POSITIVES AND NEGATIVES IN THE PANDEMIC ERA

A big plus has to be the increased emphasis on the take-up of digitalisation in its various forms and a willingness to adopt more flexible forms of working whether this be extended hours, remote working or greater role flexibility.

At a market level, however, there is not so much that is positive to say unless of course you are a shipping line enjoying a hitherto unparalleled profits bonanza. For the majority, it is a quagmire of much elevated freight rates, difficulties in securing freight space/sailing slots, vessels out of schedule, port congestion, inadequate rail capacity, trucker and warehouse worker shortages.

While 2023 is cited by most analysts as the time when the pain will subside – with a rebalancing of demand and available capacity bolstered by major new container ship tonnage – will it disappear and leave an industry as we used to know it or will it leave an industry with a markedly different shape to it?

So what could change?

• The shipping alliances – there are already some murmurs that this format of shipping service may not be an enduring one. What next a return to smaller, more focused, groupings and some solo operations? A new fracturing of the shipping line alliances could see a changing balance in the terminal sector. With individual lines (not alliances) striking deals for space. The entire alliance structure was essentially defensive to protect capacity when the market was oversupplied and profitability negligible/negative. Stronger lines may not need these arrangements in future and this could fracture terminal arrangements…..
• The loss of some cargo commodities – those that are not viable to ship given today’s elevated freight rates and the departure of other significant volumes from liner services as a result of big cargo owners adopting a DIY approach – like Walmart, Ikea, Home Depot, John Lewis and others. Amazon Shipping is a concept that was being talked about even before the pandemic.
• More near shoring – this is already underway.
• The recent mega profits of shipping lines will exert an influence – more investment in the logistics chain up to and including e-buyer platforms.
• As part of the above, much stronger interest by lines in investment in terminal capacity and as result more competition for independent terminal operators.
• Independent terminal operators ramping up interest in talking to and doing deals direct with major cargo owners…it has been thought about, the next step is wider implementation.

The list could go on and all are factors to consider in formulating forward business strategy. The one big factor that I hope will not occur is more regulation to solve problems encountered in this challenging period. More regulation can be a by-product of challenging times but it can often prove not fit for purpose when more stable times come along – it can have the reverse effect and be a brake on development.