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New Year Freight Rates now available
Please contact us for our latest 2020 Ocean & Air Freight rates.
Please book now to avoid missing out on space before Chinese New Year
The International Air Transport Association (IATA) released full-year 2018 data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs) grew by 3.5% compared to 2017.
This was significantly lower than the extraordinary 9.7% growth recorded in 2017.
Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 5.4% in 2018, outpacing annual growth in demand. This exerted downward pressure on the load factor but yields proved resilient.
Air cargo’s performance in 2018 was sealed by a softening in demand in December. Year-on-year, December demand decreased by 0.5%. This was the worst performance since March 2016. Freight capacity, however, grew by 3.8%. This was the tenth month in a row that year-on-year capacity growth outstripped demand growth.
International e-commerce grew in 2018 which was a positive factor for the year. Yet, there was a softening of several key demand drivers:
“Air cargo demand lost momentum towards the end of 2018 in the face of weakening global trade, sagging consumer confidence and geopolitical headwinds. Still, demand grew by 3.5% compared to 2017. We are cautiously optimistic that demand will grow in the region of 3.7% in 2019. But with the persistence of trade tensions and protectionist actions by some governments there is significant downside risk. Keeping borders open to people and to trade is critical,” said Alexandre de Juniac, IATA’s Director General and CEO.
“To attract demand in new market segments, the air cargo industry must improve its value proposition. Enabling modern processes with digitalization will help build a stronger foothold in e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals and perishables,” said de Juniac.
|DECEMBER 2018 (% YEAR-ON-YEAR)||WORLD SHARE1||FTK||ASTK||FLF (%-PT)2||FLF (LEVEL)3|
Airlines in all regions with the exception of Africa reported an annual increase in demand in 2018.
Asia-Pacific carriers posted the weakest growth of any region in December 2018 with a decrease in demand of 4.5% compared to the same period a year earlier. Capacity increased by 2.6%. The weaker performance in December contributed to growth in freight demand of only 1.7% in 2018 compared to 2017. Annual capacity increased 5.0%. The weaker performance of Asia-Pacific carriers in 2018 largely reflects a slowing in demand for exports from the region’s major exporters (China, Japan and Korea). Signs of a moderation in economic activity in China and an escalation of trade tensions continue to pose a downside risk to air cargo in Asia-Pacific.
North American airlines posted the fastest growth of any region for the seventh consecutive month in December 2018 with an increase in demand of 2.9% compared to the same period a year earlier. Capacity increased by 4.5%. This contributed to an annual growth in demand in 2018 of 6.8%, matching the rate of capacity increase. The strength of the US economy and consumer spending have helped support the demand for air cargo over the past year, benefiting US carriers.
European airlines posted a 1.9% year-on-year increase in freight demand in December 2018 and a capacity rise of 3.7%. The improved performance in December contributed to an annual growth in demand for air cargo of 3.2% in 2018. Capacity increased by 4.3% in the same year. Weaker manufacturing conditions for exporters, particularly in Germany, one of Europe’s key export markets, along with mixed economic indicators impacted demand in 2018.
Middle Eastern carriers’ freight volumes increased 0.1% year-on-year in December and capacity increased 4.5%. This contributed to an annual increase in demand of 3.9% in 2018 – the third fastest growth rate of all the regions. Annual capacity increased 6.2%. The region continues to be affected by geopolitical issues.
Latin American airlines experienced a decrease in year-on-year demand of 0.1% in December after three months of positive growth. Capacity increased by 6.0%. Despite a decrease in demand, it’s worth noting that the within South America market continues to perform strongly, with international demand up almost 20% year-on-year. Annual growth in freight demand among Latin America carriers in 2018 increased by 5.8% – the second fastest of all regions. Annual capacity increased 3.4% in 2018.
African carriers’ saw freight demand decrease by 2.2%, in December 2018, compared to the same month in 2017. This was significantly less than the 9.4% decrease the previous month. Capacity increased by 4.9% year-on-year. It’s worth noting that seasonally-adjusted international freight volumes, despite being 7.7% lower than their peak in mid-2017, are still 50% higher than their most recent trough in late-2015. Annual growth in freight demand among Africa carriers in 2018 decreased by 1.3% and capacity grew by 1%.
The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), rose 8.0% in January 2018 compared to the year-earlier period. This was up from the 5.8% annual growth recorded in December 2017.
Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 4.2% year-on-year in January 2018.
