Portside Efficiency, Digitization and Automation, Rates, Trade Wars, and Sustainability

by Carmit Glik | 12 Oct, 2018



Sometimes you can’t tell one week from the other. That can be because your calendar is filled to the brim, but it can also be that the news you read feels like more of the same.

As I’m experiencing both, let’s go straight to this week’s news highlight’s:


Portside Efficiency

At Cogoport we make booking a container more efficient. Moving containers around the port and on and off ships needs to be more efficient as well. As the rise in competition between carriers is driving down the revenue per container, these carriers are pressuring ports to improve efficiency in terminal operations. Automation seems to be the key.

“Some terminals are handling more volume, but in some markets the revenue per TEU is decreasing – or certainly not increasing the way it used to – so they’re having to manage their business in a different way.
“That efficiency drive has two parts: one is to be the better service provider [than regional port competitors]; but also to reduce your costs, which therefore either gives you more flexibility on the commercial side, or it means you’re a more profitable business,”

Ports need to think outside the box to make their terminals more cost-effective


Digitization and Automation

An interesting study came out done by PwC: “The Era of Digitized Trucking: Charting Your Transformation to a New Business Model.” It made me think of digitizing shipping and how that changes business models as well. More on that in a future post.

“A consistently digitized supply chain saves administrative overheads, replaces time-consuming inventory, and reduces insurance costs by cutting error rates. In total, savings of up to 41% are possible by 2030 compared to today's supply chains.”

Digitization and Autonomous Driving to Halve Logistics Costs by 2030, finds PwC Study

Also in that category a study by Deloitte:

“Continue to monitor advancements in autonomous robots for applicability to the supply chain. Autonomous robotics have the potential to improve operations, and they offer new opportunities to increase productivity, reduce risk, decrease cost, and improve data collection, particularly as customer expectations and volumes of packages, shipments, and orders reach unsustainable levels for traditional approaches.”

Using Autonomous Robots to Drive Supply Chain Innovation

And autonomous shipping news from the UK:

“The U.K.'s Maritime & Coastguard Agency (MCA) and Department for Transport will study new ways of regulating the autonomous and smart shipping industries to help them deliver new technologies to the traditional maritime sector.

The £1 million (US $1.3 million) grant will underwrite a new Maritime Autonomy Regulation Lab, where regulators, academics and industry representatives will investigate the best methods for regulating vessels operated remotely and autonomously.

The global autonomous shipping industry is predicted to grow into a $136 billion behemoth by 2030, according to U.K. maritime regulators."

UK grant will study autonomous shipping regulations


More Surcharges and Carrier Rates

More on surcharges and carrier rates in addition to the items mentioned last week.

“Anecdotal reports from The Loadstar’s sources refer to a “sharp dip” in load factors on the route in the two weeks leading up the national factory shutdown, from a peak season high of over 95% to below 90%.
The demand slowdown reinforces the strategy of carriers to axe more than 200,000 teu of headhaul capacity this month, including the 2M’s AE2/Swan loop.”

“Meanwhile, on the transpacific tradelane, the jury is still out on the impact on forward bookings of US retailers stocking up in advance of Trump trade tariff hikes on a vast range of consumer imports.”

Box carriers sail towards a tipping point of ocean freight rates and fuel

“The IMO’s 0.5% sulphur fuel cap will cause an “existential crisis” for container carriers, unless they can pass on the added bunker costs to shippers.”

“However, speculation is mounting as to whether carriers will be able to successfully pass on all the extra cost, having failed to do this during the first half of 2018 when their earnings were hit by a steady rise in bunker prices.”

2020 sulphur fuel cap may spark a crisis for carriers that can't recover the cost


More on the US-China Trade War

“Despite tariffs on billions of dollars worth of imports coming in from China, imports at U.S. container ports are expected to stay at "near record levels," the National Retail Federation (NRF) and Hackett Associates said.

Retailers "are not able to quickly or easily change their sourcing," Jonathan Gold, NRF vice president for supply chain and customs policy, said in a statement. As a result, many businesses will continue to import products from production facilities in China.”

Tariffs are not slowing down retail imports

“The US-China trade war has seemed “positive” for transpacific shipping lines, so far, with importers rushing to beat tariff deadlines.
But there is growing concern that a prolonged dispute would leave shippers with question marks on whether to reorganise their supply chains.”

China-US trade war brings box carriers a bonus – but 2019 looks less promising


Sustainability

And there was the climate change report that the IPCC published. You can read a nice recap in the last article of this week:

“It’s clear that the benefits to the world of mitigating climate change are greater than the costs of mitigating climate change”

Everything you need to know about the new 1.5°C climate-change report

Photo by Mauro Licul on Unsplash


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