BIFAlink November 2021

Policy & Compliance


pressures will impact at a time when the maritime industry is already under considerable pressure and at the precise time that recently ordered new ships enter the market, the consequences of which the readers can decide for themselves. Against this backdrop we are already seeing the supply chain adjusting to a post-pandemic era. Manufacturers and producers, if not now then in the future, will have to consider climate change targets when planning where to place orders. We have already seen considerable changes in buying patterns – Turkish manufacturers are reporting much higher orders, with exports increasing by 12% this year. We are hearing similar stories from Egypt, Portugal, Serbia and Croatia. Not only does near-shoring reduce the journey length and thus emissions, it also reduces journey time, offers alternative transport modes and reduces the time taken to ship goods. Freight volumes The last point to be considered is how much freight will actually be shipped? The days of cheap freight are probably over for at least the short term. Longer-term environmental issues look likely to be an influence for higher pricing. This will impact the least expensive end of the market, pushing up prices and to some extent reducing demand. In addition to these factors, we are seeing a move to manufacturing more durable goods and ensuring that they are easier to repair. These factors are leading to serious questions about how much will be produced and where, with some observers believing that a reduction in long haul trades will be one outcome. In all this mix, it should be remembered that China has proved to be a reliable manufacturing base throughout the pandemic compared with some of its southeast Asian neighbours who have been more severely impacted by COVID-19. The belief is that for at least five to ten years China will largely retain its position in global manufacturing, but there will be an increase in near-shoring. How this will impact the market is yet to be seen, particularly in view of the other factors discussed in this article. All that can be said for certain is that the sector will be going through a period of adjustment due to forces largely outside its making and certainly its control. As someone said recently: “Who would want to order a ULCV today, with a working life of 30 years, when we do not know what is going to happen tomorrow”. But actually this uncertainty is in one way the forwarder’s friend, because the sector’s ability to solve problems becomes more important and relevant.

Abandoned cargo: alert to risk escalation With supply chain congestion and widespread delays in the international container trades set to continue, the vexatious challenges of abandoned cargo will remain and probably increase. In its role as risk prevention advisor to the industry, TT Club has issued a StopLoss document to provide practical guidance to stakeholders across the supply chain.

The potential catastrophic impact arising from the deterioration of abandoned cargo cannot be disregarded as a remote risk. However, the considerable costs accruing from container demurrage, detention, storage and disposal regularly result from cargo that, for a variety of reasons, is no longer required by the original receiver or consignee, and is simply abandoned at a port terminal or cargo facility. Increased risks of safety and regulatory infraction are inevitably consequent, as well as significant demand on management and operational resources to resolve individual cases. “Levels of cargo abandonment have always been problematic to forwarders, NVOCs, logistics operators and, of course, container terminals,” commented Peregrine Storrs-Fox, TT’s risk management director. Compounding problems “The surge in container demand over recent months has, however, compounded container ship capacity issues, port congestion and consequent severe transit delays. These factors will do little to alleviate the practice of cargo interests, in circumstances of loss of market for goods or bankruptcy, simply relinquishing ownership of consignments.” Those left with the responsibility of removing and/or disposing of the goods and returning the container to the appropriate carrier are in need of guidance and TT’s StopLoss publication ‘Abandonment of cargo: Avoiding the pitfalls’ is designed to deliver just that. It identifies ‘red flags’ that forwarders, logistics operators and carriers should consider – certain commodities such as waste, scrap,

materials for recycling and personal effects – previously unknown shippers, particularly individuals rather than companies. Enforcement agencies Furthermore, once the cargo is defined as abandoned, the StopLoss outlines the role of enforcement agencies and the responsibilities of others involved in the supply chain. “Above all, the value of our guidance lies in mitigating the risks associated with abandonment and recommended actions outlined in methodical steps and a 10-point checklist,” concluded Storrs-Fox. “There needs to be a greater understanding of why cargo is abandoned and how it is handled in order to restrict the growth of a serious trend leading to increased safety and cost ramifications.” ‘Abandonment of cargo: Avoiding the pitfalls’ is available for download at resources/publications/stoploss/stoploss-aban donment-of-cargo/

November 2021


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