The continued positive momentum in freight growth into 2018 reflects the fact that demand drivers for air cargo remain supportive. Global demand for manufacturing exports is buoyant and meeting this strong demand is leading to longer supply chain delivery times. Demand for air cargo may strengthen as a result, with companies seeking faster delivery times to make up for longer production times.
“With 8% growth in January, it’s been a solid start to 2018 for air cargo. That follows an exceptional year in which demand grew by 9%. We expect demand for air cargo to taper to a more normal 4.5% growth rate for 2018. But there are potential headwinds. If President Trump follows through on his promise to impose sanctions on aluminium and steel imports, there is a very real risk of a trade war. Nobody wins when protectionist measures escalate,” said Alexandre de Juniac, IATA’s Director General and CEO.
All regions reported an increase in demand in January 2018.
Asia-Pacific airlines saw demand in freight volumes grow 7.7% in January 2018 and capacity increase by 2.2%, compared to the same period in 2017. The increase largely reflects the ongoing strong demand experienced by the region’s major exporters, China and Japan which has been driven in part by a pick-up in economic activity in Europe. However, the upward-trend in seasonally-adjusted volumes has paused.
North American airlines’ freight volumes expanded 7.5% in January 2018 year-on-year, as capacity increased 4.2%. The strength of the US economy and the US dollar have improved the inbound freight market in recent years. However, this may be offset by the weakening in the dollar although the recently-agreed US tax reform bill may help to support freight volumes in the period ahead. Seasonally-adjusted volumes are broadly trending sideways.
European airlines posted a 10.5% increase in freight volumes in January 2018. Capacity increased 5.3%. The strong European performance corresponds with a very healthy demand for new export orders among the region’s manufacturers. Seasonally-adjusted volumes jumped 3% in month-on-month terms in January – the largest increase since March 2017.
Middle Eastern carriers’ freight volumes increased 4.4% year-on-year in January 2018, the slowest growth of all regions. Capacity increased 6.3%. Seasonally adjusted freight volumes continued to trend upwards during the first month of the year, however, the region’s carriers remain affected by the ongoing challenging political environment in the Middle East.
Latin American airlines experienced a growth in demand of 8.0% in January. Capacity increased 5.4%. The pick-up in demand comes alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes are now back to the levels seen at the end of 2014.
African carriers’ saw freight demand increase by 12.9% in January 2018 compared to the same month last year. The increase was helped by very strong growth on the trade lanes to and from Asia. Freight demand jumped by 59% between Africa and Asia in 2017 following an increase in the number of direct flights between the continents, driven by ongoing foreign investment flows into Africa.
The International Air Transport Association (IATA) released full-year 2017 data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs) grew by 9.0%. This was more than double the 3.6% annual growth recorded in 2016.
Air cargo’s strong performance in 2017 was sealed by a solid result in December. Year-on-year demand growth in December increased 5.7%. This was less than half the annual growth rate seen during the middle of 2017 but still well above the five-year average of 4.7%. Freight capacity grew by 3.3% year-on-year in December.
Full-year 2017 demand for air freight grew at twice the pace of the expansion in world trade (4.3%). This outperformance was a result of strong global demand for manufacturing exports as companies moved to restock inventories quickly.
Industry-wide FTKs grew by 9.0% year-on-year in 2017 as a whole, up from 3.6% in 2016 and the strongest calendar-year of growth since 2010. Demand grew three times faster than capacity in 2017, which drove a further recovery in the freight load factor. 2017 was also the strongest year of global goods trade growth since 2011.
“Air cargo had its strongest performance since the rebound from the global financial crisis in 2010. Demand grew by 9.0%. That outpaced the industry-wide growth in both cargo capacity and in passenger demand. We saw improvements in load factors, yields and revenues. Air cargo is still a very tough and competitive business, but the developments in 2017 were the most positive that we have seen in a very long time,” said Alexandre de Juniac, IATA’s Director General and CEO.
“The outlook for air freight in 2018 is optimistic. Consumer confidence is buoyant. And we see growing strength in international e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals. Overall the pace of growth is expected to slow from the exceptional 9.0% of this year. But we still expect a very healthy 4.5% expansion of demand in 2018. Challenges remain, including the need for industry-wide evolution to more efficient processes. That will help improve customer satisfaction and capture market share as the expectations of shippers and consumers grow ever more demanding,” said de Juniac.
Airlines in all regions reported an increase in demand in 2017.
