The saying goes, “There are two sides to every coin,” and this is true for international ocean freight shipping as well. In this case, the two sides are the shippers, who order supplies to and from various ports, and the container lines, which carry them. Shippers want to get a low rate, container lines want to maximize profits – and all this in a climate, both in the political and literal sense, that is changeable in dramatic and unpredictable ways…
For starters, there is a good chance that seven of the top twenty container lines will be gone at the end of this year, as major container lines begin consolidating in order to solidify their hold on the market. Excess capacity has plagued the carriers for several years now, which has depressed rates. Shippers, ironically enough, are worried that if prices cannot rise, container lines will be bought out or bankrupt – either of these can disrupt service – even as they continue to pay the too-low rates.
Most notably, when the container line Hanjin filed for bankruptcy last year, Hanjin vessels became stranded all over the planet. The collapse was the largest in the history of shipping. Shippers could not find their goods, or else their goods were stranded in the wrong port. Hanjin needed €155 million just to dock and offload containers, but could barely raise a third of that as a loan, so shippers and forwarding agents had to bear substantial costs in order to recover their goods.
On top of all of this, the ramifications of the United States leaving the Trans-Pacific Partnership remain unclear, and container lines and shippers alike are reluctant to make long-term predictions without some certainty and assurances. The EU and UK are, likewise, embroiled in negotiations about Brexit. It is business as usual, for now – but how much longer this will last remains to be seen. And while modern-day shipping is relatively impervious to storms, the presence of icebergs in shipping lanes earlier and earlier in the season and the increasing number of severe weather events due to climate change can lead to delays in transit time, increased costs for container lines, and disruptions in the supply chain.
Despite all of the obstacles, though, shipping remains one of the most reliable means of transportation. Sirius prides itself on the close working relationships with international forwarding agents, shipping lines and suppliers alike, and we work hard to keep abreast of the latest rulings and regulations that are passed so that you don’t get surprised by bureaucracy. Cultivating these relationships enables us to stay ahead of the competition and remain nimble enough to change when we need to. In addition to these measures, last year Sirius began storing hazardous chemicals in a separate facility from its usual inventory and packaging operations, increasing our safety stocks and allowing us to continue operating as usual even when seas get a little rough.
The Sirius Effect:
Sirius’s role as a facilitator is a modest one, but nevertheless we work to protect our customers from the vagaries of politics and infighting. Suppliers get to focus on coming up with new ways of producing raw materials sustainably, manufacturers are free to create new products. Of course, nothing is 100% certain in this world, but with Sirius at your side, you can be certain that we’ll be doing everything we can to get you what you need, when you need it.