European Shipping Review and Outlook: A Two-Part Webcast Series (Part 2)
European supply chains haven’t had any time to reset this summer, and as the Asia-Europe trade heads into the peak shipping period, the strain is showing. Months of strong consumer demand have kept European imports surging, while COVID-19 measures have created labor shortages and bottlenecks at terminals at origin and destination ports, and vessel schedule reliability at European hubs is at record lows. Late arrivals are driving up congestion across Europe’s ports, absorbing available vessel capacity, and disrupting the onward carriage of cargo via the feeder and short-sea services, inland waterway, rail, and road.
Despite carriers’ poor on-time performance, rates are extremely elevated, soaring 800 percent in July above those in pre-pandemic 2019. On top of the high rates, carriers are charging thousands of dollars extra per container to guarantee space on vessels leaving Asia, with shippers reporting the cutting of agreed weekly allocations in a highest-bidder-wins-the-space environment.
This combination of record-high rates and record low service has created a toxic relationship between shippers and carriers and is leading to unprecedented levels of animosity. With the peak Asia-Europe shipping season kicking off, industry stakeholders face the prospect of continued disruption right through year-end as Europe’s economies reopen and pent-up demand sustains import volume.
This two-part webcast series will take a close look at the drivers behind the healthy imports and analyze the economic consequences of the pandemic on containerized trade into and out of Europe. Importantly, it will look at how deteriorating shipper-carrier relationships will play out. How much trust has been lost over the past year, and how will that change the way cargo contracts are structured? Container terminals and the inland logistics chain have been maxed out for months, but how long can the system continue to run at full speed? Finally, what can Europe’s importers and exporters expect in the year ahead?
AGENDA
9:00-9:05 AM ET Welcome Remarks
Session Chair: Greg Knowler, Senior Editor, Europe, JOC, Maritime & Trade, IHS Markit
9:05-9:35 AM ET Looking for the Exit: What Must Change Before Asia-Europe Trade Normalizes
Session Chair: Greg Knowler, Senior Editor, Europe, JOC, Maritime & Trade, IHS Markit
Speaker(s):
Thomas Eisenblätter, Head of Ocean Freight Europe (Executive Vice President), DB Schenker
Peter Sand, Chief Shipping Analyst, BIMCO
Container shipping out of Asia has been described as chaotic by all parties involved in the handling of cargo on the busy trade lanes to Europe. Yet the term doesn’t seem to quite capture a market bloodied by the Suez Canal blockage, COVID-19 cases shutting down the world’s third-busiest container terminal of Yantian, record low carrier schedule reliability, growing congestion across North Europe, and chronic vessel space and equipment shortages. The disruption also is flowing downstream and impacting short-sea shipping and logistics providers. How long will the disruptions last? It's a question with no easy answers, but our executive panel will look at what must change within the Asia-Europe supply chain before any normalization can occur. What will that normality mean for cargo flows as shippers adjust to new sales patterns or changing demand channels? Will there be changes to Asia sourcing? Will we see a return of the traditional seasonality of demand?
9:35-10:05 AM ET Managing Europe’s Port Congestion
Session Chair: Greg Knowler, Senior Editor, Europe, JOC, Maritime & Trade, IHS Markit
Speaker (s):
Turloch Mooney, Senior Editor, Global Ports, JOC, Maritime & Trade, IHS Markit
Thor Thorup, Chief Commercial Officer, Portchain
The late arrival of container ships from Asia at North European ports, combined with months of high import volumes, has led to growing congestion at hub terminals that has spread to smaller ports across the region. Carrier schedule reliability on the Asia-Europe trade is at a dismal 23 percent, according to Sea-Intelligence Maritime Analysis, and the impact of the poor on-time performance has rippled throughout the chain, disrupting short-sea schedules, feeder operations, and all modes of inland transportation. IHS Markit Port Performance data show growing call sizes at European ports are being accompanied by longer waits at anchorages, with high yard density keeping ships at berth for longer. In this session, IHS Markit will present this latest data, with port optimization specialist Portchain outlining the role digital solutions and data sharing can play in improving carrier and terminal schedule planning, even in the current heavily disrupted container shipping environment.
10:05-10:35 AM ET Air Cargo Trapped in Perpetual Peak Season
Session Chair: Greg Knowler, Senior Editor, Europe, JOC, Maritime & Trade, IHS Markit
Speaker (s):
Jan Kleine-Lasthues, Chief Operating Officer – Airfreight, Hellmann Worldwide Logistics, International GmbH
Niall van de Wouw, Managing Director, and Co-Founder, CLIVE Data Services
Airfreight continues to benefit from the disrupted container shipping markets, where tight ocean capacity and equipment shortages restrict shipper access to vessels. Poor ocean reliability is pushing cargo with a time-sensitive or seasonal nature into the air, and forwarders are reporting traditional sea freight products such as hot tubs, stationary exercise bikes, leaf blowers, and even gas barbeques being loaded in aircraft in a desperate attempt to make their seasonal windows. Much of this business will not be sustainable, but for now, it is combining with the rising volume of e-commerce and perishables to fill all available capacity in a tightly constrained market. The passenger aircraft belly cargo that comprises half the available capacity remains grounded, which is keeping air freight rates elevated and trapping the industry in a perpetual peak season. Belly cargo is not expected to return at scale until 2023, or even 2024, so what can shippers expect in terms of rate levels, longer-term block space agreements, and demand through the traditional fourth-quarter peak shipping period and into next year? How should shippers manage their air cargo needs in such an unnatural market?
10:35 AM ET Closing Remarks
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