Capacity Crunches, Trade Wars, and Robots

Technology & Advancements

29 April 2020 • 9 min read

Capacity Crunches, Trade Wars, and Robots

Editorial Team

This Week in Ocean Freight. Speaking about events, here are the events that caught my eye this week in shipping and logistics


It has been an eventful week. Hurricanes and trade wars impacting supply chains and logistics operations in various parts of the world, and the capacity crunch impacting shippers and shipping companies alike. For me personally, the week was literally eventful. I visited the Netherlands India Business Meet event near our European headquarters in Rotterdam and had interesting conversations on opportunitites and trade between India and the Netherlands. I accepted an invitation to speak on the Multimodal Europe event, which will be in Rotterdam November 6 and worked on the presentations I will be giving at the ICT & Logistiek (ICT & Logistics) event in Utrecht November 7 and 8.

Speaking about events, here are the events that caught my eye this week in shipping and logistics:

The Capacity Crunch

The Loadstar has been writing a lot about the capacity crunch this week. Major shipping lines are canceling sailings from Asia to Europe. One of the reasons cited is the early October Chinese Golden Week holiday. Some interesting highlights:

According to this week’s World Container Index (WCI) from Drewry, the Asia to North Europe spot rate component was $1,662 per feu, which is 3% down on the previous period.

The aggressive rate stance taken by CMA CGM and Maersk on the route, as well as others less publicly, including MSC, is due to a particularly bearish sentiment on forward booking prospects.

--> Slack season pressure could spark new Asia-Europe capacity crunch

North European exporters are becoming increasingly concerned at the knock-on impact of canceled backhaul voyages in November, and fear a return to the capacity crunch last experienced during the alliance restructuring in April last year.

--> Backhaul capacity crisis fears as more Asia-North Europe sailings are blanked

Container throughput in the five largest [Chinese] ports was up 6.8% to 40.9 million twenty-foot equivalents (TEU) in the second quarter. However, trade tariffs imposed on China by the US is increasingly seen as a roadblock to further growth.

--> Maritime trade continued to see strong growth, but tariffs remain a risk 

Demolition of container vessels so far this year is at a record 10-year low, with just 24 ships for 47,500 TEU sold for scrap. This compares with 120 vessels equating to 355,000 TEU sent to the breakers by the same point in 2017.TEU

--> Gloomy outlook for container charter market as cautious carriers cut capacity 

The Trade War between the US and China

Another thing impacting shipping in a negative way is the ongoing trade war between the US and China. The US is still increasing tariffs. And we haven't seen the end of it yet. So far the impact on shipping has not been big, but that will change. Some interesting snippets:

Following the latest round of tariffs introduced by the US and China this week, Drewry has reduced its forecast for global container volume growth from 5.7% to 4.3%.

--> Fears over future container terminal capacity as investors get cold feet

China and the United States plunged deeper into a trade war on Tuesday after Beijing added $60 billion of U.S. products to its import tariff list in retaliation for President Donald Trump’s planned levies on $200 billion worth of Chinese goods.

--> China to penalize $60 billion of U.S. imports in tit-for-tat move and Tariffs on $200B worth of imports from China start Sept. 24

Coming off of an all-time monthly high for United States-bound waterborne shipments in July, August levels, while still strong, were down slightly, according to data recently issued by global trade intelligent firm Panjiva.

“The basic message is that Trump’s tariffs likely led to accelerated shipments in July instead of August and we may, therefore, have seen the peak of the year already,” said Chris Rogers, Panjiva research director.

--> U.S.-bound imports are down sequentially and up annually in August, reports Panjiva

The Robots Are Coming

And to end on a positive note: good news for us logistics professionals. We have nothing to fear from robots in the workplace. And the same goes for those not in logistics as well. Although some jobs will change and others will go away.

According to the World Economic Forum (WEF), about 133m jobs globally could be created with the help of rapid technological advances in the workplace over the next decade, compared with 75m that could be displaced.

--> Robots in the workplace 'could create double the jobs they destroy'

Supply chain and logistics specialist positions are safe in the age of automation, according to WEF — in fact the report calls this field "emerging".

--> Supply chain, logistics professionals are 'safe' from automation

Plans for an autonomous, purely electric container ship are making waves internationally as Norway positions itself as a global pioneer in alternative propulsion systems. The ‘Yara Birkeland’ will be the world’s first autonomous electric container ship, and will no doubt change freight transport at sea.

--> The World’s First Electric Autonomous Container Ship To Set Sail In Norway

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