Asia-Pacific carriers saw demand in freight volumes grow 5.6% in December 2017 compared to the same period in 2016 and capacity grow by 2.2%. This contributed to a growth in freight demand of 7.8% in 2017 compared to 2016. Capacity increased 1.3%. The strong performance of Asia-Pacific carriers in 2017 largely reflects the ongoing demand for exports from the region’s major exporters China and Japan which has been driven in part by a pick-up in economic activity in Europe and a continued solid performance from the US. This is expected to support demand into the New Year.
North American airlines saw freight demand increase by 5.4% in December 2017 year-on-year and capacity increase of 2.2%. This contributed to an annual growth in 2017 of 7.9%. Capacity grew by 1.6% in the 2017 calendar year. The strength of the US economy and the US dollar have improved the inbound freight market in recent years. Looking towards 2018, the recently agreed US tax reform bill may help to support freight volumes in the period ahead although this may be offset by the recent weakening in the dollar.
European airlines posted a 5.0% year-on-year increase in freight demand in December and a capacity rise of 3.2%. The strong performance in December boosted cargo volumes for the 2017 calendar year by 11.8% – the largest increase of all regions with the exception of Africa. Capacity in the region increased by 5.9% in the 2017 calendar year. This is consistent with Europe’s manufacturers’ export orders growing at their fastest pace on record. This is expected to support demand into the New Year.
Middle Eastern carriers’ freight volumes increased 6.3% year-on-year in December and capacity increased 4.7%. This contributed to an annual increase in demand of 8.1% in 2017 – the third fastest growth rate of all the regions. Capacity increased 2.6%. However, having not seen the strong upward demand of other regions in the first half of 2017, Middle-Eastern carries’ share of global demand dropped for the first time in 18 years.
Latin American airlines experienced a growth in demand of 4.9% in December and a capacity increase of 11.6%. This contributed to an annual growth in freight demand of 5.7% and a capacity increase of 3.1% in 2017. This was the first increase in annual demand in two years. The pick-up in demand comes alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes are now back to the levels seen at the end of 2014.
African carriers’ posted the fastest growth in year-on-year freight volumes, up 15.6% in December 2017 and a capacity increase of 7.9%. This contributed to an annual growth in freight demand of 24.8% in 2017 – the fastest growth rate of all regions. This is only the second time African airlines have topped the global demand growth chart since 1990. Capacity in 2017 increased 9.9%. Demand has been boosted by very strong growth in Africa-Asia trade which increased by more than 64% in the first eleven months of 2017.
IATA stated that 2017 will be remembered as the best year for growth in air cargo. With growth comes additional challenges, therefore, it is important that the industry continues to transform and embrace new technologies. As Alexandre de Juniac, IATA ‘s Director and CEO says, “2017 was the strongest year for air cargo since 2010. There are several indicators that 2018 will be a good year as well. In particular, buoyant consumer confidence, the growth of international e-commerce and the broad-based global economic upturn are cause for optimism as we head into the New Year.”
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The 2018 marine forecast for transpacific and other major shipping trade routes notes that full recovery depends on a number of political, economic and technological factors.
China is also a concern. “I know analysts have been harping on about it for years,” said Transport Intelligence Ltd. economist David Buckby, “but I think given what the Chinese government has said following the 19th [Communist] Party congress – that it will be switching focus from meeting long-run economic growth targets to other objectives – coupled with recent comments on trying to manage down debt, there is a real chance that Chinese growth will stutter.”
Buckby said the slowdown might not occur in 2018, but it will likely happen over the next few years.
“As the linchpin of so many global supply chains, what affects China is going to impact the rest of the world. I don’t know exactly when that’s coming, but when it does, I think it will adversely impact global port volumes quite significantly.”
McKinsey & Co.’s Container Shipping: The Next 50 Years also points to warning signs about China’s retooled economic development model. It estimates that the swing away from exports of goods to a model based on consumption and services has coincided with a drop in China’s real gross domestic product to between 6% and 7% from more than 10%.
Asia, and China especially, are major containerised-shipping drivers. Asia accounted for 64% of the world’s container throughput in 2016, and McKinsey notes that China imported and exported 52 million 20-foot equivalent units (TEUs) in 2015 compared with 13 million in 2000. It also maintained that China’s dramatic growth and the resultant boom in container trade over the past three decades is unlikely to be repeated elsewhere in the world.
But John Murnane, a partner in McKinsey’s travel, transport and logistics practice, noted in an email response to Business in Vancouver that in the near term, continued growth in container-shipping demand is likely.
“The U.S. and Canada continue to grow strongly, and volumes in 2017 outpaced expectations. This is good news for all ports and terminals. We expect 2018 to continue this strong volume growth.”
