methanol to power their vessels

WasteFuel, a leading developer of bio-refineries focused on converting Municipal Solid Waste into low carbon fuels, announced today - during the UN United Nations General Assembly and New York Climate Week - the WasteFuel Methanol Module.  A new technology that will significantly accelerate the use of organic waste to produce green methanol.

Methanol has quickly emerged as the most cost-effective fossil fuel alternative for shipping companies around the world. Major shipping companies including Maersk, CMA CGM, COSCO, Stena Line, and Proman have committed to using methanol to power their vessels.

The WasteFuel Methanol Module is designed to produce up to 100 metric tons per day of fuel grade methanol from a variety of waste sources including landfill gas and biogas from anaerobic digestion. The process is designed in a modular fashion to improve the overall utilization of resources and allow for cost-effective, quick scaling.

WasteFuel has filed a provisional patent application directly related to the novel approach and unique configuration. The process is engineered to simultaneously wet and dry reform to convert waste into green methanol. The technology will be available for licensing meaning even greater potential for adoption and decarbonization.

When utilized at a commercial scale the WasteFuel Methanol Module will produce green methanol fuel that can achieve up to 90% reductions in CO2 and other greenhouse gases and pollutants compared to conventional fuels.

"Green methanol is critically important in decarbonizing global shipping and the supply chains of companies who depend on it. There is also a vast market for green methanol in the petrochemicals space. The WasteFuel Methanol Module will allow WasteFuel and companies who license the technology to convert municipal waste more efficiently into green methanol around the world,” said Trevor Neilson, Co-founder, Chairman and CEO of WasteFuel. “Consumer product companies who have made net zero commitments will not be able to meet them without a dramatic expansion of green methanol supply," Neilson added.

WasteFuel aims to produce green methanol that can be used in a variety of markets including shipping, marine transport, and petrochemicals, as well as to license its proprietary process to customers across markets, such as waste owners, biorefinery developers, and petrochemical companies.

Existing WasteFuel Methanol efforts include a commercial-scale partnership with Maersk, who has announced their intent to purchase 30,000 tons per year of WasteFuel’s bio-methanol.

WasteFuel’s solutions go beyond green methanol. The company has several biorefinery projects underway that will produce low-carbon fuels to revolutionize mobility across the transportation sector and to address the climate emergency.

WasteFuel uses proven technologies to address the climate emergency and revolutionize mobility. We convert municipal and agricultural waste into low-carbon fuels including green methanol, renewable natural gas, and sustainable aviation fuel.

All About the 53-foot containers

All About the 53-foot containers

General purpose 53’ containers were introduced in the United States in 1989. These containers are widely used both in the US and Canada, mainly for domestic road and rail transport. They are considered High-Cubes, based on their 9 ft 6 in (2.90 m) ISO-standard height. Their width of 8 ft 6 in (2.59 m) however makes them 6 inches (15 cm) wider than ISO-standard containers.  These large boxes have 60% more capacity than 40’ feet containers, enabling shippers to consolidate more cargo into fewer containers

Quick Facts: In the United States, the domestic 53-foot container represents the largest size a standard truck is authorized to carry on roadways, namely the Interstate. Therefore, it is the largest road transportation unit in most of North America (road trains of two trailers can be used in some states and Canadian provinces). 

Shippers began using 53-foot containers in the 1990’s for their many benefits including ability to easily transition from various modes of transportation and significant cost savings with additional capacity. While this size box is standard for domestic freight.

The containers in the above photo belong to J.B. Hunt, one of the largest road carriers in the United States, and are arriving at the Corwith railyard in Chicago. It represents an eloquent example of intermodal integration as both modes focus on the haulage distances that are the most suitable; long hauls for rail and short “last mile” hauls for trucks. The rail cars (well cars) in which these domestic containers are been carried on have been designed to handle a wide variety of container sizes, including two 20-footers, 40-footers, 48-footers, and 53-footers (as depicted above). The well cars are owned by TTX, which is a corporation specializing in leasing intermodal rail equipment to the major rail carriers in North America.

53-foot container for International Transport? 

