Chaos Creates Opportunity on the Container Shipping Horizon

By Brandelyn Twellman 

Though the industry is experiencing challenges such as increased consumer demands, consolidations, tariffs, weight restrictions and more, there are no surprise concerns in the current international container shipping environment, according to experts at the 2020 U.S. Soy Global Trade Exchange & Specialty Grains Conference. While export barriers are present, panelists in a session on container shipping are confident the industry is prepared to overcome.

One challenge is the frustration shippers are experiencing due to canceled and reduced bookings of soy, said Bob Sinner, SB&B Foods president and SSGA Competitive Shipping Action Team chair, while moderating the panel discussion. Global schedule reliability and sailings have been affected by factors such as imposed tariffs and COVID-19, but industry stability has rebounded.

“We have actually seen schedule reliability improve gradually through the second quarter of this year. We have also seen the average of vessel delays less so. About the average of one day when we see delays happening.”

-Uffe Ostergaard, Hapag Lloyd

What these trends don’t include is blank container sailings. Fifteen percent of sailings were canceled throughout the second quarter of the year, according to Ostergaard. The fifteen percent peaked in May and June, but has come down significantly throughout the third quarter in July and August.

“The number of blank sailings is far less,” Ostergaard said. “I think in August we were looking at less than five percent of blank sailings in total.”

Imports are flowing into the U.S. again, and the current demand outlook is strong, he added. Ostergaard projects reliability to remain intact, though the rate of canceled sailings may rise again before the end of the year.

Carriers are looking toward proactive communication and visibility to help ease the frustrations of last minute cancellations.

Gene Seroka of the Port of Los Angeles views these trends, along with industry barriers and challenges, as a container shipping equation.

“Connecting that importer to exporter, moving the empty container, fashioning truck and rail services are all parts to this equation that needs to be solved,” he said.

Components of the equation vary by geographic location, adding to its complexity.

Restrictions are another challenge the industry is working to overcome, according to Peter Friedmann of Agriculture Transportation Coalition (ATC).

“In the United States, we have multiple options for soybean and other agriculture enforced product exports,” he said.

To ensure each option is accessible and fully benefiting the shipping industry, ATC is working with railroads to eliminate weight and other restrictions that affect the export of agriculture products.

Despite logistical challenges, Roger Mortenson of Grain Millers Specialty Products is confident of the industry’s ability to take advantage of new opportunities and come out on top.

“It all leaves a little question on how well things will go this next year,” he said. “But, I also believe that chaos creates opportunity.”

Mortenson said current chaos is creating the opportunity for a more unified team approach as an industry. The key to this team approach? Communication. Whether it’s suppliers, exporters or importers, communication of the current environment and your needs is the strategy Mortenson suggests to push through.

Across the container shipping industry, schedule reliability has seen an increase while vessel delays have seen a decrease, according to Uffe Ostergaard with Hapag Lloyd.