Oxford Economics agrees. The U.K.-based economic research company raised its global GDP growth forecast to 3.2% in 2018 from 2.9% in 2017 based on what it sees as a continuing strong performance of the world economy and positive “omens for 2018.” Its December 4 global outlook research briefing pointed to four key reasons for that optimism: strong trade growth, low inflation, robust emerging markets and resilience to political uncertainty.
In a November brief, it also revised its world trade forecast up 0.5 percentage points to 4.2%.
Oxford Economics’ forecast for Canada predicts that exports will rise 2.9% in 2017 and 4% in 2018. It sees imports up 3.7% in 2017 and 2.4% in 2018, but Canada’s GDP growth slipping to 2.1% in 2018 from 3% in 2017.
The International Monetary Fund’s World Economic Outlook, meanwhile, projects global economic growth of 3.6% for 2017 and 3.7% in 2018.
In its 2017 nine-month financials, Hapag-Lloyd (ETR:HLAG), the world’s fifth-largest ocean container company, noted that global container-shipping volume from 2018 through to 2021 is projected to increase between 4.8% and 5.1%.
The United Nations Conference on Trade and Development’s Review of Maritime Transport 2017, meanwhile, pointed to CETA and the economic partnership agreement concluded between Japan and the EU in July as positive developments for global trade and shipping. It added that the growth of cross-border e-commerce could also drive long-term container-shipping demand.
However, it noted that a sustained recovery will require a strong commitment to “coherent and co-ordinated multilateral policies.” It also red-flagged the growing cybersecurity threats to world shipping supply chains.
While Buckby agreed that CETA will benefit port volumes, he doubted that it would significantly increase cargo through Vancouver and other Canadian ports.
“The dirty secret of many free-trade deals is that they don’t tend to have a substantial economic impact, especially if they just address tariffs, which tend to be low anyway, and don’t focus much on breaking down non-tariff barriers.”
Buckby added that port volumes would drop if NAFTA collapses.“And even if it is successfully renegotiated, supply chains still face disruption, thanks to possible changes to rules of origin.”
The newly widened Panama Canal has also opened the way for larger transpacific ships to reach East Coast ports directly. Infrastructure and operations in those ports consequently face similar pressures.
Port productivity suffers because a mega-container ship can take up to five days to unload. “Some ports are rising to the challenge and investing, but smaller ports and constrained ports risk losing some mainline services.”
Source: Hellenic Shipping News
In little more than 2 years shipping will have to shift to low sulphur fuel. The International Maritime Organisation (IMO) has set a global limit for sulphur in fuel oil used on board ships of 0.50% m/m (mass by mass) from 1 January 2020. This will significantly reduce the amount of sulphur oxide emanating from ships and should have major health and environmental benefits for the world, particularly for populations living close to ports and coasts.
IMO has been working to reduce harmful impacts of shipping on the environment since the 1960s and the regulations for the Prevention of Air Pollution from Ships seek to control airborne emissions from ships (sulphur oxides (SOx), nitrogen oxides (NOx), ozone depleting substances (ODS), volatile organic compounds (VOC) and shipboard incineration) and their contribution to local and global air pollution, human health issues and environmental problems.
Under the new global cap, ships will have to use fuel oil on board with a sulphur content of no more than 0.50% m/m, against the current limit of 3.50%, which has been in effect since 1 January 2012.
The interpretation of “fuel oil used on board” includes use in main and auxiliary engines and boilers.
Exemptions are provided for situations involving the safety of the ship or saving life at sea, or if a ship or its equipment is damaged.
Another exemption allows for a ship to conduct trials for the development of ship emission reduction and control technologies and engine design programmes. This would require a special permit from the Administration(s) (flag State(s)).
Ships can meet the requirement by using low-sulphur compliant fuel oil.
An increasing number of ships are also using gas as a fuel as when ignited it leads to negligible sulphur oxide emissions. This has been recognised in the development by IMO of the International Code for Ships using Gases and other Low Flashpoint Fuels (the IGF Code), which was adopted in 2015. Another alternative fuel is methanol which is being used on some short sea services.
Ships may also meet the SOx emission requirements by using approved equivalent methods, such as exhaust gas cleaning systems or “scrubbers”, which “clean” the emissions before they are released into the atmosphere.
Last month, an ExxonMobil survey highlighted an ongoing sense of confusion and a lack of preparedness, with 70% of respondents saying that they do not believe that the industry is ready for the deadline, when a global limit of 0.5% sulphur will be imposed on marine fuel for vessels trading internationally.