North American 53-foot containers were not constructed strong enough to endure the rigors of ocean transport, but in 2007 container carrier American President Lines introduced the first 53-foot ocean-capable containers. All new, reinforced 53-foot boxes were built specifically for international trade and designed to withstand ocean voyages on its South China-to-Los Angeles service. In 2013 however, APL stopped offering vessel space for 53-foot containers on its trans-Pacific ships. Nevertheless, In 2015 both Crowley and TOTE Maritime each announced the construction of their respective second combined container and roll-on/roll-off ships for Puerto Rico trade, with the specific design to maximize cubic cargo capacity by carrying 53-foot, 102-inch wide (2,591 mm) containers. Within Canada, Oceanex offers 53-foot-container ocean service to and from Newfoundland. Fifty-three-foot containers are also being used on some Asia Pacific international shipping routes

New 53-foot container service 

A New Shipping line Carrier53’ specializes in the transport of 53 ft containers from China to the USA. Established during June 2021 by container lessor Lotus Container Group and ship manager Schulte & Bruns, Carrier53’ was spun off as a fully independent entity in March 2022 having grown rapidly since its formation. 

By September 2022,  Carrier53’ had performed 41 sailings with its six vessels, which occupy the 32,000-38,000 dwt range. The primary revenue generator, thus far, has been front haul – namely 53 ft containers from China to the North Pacific, and a swift ballast back to China.

World Direct Shipping’s M/V Queen B III, carrying newly acquired 53-foot-long containers, is the latest and largest addition to the Port Manatee-based line’s vessel fleet, which offers the fastest short-sea link between Mexico and key U.S. markets.

Bigger containers can be better for shippers. Here are four advantages of utilizing a 53-foot container to move your cargo.

• These containers offer 37% more capacity than their 40-foot counterparts, typically 416 square feet compared to 320 square feet with a 40-foot box. Additional capacity means more room for cargo, which lowers the per-unit shipment cost for customers, reduces the overall supply chain footprint and shortens the time to deliver to the end-user.
• The additional capacity allows for better equipment allocation. Designed for intermodal transportation, you can load the 53-foot container at the manufacturing facility, transport it to the ocean or railyard and deliver the goods to the final destination by truck – all in the same container. Reducing the number of cargo touchpoints and increasing cost savings.
• An industry standard in North America, 53-foot containers require no special modifications or specialized equipment. The containers can move throughout the supply chain without costly delays caused by repackingcargofor various modes of transport as well as reduced risk of damage to the goods as they remain in the container from ramp to ramp.
• Transporting more cargo or larger equipment with an additional foot of headroom with a 53-foot container.
  
  
  

Egypt to raise Suez Canal transit fees for ships in 2023

Egypt's Suez Canal Authority  said that it will increase transit fees for vessels, including oil-laden tankers, passing through Suez Canal, one of the world's most crucial waterways. The Suez Canal Authority said in a statement on September 17th that it will add 15% to the fees for tankers carrying oil and petroleum products, and 10% for dry bulk carriers and cruise ships.

The authority's chief, Osama Rabie, said the hikes, which will take effect on Jan. 1, are inevitable and a necessity. He blamed booming global inflation rates, which have increased the cost of the waterway's operations, maintenance, and maritime services.  He said the SCA adjusted the tolls through clear mechanisms incorporating the changes in the maritime transport market, noting the Suez canal remains the most efficient and least costly route compared to alternative routes.

Quick Facts:  About 10% of global trade, including 7% of the world's oil, flows through the Suez Canal, a major source of foreign currency to Egypt, the most Arab populous country with over 103 million people. 

Authorities said 20,694 vessels passed through the canal in 2021, a 10% increase compared to 18,830 vessels in 2020.  In 2021, some 1.27 billion tons of cargo were shipped through the canal, earning $6.3 billion dollars (5.5 billion euros) in transit fees, 13 percent more than the previous year.

Suez Canal achieved its highest annual revenue in its history during the fiscal year 2021/2022 at $7 billion, compared to $5.8 billion in 2020/2021, marking an increase of 20.7 percent.

Egypt has faced towering economic challenges and is running low on foreign currency needed to buy essentials such as grain and fuel.

