BIFAlink November 2021


Policy & Compliance

Building a new maritime supply chain With huge and ongoing problems in the deepsea container market, how will the sector evolve over the next few years and what will be the factors that influence it?

flawed. It is believed that a guarantee that freight will be shipped on time by carriers, in return for assurances about traffic volumes from the shipper, will help bring some stability back to the market. However, there are other significant cost pressures at work, not least those stemming from efforts to reduce carbon emissions. The EU has announced its Emissions Trading System (ETS) to be introduced gradually from 2023 and phased in over a three-year period. Shipowners will have to buy permits under the ETS when their ships pollute, or else face possible bans from EU ports. In addition to ships sailing within the EU, the proposals will also cover 50% of emissions from international voyages starting and ending in the bloc. The EU’s proposed emissions trading system for shipping would raise nearly $5.9 billion annually at current carbon costs. Dependent on the type of vessel, the carbon price could amount to $8,660 per day if it trades wholly inside EU waters. That rate would halve to $4,330 daily for an international voyage. Emissions trading The scheme sees shipowners pay 20% for emissions in 2023, rising to 45% in 2024, 70% by 2025 and 100% after that. For those owners moving to less polluting fuels, the rate of taxation will decline, or in certain cases be exempted. The problem is that currently this technology is not readily available nor fully tested. Inevitably carriers will pass these additional costs on to the customer. Also it should be remembered the less-polluting fuels will be more expensive, at least in the short run, to purchase and adjusting bunkering arrangements will add further additional costs. These new pricing

Earlier this year BIFA published a presentation originally made to its Road, Maritime and Rail Policy Group regarding the then current situation in the deepsea container market. We had numerous enquiries about the information contained within it, including from overseas interested parties. Let us be very clear, the carriers have in certain cases failed to provide a reasonable service level to their customers; the main complaints we hear revolve around failures to follow basic instructions, issuing invoices late, failing to release cargoes after payment and/or documents lodged. The main and most significant complaint is regarding the lines’ failure to accept that these failings have caused delays and to re-imburse the affected parties for the additional costs. Carriers argue that they do not charge quay rent, etc, it is the ports – well Members in the maritime field have a pretty good idea that the tariff charged to them [the carriers] by the port is at more favourable rates than that charged by the port to the forwarder or importer. Whilst other trade associations have frequently complained about the rates being charged, at BIFA we have had few significant complaints on this point, but

there seems a weary resignation that pricing reflects high demand relative to supply. Currently shipping lines have about 5.6 million teu of capacity on order – but delivery of these new vessels will not begin for a while yet – some industry experts feel that the market will only rebalance in late 2023 or early 2024. The question is, what will this market look like? The future market There are differing views on this subject, one side believing that it will be broadly similar to what it was pre-pandemic. However, it is pointed out that this view ignores significant changes that are already under way. Ultimately it will be consumers and manufacturers who will determine what the market looks like and what its new shape will be. The pandemic has demonstrated that the maritime supply chain is relatively inflexible and that to increase capacity in the short run, at least, is challenging. There have been calls for greater ‘resilience’ in the maritime supply chain; in effect this means maintaining potentially under-utilised capacity, which is wasteful and expensive. It has been noted by many that the underpinning relationship between carriers and customers is


November 2021

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