The evidence seems to show that it’s because shippers are booking more. It’s possibly because they are afraid of more disruptions, such as the Red Sea attacks and closures such as Baltimore and the Panama Canal delays.
Drewry’s says there is no shortage of ships, even for the longer routes bypassing the Red Sea. And there is a glut of new ships slated to come into service soon. But demand is driving the price rises. The graph shows loaded volumes on key container routes and changes since a year ago. It’s from the Drewry’s interview in the link below.
Source: Drewry Maritime Research derived from Container Trades Statistics, enquiries@drewry.co.uk
It is well worth listening to. The Drewry’s expert has a firm, data-driven grip on what’s happening in container shipping.
Lora Cecere, the Supply Chain Shaman, is one of my favorite writers about supply chain issues. She’s always right on target with ideas and metrics that aid companies in the pursuit of supply chain improvements. And she’s the essence of simplicity; it’s never that complicated to do, though the ideas may embody complex interactions and reactions.
This article is an example. Lora and her assistant, Alex, put together some orbit charts to show how firms performed against the industry standard.
It’s a great piece of work. In the figure above, you can see that Lenovo is doing well on Inventory Turns, though not so hot on Operating Margin. And the recent trend is toward boosting margins but reducing inventory turns. The great thing about Lora’s charts is how they constructed the comparable business dataset to show us this comparison. Read the article for some details.
For those of you who don’t know about Orbit Charts, they are essentially connected scatterplots, with the connections covering a time dimension, so we see how the pattern changes over time. They are easy to make with most graphics software.
The Supply Chain Shaman’s analysis of the Gartner top 25 Award Winners is worth pursuing. It shows that there is more than one way to achieve supply chain and operational excellence.
DP World, the international port container terminal operator, is beginning a new rail service from Mexico to the US for automobiles. It will use 53-foot containers to move the cars by truck or rail. That makes the containers compatible with the standard size container used in the US and Mexico as well, rather than the 40-foot ocean containers. That eliminates a need to transload for US road transport.
It’s a good idea. Large quantities of cars are made in Mexico for the US market. The business is growing, because some automotive components made in China face trade barriers when ocean shipped directly to the US.
Intermodal transport by rail over long distances will reduce emissions considerably. A properly engineered service could compete in travel time with road haulage to a distribution point.
Railroads have notorious problems with reliability of service; they have trouble predicting when arrival may occur. According to rail experts, this is largely due to delays that occur in switching yards, which can be unpredictable in length. And when one stopover in a yard is delayed so the next outbound train is missed, days can be added to transit times.
However, auto transport in containers like this has advantages.
First, at the destinations, cargo owners have some buffer storage, so delayed delivery is seldom critical to business.
Second, the container cars can be mixed and matched on trains, so if some are ready, they can make the train for the next leg; others can wait for the next train. All the containers in the original train needn’t go together. My rail expert thinks this ability to make shorter trains is key to making rail transport more reliable and yard performance more efficient.
Third, intermodal transport of containers has been shown to reduce emissions over individual container transport by truck. That’s important for many shippers today, due to public companies’ need to report Scope 3 emissions.
Finally, there’s a growing demand for car transport from Mexico. The country is proving to be a dependable place to locate auto factories, with adequate labor supply and manufacturing knowledge. There should be plenty of business for DP World.
Supply Chain and Logistics 