The Suez Canal Authority have been working to widen and deepen the waterway's southern part, since Evergreen Marine’s giant container ship Ever Given ran aground and closed off the canal in March 2021. The six-day blockage disrupted global shipment.

An oil tanker had ran aground on 31st August 2021, briefly blocking the waterway before it was freed.

World’s largest shipping company reroutes ships to protect world’s largest animals

The Mediterranean Shipping Company (MSC) has started to reroute its ships on the shipping lanes off the Sri Lankan coast to save the massive blue whales that have been on a deadly collision course with large ships.

The world's largest container carrier said it has voluntarily adjusted its routes around Sri Lanka in the northern Indian Ocean to reduce the risk of accidents involving whales, dolphins and porpoises. The container carrier has also encouraged other shipping lines to take a more southerly route south of the official Traffic Separation Scheme (TSS) shipping lane to avoid colliding with the endangered mammal.

According to the report, Maersk, another major shipping line, is also considering the same. The coast, which has an unusually high density of blue whales, is one of the world's busiest international shipping lanes, where nearly 200 ships transit daily.

The blue whales are non-migratory and resident in these waters year-round and have been classed as endangered on the IUCN Red List of Threatened Species.

The Geneva-based MSC has adopted a new lane for commercial shipping about 15 nautical miles south of the current TSS. MSC was also the first major shipping line to re-route its ships on Greece's west coast in January to reduce the risk of collision with endangered sperm whales in the Mediterranean.

The company said its move could reduce the strike risk by as much as 95 per cent.

"We believe that the commercial shipping sector has an important role to play in protecting cetaceans, specifically in helping to reduce the risk of ship collisions with whales," said Stefania Lallai, vice-president of sustainability at MSC.

A spokesperson at Maersk, also told, "We follow all mandatory speed reduction schemes at sea and avoid restricted zones to reduce risk of whale strikes and disturbing whales breeding, and we have in addition adopted voluntary restriction zones for whale protection, most recently adding two zones in the Mediterranean Sea."

All about The Flag of the Ship..

All about The Flag of the Ship

Like people, a ship also has a nationality assigned to it.. This is represented by a flag that the ship flies at all times.. A ship is assigned a flag through registration with a Ship Register or Ship Registry and the ship is expected to follow the rules and regulations enforced by this register at all times.

The nationality or port of registration is shown on the stern of a ship.. In the above example, the marking on the stern tells the world that the ship called MOL PRIDE has been registered in Monrovia in Liberia (flying the Liberian flag)..

Any ship over 100 GT (Gross Ton) irrespective of whether it is a cargo vessel, fishing vessel, passenger vessel etc, has to be registered.. This registration grants the ship physical and legal protection of that flag/flag state which may be applied to vital areas such as safety of cargo and life of those on board the ship..

Ships need not necessarily be registered under a country’s own flag.. For example a ship owned by British nationals need not be registered mandatorily under the British Flag or UK Ships register.. It may be registered with registries other than the British Registry..

Types of ship registers

What is a ship register - shipping and freight resourceSome ships fly the flag of their own country, meaning it is owned, operated, and manned by nationals of that country..

This form of registration is called “Traditional Register” wherein the owner of the ship should necessarily be from the country of registration and the place of business should be in the country of registration..

Some ships fly the flags of other countries, like a ship owned by a Japanese firm flying a Maltese flag.. This form of registration is called an “Open Register“..

Many ship owners also opt for what is known as a “Flag of Convenience” (FOC).. An FOC is a type of open registry that offers (among other things) an attractive fiscal regime, substantially lower administrative fees, flexible to loose maritime safety policies, and lower costs for the ship owners..

FOC is a pejorative term used for an open registry and a FOC usually has no genuine link between the state and the ships that are flagged under that state..

For example, the ship is not owned by anyone from that country of registration, the ship is not operated by anyone from that country and the country of registration has no crew members or any other kind of administrative, technical, or social connection with that ship..

Because of this, organizations like the ITF (International Transport Workers Federation) find it difficult for unions, industry stakeholders and the public to hold ship owners to account as they may not follow the various regulations set..

The list of countries that have been declared as FOCs by the ITF’s fair practices committee can be viewed here..

Why is a flag important in shipping ?

