A backlog of over 50 trains is clogging the China – Europe rail route known as the New Silk Road. As a result costs to ship a container to Europe are rising fast. And delays are a mater of weeks.
If this route is to be viable competition for ocean shipping it must fix the problems. are they easier to fix for rail than for ocean shipping? I’m not sure they are. Look at the trouble the Asia-US-Europe land bridge service has had in Chicago.
Ships periodically require surveys, which are inspections a lot like your annual car inspection, though a lot of states don’t have them anymore. Key systems of the ship are checked for compliance with safety rules and such things as pollution control equipment. The inspection period for most ships is I believe 5 years. Major surveys occur less often, but result in substantial repairs most of the time. Voyages on the open sea put a great strain on ships’ mechanical structure.
Repairs of any problems must be made before the ship can sail again. Today most surveys are done in China. See the article for the dominance of China in this market.
Covid quarantines for ship surveys are very strict and expensive. China has maintained recently a zero new infections rte for those arising internally. However there have been a few infections from travelers entering the country. That is why the strict regime is being enforced. Ships are a frequent source of infections; the mariners are exposed for a long time, air circulation is not very good in the interior, and mariners are travelers likely to be exposed to new people wherever they land.
So don’t take your ship to China for your survey work.
You think we have a driver shortage in the US? In the UK it is even worse.
When we can’t get milkshakes, maybe we can get carriers to pay more to drivers, or change work rules so they can be fairly compensated.
In short term economics of the situation, shippers are always working out on carriers for lower prices. It’s the single factor they care about most. Whether that is what they should be concerned about is a different question; it’s reality. Carriers (trucking companies and owner-operators) have only limited control over their expenses– fuel, which is proportional to distance and delay time), labor costs, and relatively longer term costs such as truck lease payments and insurance. Note that truckers can often get the shipper to pay trailer or container chassis costs; otherwise those are also short term.
The only one ofthese within easy control is labor costs– wages for the driver and any benefits they get. Employee drivers usually get an hourly wage and some benefits like medical insurance, retirement benefits etc. Owner-operators get a piece rate for theload they carry, and must pay their benefits themselves out of the receipts.
So the easy short term way for carriers to squeeze cost out is to keep wages low for employees, or negotiate lower piece rates for owner-operators. They are likely to resist raising rates to drivers, even if they can raise prices to the shipper for hauling their cargo.
How can drivers earn more? They can jump to a different firm. Owner-operators can refuse low-paying loads,and in the extreme simply park their truck, taking themselves out of the labor market for trucking logistics. This is called job mobility in the language of labor economics. That results in fewer people seeking this kind of job. In the US, over half the drivers are owner-operators rather than employees, but the fraction varies in different segments of trucking. In the UK, more drivers are employees.
How can trucking firms react to the shortage? It’s actually simple– pay more! Drivers do a difficult job, that requires some skill and a reliable attitude. Maybe it’s worth more than carriers are currently paying.
Supply Chain and Logistics 