The survey suggests that only 500 ships have been equipped with scrubbers. There has been something of a backlash against scrubber technology, most notably from Maersk and Klaveness, who have said they see the technology as being expensive and immature.
Other respondents to the ExxonMobil survey said they were concerned that shipping companies would cheat and falsify the sulphur content of their marine fuel.
what mix of fuels will be available in 2020 and at what cost for each type? Refiners have not been so forthcoming with information about what new capacity they are adding to deal with the expected rise in demand. If ship operators do switch to gasoil, they will have to compete with truck drivers and SUV owners to buy the fuel, which could drive up prices and possibly lead to shortages in supply.
Meanwhile, there will be a loophole for shipowners in 2020: vessels will be permitted to sail without compliant fuel if none is available, even if they do not have scrubbers installed.
Panos Zachariadis – Technical Director at Atlantic Bulk Carriers Management Ltd doesn’t believe that the industry is ready either.
“The industry is not ready. And by “industry” I mean mostly the fuel producers, by their own admission. That is the main problem. There were two studies submitted to IMO, one by “industry” including refiners. Industry said there will be no fuel available by 2020 even if we started preparations and the required investments yesterday. In addition a submission by ISO cautioned about the danger of “designer” fuels. These were simply ignored. The majority of IMO member-states wanted favourable news headlines for various reasons (to show the EU that they take action etc). It was a “political” decision. We have seen before what happens when facts are ignored and political decisions are taken (remember Ballast Water Treatment?)
In short I expect a mess and I’ll be very surprised if this goes smoothly and on schedule. One possibility I see is that, come 2019, IMO will have to face reality (not enough availability of safe fuel) and re-examine the application date. One other – unfortunate – possibility is that, since MDO cannot be available in such quantities, untested “designer” fuels will be introduced to fill the void. Current experience with hybrid (desulfurised) fuels is not good; they are very unstable. But a further fear is that inappropriate blends may also appear pausing a safety threat! ISO in its submission to IMO warned that cutting heavy fuel with e.g. naptha may show acceptable flash point limit but still may be explosive! And there will be no ISO or other quality standards for such “designer” fuels by 2020.”
It seems apparent that the information regarding the switch is causing uncertainty with regards to what the choices will be to make sure that ships are properly equipped to deal with the change. It could be a case that companies are waiting for their competitors to go first so that they can then make an informed decision on the best way to go, but with little over 2 years to go this seems a difficult strategy. Compliance seems to be something of a grey area, but companies should by now have plans in place to make sure that as of 1st January 2020 they are ready to go.
Hellinic Shipping News
Green 4 sea.com
In 1967, the British Transport Docks Board (BTDB) commissioned McKinsey & Company to assess the impact of a recent development from the United States: container boxes. The first purpose built ships for them were being launched, and a few US lines were carrying these novelties on their regular service.
McKinsey & Company predicted:
Containerised cargo is effectively becoming homogenous, like other bulk cargoes, and is subject to the same economies of scale. Economics of scale will result in this concentrated cargo being handled by a small number of large organisations. Efficient use of expensive containers will require extensive route networks under unified control to allow load balancing.”
Now that standardised containers have been introduced in the shipping industry, the rush to ‘get on the bandwagon’ will probably lead to substantial overexpansion.
If container ships follow the tanker trend, ships of more than 10,000-container capacity could be available.
Feeder services will tend to replace direct calls when the large container ships come into service.
Rotterdam is an example of a European port which is in a good position to fill a major transoceanic role.
The role of British ports may tend to become that of feeders to the Continent…. Proximity of British East Coast ports to Europe will dictate their use.
In their October 2017 report they posed the question: In 1967, containers were disrupting the shipping business, so the players had to rethink everything. Now it’s digital, big data, and the Internet of Things. Is it time to rethink everything again?
In 1956, the first ship to transport containers, named the Ideal X, carried only 58 of them. Since then, container-ship capacity has grown 370-fold: today’s largest vessels can hold more than 20,000 TEUs. Larger vessels provide greater cost efficiencies in fuel and crews, reduce greenhouse-gas emissions per container, and enable hub-and-spoke network strategies. Moreover, as operators collaborate in alliances, putting a single large vessel instead of two small ones on a given route has its advantages.
So, how much longer will this trend toward growth in capacity continue? In the long term, three factors could limit it.
The first is that returns to scale decline with increasing size, so a move from 20,000 to 40,000 TEUs wouldn’t reduce unit costs as much as a move from 10,000 to 20,000 TEUs.