A flag provides an identity to a ship which means the ship’s national state has exclusive dominion over the ship and no other nation can exercise dominion over that ship although a ship of any nation can navigate the oceans freely under the “guiding principle of the sea” which is freedom..

Of course, there are caveats here in the form of sanctions against certain countries which are enforced in shipping based on the flag/nationality of the ship..

As an example, the International Association of Classification Societies has withdrawn the Russian ship register’s membership after Russia’s attack on Ukraine..

This means ships flying the Russian flag are under sanction and any country doing trade with Russian flagged ships do so under risk of such sanctions.. There are political caveats to this as well which you can read about here..

The registration of a ship plays an important role in ensuring safety and security of the ship and significantly contributes to the protection and preservation of the marine environment..

As per IMO regulations, all ships must be surveyed in order to ensure that the ships under their register/flag are structurally sound and subscribes to design and safety standards and issue certificates that establish a ship’s seaworthiness..

The registration and linking to a national registry in a traditional register means that these ships may be requisitioned at time of war for the transportation of goods and people in the service of the nation..

The ship’s flag is also of importance in identifying specific registries or flag states that do not take action or turn a blind eye against shipowners who violate the rights of seafarers and in 2022 we are seeing a shameful record of seafarer abandonment.

What factors may play a role in a Shipowner choosing to register their vessel in a particular flag state for their ship registration

1. Restricted cabotage on ship registration

– Cabotage is the transport of goods or passengers between two places in the same country by a transport operator from another country (e.g. a bahamian ship transporting something from Liverpool to Edinburgh). Cabotage rights are the right of a company from one country to trade in another.

Exclusions:

– A small number of countries have what is known as restricted cabotage. The three most significant of these are Brazil, Japan and the USA. If a ship owner wants to carry goods from one port in the USA to another in the USA then they would need a US flag flying from their vessel.

2.Flag administration.

– Ship owners want to choose a flag where the flag administration is helpful, is commercially aware, responds to their needs swiftly, and is competitive in terms of price.

3. Flag reputation

– If the flag a ship owner chooses has a poor reputation they will find that their ships are inspected more frequently than ships that fly under the flag of a state with a better reputation.

4 Cost of operation.

– As above, ship owners will consider the cost of ‘flagging’, the cost of registering, and the cost of getting the necessary certificates can be a big factor. There is often a big disparity in terms of cost between different flag states.

5 Insurance

– Some underwriters will demand that a ship owner chooses a flag from certain states as the insurer can then be assured that the standard of flag meets their own requirements.

6 Naval protection.

– The diplomatic and naval protect ion of the flag state may be important to some ship owners and may be particularly important at times of political crisis.

7 Other factors on ship registration

– Finally many other owner specific requirements like sponsorship to their employees, owners interests, and especially s vessel type. If a flag state has significant experience of registering cruise ships, and the ship owner owns cruise ships, then they may wish to choose that state. Ex: Bahamas which has a very good track record of registering cruise ships.

Flag of convenience?

– Effective jurisdiction, control, and enforcement of Flag State regulations upon vessels is frequently impossible because operations often take place vast distances away from the ship’s country of registration and shielded from the eyes of observers. Open registries have absorbed the M/V SAIGA ruling and evolved into ‘flag of convenience’ states, allowing any owner an opportunity to register their vessel while maintaining little tangible oversight over their vessels.

– This flag of convenience and open registry system exponentially complicates jurisdiction,  accountability, and oversight. Shipowners can simply change vessel registration from one open registry to another, which converts the nationality (and therefore Flag State Jurisdiction) of the vessel in order to place it under a jurisdiction with greater or lesser leniency in accountability and oversight depending on t heir wishes. Shipowners trying to avoid stringent compliance with Flag State

requirements will simply register their vessels in a state that is not willing or able to exercise jurisdiction and control, especially in matters often relating to fishing, pollution control, and labour practices.

– For example, a shipowner with a tanker flagged in a country with stringent environmental and security legislation, who desires more flexibility, can simply reflag to a state that is not willing or able to exercise jurisdiction and control, in order to ease regulations aboard his/ her vessel. This is similarly done to dodge taxes, fees, and proper treatment of the crew, as well as to avoid Flag State-imposed pollution control measures.