Hi, this is IINO. Today, I would like to share with you the logistics news in May 2021.
As in the previous video, I summarized the recent news about logistics and shipping. By watching this video, you can understand what’s going on in logistics in the world.
Let’s take a look.
Could container shortage prolong until September?
The global shortage of shipping containers shows no signs to be solved.
The container shortage, which has been worsening since last fall, failed its initial forecast of settling down by February or at the latest by May.
The situation continues with no change in the status.
Congestion at major overseas ports is not on the verge of being resolved. Recently, there seems to be a widespread view that disruptions will continue until around September.
Although off-shore waiting has decreased at Los Angeles and Long Beach on the west coast of the U.S, many vessels are shifting to other ports to avoid congestion.
Now, off-shore waiting occurs at Vancouver Port in Canada and Savannah Port on the east coast of North America.
The container shortage has been caused by a lack of workers at ports and truck drivers, in addition to the reason that the cargo movement has exceeded the supply, due to the demand increase caused by the Corona disaster.
Because of it, a backlog of containerized cargo has been led and turn times for returning containers take longer than usual.
According to a U.S. container shipping company official, it will take three to four more months for converging the situation and three to six months for normalizing.
US West Coast import exceed 1million TEU
North American West Coast import containers exceed 1 million TEU for the second month in a row. Container freight rate hike unstoppable.
According to BIMCO (Baltic and International Maritime Council), the volume of imported containers handled at North American West Coast ports was 1.1 million TEU, surpassing 1 million TEU for the second consecutive month.
In the past 10 months, the volume has exceeded 1 million TEU in nine months, except for February this year. In the January-April period, the volume was up 40% from the same period last year and is expected to remain strong in May and beyond.
The U.S. government provided $1,400 per person in March as an additional economic measure, which boosted retail sales and led to a correspondingly high level of container imports.
According to BIMCO’s analysis, due to strong retail sales, they need to replenish inventories, thus they may lead to imports ahead of normal to counter last year’s supply chain disruptions, and boost logistics from May onwards.
As for container freight rates, they have not stopped rising.
As of May 14, the spot freight rate for containers from Shanghai to the East Coast of North America was $7,378 per 40-foot container, up $2,000 in just over a month.
Spot freight rates to the west coast of North America exceeded $5,000 at the end of April.
In addition, prices for 20-foot containers bound for Northern Europe and the Mediterranean are also at an all-time high, topping $5,000 for the first time.
IMO, formulates rules for automated ships
The International Maritime Organization (IMO), has announced that it plans to revise the SOLAS Convention, to formulate international rules for automated ships.
To establish international rules for automated ships, the convention will need to be amended and reinterpreted,the definition of automated systems may be included in the chapters on radio communications, safety of navigation and maritime security.
It was also decided that the satellite VDES, which is being developed as a compatible device for automatic identification of ships, would be considered to be treated as a navigational device under the SOLAS Convention.
VDES is a communication information network at sea with high capability. In the future, it will be able to send and receive images, and contribute to the safer operation of ships.
The shipbuilding market is also booming
New ship orders up 43% year over year.
Vessels Value Market Report reports that new shipbuilding orders have increased, with 352 new vessels ordered for the first four months of 2021, up 43% from the same period last year.
The total order value for the same period was $16.96 billion, 2.1 times higher than last year.
Container shipping, A significant increase in transit time has slowed the economic recovery.
Here is the news from the United States.
Since the beginning of this year, cargo handling times have increased significantly, and it causes delays on container ships schedule and pressures on shipping capacity and inventory.
This is adding confusion in the supply chain.
According to an analysis by Denmark’s Sea-Intelligence ApS, only about 40 percent of containership arrived on time at global ports in March, with delays averaging more than six days.
In the past two years, more than 70 percent of ships arrived on time.
Vincent Clerc of Maersk said, “It usually takes 14 days to transport from Shanghai to Los Angeles, but now it takes 33 days. The lead time is the same, but the waiting time to unload has doubled.
Decarbonization still have skeptical idea
The U.S. decarbonization program has divided opinions in the industry.
The Biden administration is seeking to reduce CO2 emissions from ships drastically. Still, it is likely to face opposition from Asian and South American countries, that fear the increases of exports costs due to use non-fossil fuels.
In April this year, U.S. envoy John Kerry said that the IMO (International Maritime Organization), should push for a more stringent goal of zero greenhouse gas emissions in 2050. It is expected that Japan and some Scandinavian members join the U.S. demand.
On the other hand, some countries, such as Brazil, Argentina, and African countries, are likely to demand compensation as a condition for supporting the goal.
According to a source familiar with the IMO, deliberations, it is expected that China, along with developing countries, is likely seek exceptions to the new requirements, financial assistance or technology transfers to ease the transition to new fuels.
There is much skepticism in the industry, whether zero greenhouse gas emissions can be achieved by 2050. Thus, it appears that efforts to decarbonize ships are still in the early stages.
Commentary Section on the news
Now, this is the commentary section on the news that I introduced this time.
Container shortage takes more time to be solved
The container shortage continuing since last October is expected to be resolved, but it is still behind schedule.
I think this is because the liquidity of containers in the market, which had been tightly packed, collapsed due to the blockade of the Suez Canal by Evergreen vessel, for about a week at the end of March.
As a result, there is a real lack of space for cargo bound for the U.S, and ocean freight rates have skyrocketed.
I get many inquiries from shippers who have seen my YouTube videos, asking me to help them get space for their shipments to the U.S.
We are doing everything we can to help, but we can’t promise anything.
The IMO. is also moving to revise the SOLAS Convention
The SOLAS Convention is an international treaty that aims to ensure the safety of ships, and the most recent revision is the VGM, that regulates the weight of containers.
The Suez Canal stranding issue may have been a trigger for this revision of the convention.
With the development of technology, automated ship operations are advancing. Just as laws are being developed for automated driving of cars, it will continue to be important to create rules for mechanical ship operations systems.
The shipbuilding market is also booming
The current shipping market is booming, as can be seen from the announced financial results of shipping companies.
As a result, orders for shipbuilding and new containers are increasing. However, I think there is a high probability that this will lead to oversupply later, just like the Suez boom in 1956, which I explained in another video.
If that happens, the price war will start again, and I think it will be interesting to see how the shipping companies will do based on their experience, during the recession that lasted for the past several years.
Decarbonizing ships in the news from the U.S.
This topic is getting much attention in the news right now, but there are still some opposing forces.
As the world’s No. 1 economic country, U.S will be able to take the lead in setting up the infrastructure. However, on the other hand, developing countries may have problems with financial resources, and may not be willing to make a complete change.
Nevertheless, the issue of decarbonization is a global-scale measure, so we should keep an eye on its progress.
What did you think of the logistics news this time?
I have tried to summarize the logistics news, so that both those who are involved in logistics and those who are not, can understand them.
The news sources referred to in this video are linked in the summary section, so please refer to them for details.
That’s all for now from the field! Thank you very much.
Source of the News
Vessels Value Market Report
Contact to IINO san