Second, the narrowness and shallowness of some of the world’s waterways impose physical constraints: for example, the Strait of Malacca (between the Malay Peninsula and the Indonesian island of Sumatra) has a minimum depth of 25 meters, the most modern channels of the Suez Canal a depth of 24 meters. The latest designs for vessels that carry 24,000 TEUs have a depth of 16 meters, which leaves scope for further growth in capacity.
Third, over the past decade, the blitz for bigger vessels has strained terminal and port operators, forcing them to invest in new cranes, dredging equipment, reinforced quay walls, and extended berths. Unloading containers from bigger ships takes longer because cranes must reach farther across vessels, thus extending berth occupancy and reducing productivity.
On balance, we do not view 20,000 TEUs as the natural end point for container ships—50,000-TEU ones are not unthinkable in the next half-century. However, progress will probably be much slower than it was in the past decade: overcapacity means that new ordering will be slower over the next five to ten years. Lower slot costs materialise only when demand fills up larger ships, which hasn’t happened recently. But if demand catches up with supply, as it may well do in the early 2020s, the logic of scale will once again drive orders for bigger and bigger ships. Nonetheless, since 40 percent of all shipyard capacity is unutilised, and it’s not conceivable that governments will allow shipyard bankruptcies on a large scale, they could find a way to prompt some level of new ordering.
The size of boxes could also increase. From the original six-foot-long Conex box the US military used in the 1950s, they have grown to 20 and now 40 feet and above. The limitation on box size is compatibility with road, rail, and other modes of transport. On US and Chinese roads, the maximum box length is 53 feet, so containers of this size are common for US domestic trade. As road networks improve and trucking becomes autonomous on major routes, we may well see containers 60 or more feet long, as well as wider and taller containers.
Wholly automated terminal and inland operations, with self-driving trucks (and perhaps even self- driving containers or “hyperloops”) transporting containers to inland distribution centres, will probably become the norm in the next couple of decades. Self-loading trucks, arriving just in time to pick up the next container without waiting or moving around unproductively at terminals, would improve the interface between ports and inland transport. Imagine a terminal with no stacks in the yard; instead, customs would pre-clear boxes digitally, and autonomous trucks would take them straight from ships and out to customers.
Advances in the use of data and analytics will bring further step changes in productivity. Shipping companies could heed the example of today’s state- of-the-art aircraft, which generate up to a terabyte of data per flight. Coupled with the introduction of more sensors, the better usage of the data that ships and containers generate would allow enhancements such as optimising voyages in real time (by taking into account weather, currents, traffic, and other external factors), smarter stowage and terminal operations, and predictive maintenance. Data could also improve the coordination of arrivals at port—a major benefit, since 48 per- cent of container ships arrive more than 12 hours behind schedule, thus wasting the carriers’ fuel and underutilising the terminal operators’ labor and quay space.
Data can create additional value for customers too. Full transparency on shipments, from one end of the value chain to the other, would be an enormous boon to carriers, forwarders, and shippers alike, giving them access to real-time information and enabling them to predict a container’s availability, arrival times, and so forth. Some ports (such as Antwerp, Hamburg, and Singapore) are already starting to share information in real time across data ecosystems, which could eventually extend throughout the whole industry. That would create a truly integrated end-to-end flow of containers and therefore make the industry more productive by reducing handovers, waiting times, and unnecessary handling.
A data-enabled shipping industry could also support its customers’ supply chains in important ways— but that will require a truly new order of performance and efficiency. The real-time visibility of all container movements, reliable forecasts, and integrated flow management will pave the way for flexible, dynamic supply chains that all but eliminate waiting times and inefficiencies. This achievement will be especially beneficial for industries (such as automotive) that have increasingly complex supply chains or for those with special needs (suchas cold chains). It will also allow smart logistics providers to differentiate themselves and earn premiums. But these opportunities won’t appeal to all customers; other sectors will demand only basic logistics services at the lowest possible cost.
By 2067, we believe shipping will have some or all of these characteristics:
Autonomous 50,000-TEU ships will plow the seas—perhaps alongside modular, dronelike floating containers—in a world where the volume of container trade is anything from two to five times greater than it is today.
Short-haul intraregional traffic will increase as manufacturing footprints disperse more widely because of converging global incomes and the increasing use of automation and robotics. Container flows within the Far East will continue to be huge, and the secondmost significant trade lane may link that region to Africa, with a stopover in South Asia.
After multiple value-destroying cycles of overcapacity and consolidation, three or four major container-shipping companies might emerge. These businesses could be either digitally enabled independents with a strong customer orientation and innovative commercial practices or small subsidiaries of tech giants seamlessly blending the digital and physical realms. Freight forwarding as a stand- alone business will be virtually extinct, since digital interactions will have reduced the need for intermediaries to manage logistics services for multiple participants in the value chain. Across the industry, all winners will have fully digitised their customer interactions and operating systems and will be closely connected via data ecosystems.
A fully autonomous transport chain will extend from initial loading, stowage, and sailing all the way to unloading directly into autonomous trains and trucks and drone-enabled last- mile deliveries.
The needs of customers will diverge: some will expect their shippers to be fully integrated into their supply chains—and be willing to pay a premium for that—while others continue to demand sea freight at the lowest possible cost. Both sets of customers will expect transparency and reliability to be the norm, not the exception.
What therefore has to be done to move shipping and containerisation further into the digital age?
First, invest in digital, which is the main way to differentiate products, disintermediate value chains, improve customer service, raise productivity, and cut costs. The risk is that tech giants and would-be digital disruptors will move faster than incumbents and capture most of the value from customer relationships.
Second, think about consolidation: the industry’s natural end game may involve fewer, larger operators. The past few decades of explosive trade growth created an environment that could sustain many players. Now that growth has slowed, the industry must rationalise overcapacity. Although some companies and investors could be candidates to lead the next wave of consolidation, becoming a target may sometimes be better for shareholders than struggling to be the winner at any cost. McKinsey research shows that from 2000 to 2015, in a range of industries, the value from deals was nine percentage points higher for average target companies than for average acquirers.21
Third, integrate. Some next-generation innovations now on the drawing board require careful orchestration across the value chain. Carriers and terminal operators share a particularly rich agenda: bigger vessels paired with investments in infrastructure for terminals, complete transparency on ship arrivals and berthing (thanks to geospatial analytics), and larger containers. Integrated logistics providers could make today’s freight forwarders largely irrelevant by mastering the complexity and the customer interface.
Fourth, be bold. The shipping industry has been built on the vision of audacious leaders with the per- severance to sail through the storms. It now faces a wave of digital disruption. The ability to convey a sense of purpose for employees, to create optimism about the journey ahead, and to maintain a steady course will be the hallmarks of the leaders shaping the industry for the next.
McKinsey and Company’s 1967 predictions were on point, so their analysis of the next 50 years of evolvement cannot be ignored. These changes seem massive and unachievable at the moment, but that would have been the case 50 years ago as well, and the industry is unrecognisable from then. It is exciting to watch what the next years have in store, and the advances that can be made to make sure that shipping does truly come alive during the digital age.
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As part of celebrations for golden week, also called National Day, a major holiday is coming up in China from Saturday 1st October for a week, officially ending on the 7th but with effects lasting until the 10th.
It has been celebrated in mainland China and Hong Kong since 2000. The holiday was implemented by the Government to encourage domestic tourism and allow families to make long distance trips. This means that businesses come to a standstill.
All businesses will be closed, cargo flights are cancelled and ports operate on basic crews. Shipping quotes will be hard to obtain as nothing moves in or out. Vessels are usually under capacity at this time so don’t sail.
Our advice is plan ahead! Contact us as soon as possible for rates and availability to secure your shipment in time. Please also be advised that there will be a back log of orders and freight after golden week which will mean that space will be at a premium. If a shipment is time critical it is important to be organised before next week.
We look forward to hearing from you.
At the end of London International shipping week, the transport secretary Chris Grayling set out his thoughts on the future of UK shipping.
His speech focused on the changes in transport, and how the maritime industry is not only contributing to that change, but are increasingly leading it.
His first point concerned new technology and the advances in maritime autonomy. Today, 90% of accidents at sea are caused by human error, and so there could be a huge safety benefit to keeping away from the risky routes. Drones that are being increasingly deployed in other areas could also be used over our seas, inspecting ships and further improving safety.
This increase in efficiency could make maritime even more competitive against road freight, which in turn offers big environmental benefits. Grayling also points out that this would obviously lead to concern over the effect of automation on jobs, and that these concerns quite rightly should be taken seriously. However, he continues by saying that there is also evidence that rather than destroying jobs, automation creates wealth, and that wealth creates opportunity, and opportunity means new jobs. So, the seafarer of today might be the unmanned vessel operator of tomorrow – supervising several ships from a control station on-shore. He or she might help design intelligent software, or contribute to new naval architecture.
These type of new roles require different skills, and that is why it makes sense to invest in training. This week maritime industries have been called on to double to amount of people taken on as apprentices, and this will improve the capability of the work force. The government has also written to heads of maritime businesses and training colleges asking what more can be done to increase the number of women working in the industry. In the UK, too, of our 14,000 certified officers, only 3% are women. Only 4% of our technical officers are women. Of our engine officers, only 1% are women. The industry is missing out on 50% of the talent, and the potential progress that could be made.
Brexit and the EU was also a pertinent point. Grayling believes that both the EU and the UK will work better as friendly neighbours than as part of a strained union. For instance, in less than 2 years, for the first time in more than 4 decades, the UK will begin to enjoy an independent trade policy. Our departure from the EU will allow us to build those closer trading ties with countries around the world. Trading with our neighbours in the EU is important, but trading with other countries such as the USA, Australia, China, India, Mexico, South Korea, India and Brazil will enable us to expand our trade, receiving the worlds goods, and exporting our own. That is why the government announced that it wants to draw up plans for the maritime industry stretching up until 2050.
To read the full report please go here
According to the Department for Transports recently published 2016 final figures, total freight tonnage handled by UK ports declined by 3% in 2016. This decline is attributable to a large reduction in demand for coal imports. Despite this, steady growth has been experienced in unitised traffic, which saw its fourth consecutive year of growth in 2016.
* total tonnage decreased by 3% to 484.0 million tonnes
* coal handled showed the biggest decline of any cargo category more than halving to 12.0 million tonnes
* liquid bulk goods, which account for 40% of total tonnage, decreased by 2%
* crude oil handled has halved since 2000, to 87.1 million tonnes
* unitised traffic rose by 2% to 24.1 million units
* container units reached a record high of 5.9 million units
* overall roll-on roll-off traffic rose 1.4% to 18.2 million units
* the volume of import and export motor vehicles increased 1% to 4.5 million units
* 18.2 million Ro-Ro units passed through UK major ports via roll-on roll-off services, up 1.4% compared to 2015.
* 10.2 million TEUs of LoLo container traffic passed through UK major ports in 2016, up 4% from 2015. Felixstowe had a 0.3% increase to 24.8 tonnes.
* Maritime freight with the European Union grew 2% to 206.8 million tonnes in 2016, and accounted for 44% of all tonnage through UK major ports.
In 2016, major port tonnage fell whilst minor port tonnage increased . There are 51 major ports in the UK. UK major port tonnage fell by 3% in 2016 to 472.8 million tonnes. The major port share of UK port tonnage has remained stable at 98% since 2005. Minor port tonnage increased to 11.3 million tonnes, an increase of 3% on the previous year.
Overall domestic major port traffic – coastwise and one-port – fell to 98.6 million tonnes in 2016, a drop of 5% from 2015. However, one- port traffic, rose 13% to 20.0 million tonnes in 2016.
The proportion of domestic traffic c carried by UK registered ships increased 3% in 2016, to 23.5 million tonnes. This makes up 24% of all UK domestic traffic.
Imports made up 56% of all tonnage handled between the UK and EU countries. UK major ports received 116.6 million tonnes from countries in the EU in 2016, an increase of 4% compared to 2015. Among EU countries, the highest amount of imports was from the Netherlands, 31.5 million tonnes, 10% higher than 2015. Freight received from ports in the Netherlands now makes up over a quarter of all inward tonnage from the EU.
In contrast, exports from the UK to the EU fell 1.6% between 2015 and 2016, down to 90.1 million tonnes. This is due, in part, to a fall of 11% in exports to both France and Germany, primarily driven by falling liquid bulk imports. In contrast, exports to Italy nearly doubled to 1.8 million tonnes, with an increase in crude oil imports from 0.4 million tonnes in 2015 to 1.3 million tonnes in 2016.
Container traffic with the European Union rose 8% in 2016 to 2.0 million units. In terms of twenty-foot equivalent units (TEUs), container traffic rose 9% to 3.6 million TEUs.
Container traffic between the UK and International deep sea destinations rose to 5.3 million TEUs, up 3% from 2015.
China is our largest partner for container traffic in 2016, resulting in 2.5 million TEUs, up 3% from 2015. This makes up 47% of all deep sea LoLo handled by UK ports. Second place is taken by the USA which contributes 0.4 million TEUs to our container traffic; this is 8% of all deep sea LoLo trade.
The full report can be found here