The 20-foot container, referred to as a Twenty-foot Equivalent Unit (TEU) became the industry standard reference so now cargo volume and vessel capacity are commonly measured in TEU. Select topics and stay current with our latest insights, The hidden opportunity in container shipping. In operations, many lines treat bunker as just another cost of doing business. The container-shipping industry has been highly unprofitable over the past five years. It also standardized tariffs across different countries and trades. Usually, the containers that carry a consignment a country expects to use those containers to bring their consignments back to India. Bunker management. We love emojis, and we. In October, while exports registered a 5.4 percent fall, imports registered an even higher fall of 11.26 percent. One global shipping line created a rigorous performance-management system to ensure accurate invoicing and expedited collection of detention and demurrage. This is the only way to stay a step ahead of competition and achieve elusive profitability. Today in Sweden 1,5 million TEUs with commodities of all kinds are shipped for both import and export, and there is a further potential to containerize additional 1 million TEUs with more commodities such as paper and timber. But Fitch also issues this caveat: These containers facilitate transport of goods via both, land and sea borne modes of transport, which may involve use of ships, rails and/or trucks. The forwarding industry is lagging behind in terms of digitization development and today there is almost no fully digital freight forwarder service provider. The container shipping industry has historically been among the most volatile sectors. Proper loading or "stuffing" of containers is very important to the safety and stability of the containers and the ships, trucks and trains that transport the containers and a number of efforts have been undertaken to improve the safe handling of containers. Negotiations with competitive port operators, as discussed above, will help in some cases; in others, greater use of requests for quotation (RFQs), and a clean-sheet analysis of ports costs, including accessorial fees, such as storage, security, handling, transshipments, and reefer monitoring can deliver savings. Start yours now. Carotar rules implemented by the Customs to check the stock of the importers have caused further delays in shipments by delaying the assessment of bills of entry. a number of efforts have been undertaken to improve the safe handling of containers. cookies, McKinsey_Website_Accessibility@mckinsey.com. By clicking above to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it. Become a PLUS+ subscriber and you'll get access to all Supply Chain Management Review premium content including: PLUS+ subscriptions start as low as $129/year*. Twenty percent of invoices were too high. This way, containers pile up at one location while other locations face scarcity. While India is fighting a pandemic and a shortage of containers, China is enjoying the post-pandemic time and a surplus of containers. Your email address will not be published. – In addition, several have collaborated with digital freight platforms and eliminating middlemen out of the equation. India’s exports have bounced back rather spectacularly, said Maersk, the world’s biggest container shipping line. Despite some recent structural improvements and less aggressive competition, there are still significant downside risks. Email: [email protected] Phone: 1-800-598-6067 (1-508-663-1500 x294 outside USA). The three largest alliances now account for about 80% of the global market. Just imagine what great demands they will have for the world trade! The container shipping industry has historically been among the most volatile sectors. The future still shows a potential for growth in the container industry. Carriers have to follow new regulations and adjust their ships accordingly. Blockchain technology is advancing and will introduce new opportunities for innovation even in the shipping industry. But the rest are readily addressable. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. While leasing may be the only option for many cash-strapped liners that already have substantial debt, other lines should take advantage of this by owning more of their fleet. The campaigns lifted ROS by about 2 percent in several regions and trade lanes. In some ports it results in conflicts and congestions and raises several operational questions. Unleash their potential. Single terminal operators that might only find interest in signing up with one or two alliances lead to no diversity in the industry and it does not benefit the customers, carriers or an open market competition. Open sides may be used for vegetables such as onions and potatoes. Export licence, what is it and why do you need it? The largest companies reduced available shipping capacity by more than 13% during 2Q20 to meet a 11% decline in global demand, according to Hapag Lloyd. Some of the pain is self-inflicted: as in past cycles, the industry extrapolated the good times and foresaw an unsustainable ris… Four gadgets you should invest in for good health. We use Mailchimp as our marketing platform. Container shipping has come through five highly volatile and unprofitable years, but remains in poor health. The container sizes need to be standardized so that the containers can be most efficiently stacked - literally, one on top of the other - and so that ships, trains, trucks and cranes at the ports can be specially fitted or built to a single size specification. Use minimal essential
Focus on sustainability and environment in the shipping industry. Transport is often seen as the harbinger of the broader economy. “A potential decline in shipping demand, particularly on transpacific routes due to U.S.-China trade tensions and supply-chain localization, growing ecommerce that often uses air transportation, weak global economic conditions, resistance to increased contracted freight rates and slipping shipping companies’ supply discipline may put the industry under pressure.”. We have experienced a tough market situation during some years when carriers are investing in building larger container vessels and the development has moved towards more cooperation and alliances between carriers for their own survival. Companies have a huge incentive to act first—once the whole industry has moved to a greater level of productivity, the benefits will likely be passed on to customers once again through competition. Therefore we now face a positive trend towards a more balanced market between supply and demand in the container segment. Making things worse, earnings have been exceptionally volatile. Market analysis can help lines know when prices are at their lowest and establish the correct pricing structure to reduce total cost of ownership. Containers are generally constructed of aluminum or steel with each container size and type built according to the same ISO specifications, regardless of where the container is manufactured. Another trend is that industries are adapting their cargo to the container shipping method – containerisation. There is also a risk with only a few big ports controlling the logistics flows. Stock Market Highlights: Sensex ends 236 points lower, Nifty at 12,690; SBI, Kotak Bank top losers, Asian shares rise on vaccine bets but analysts urge caution, Oil keeps climbing on hopes OPEC+ will hold back supply as COVID-19 cases rise, Rupee slumps 35 paise to 74.76 against US dollar. Congestion at transshipment ports of Colombo, for instance, is adding to the lead time. Flat racks can be used for boats, vehicles, machinery or industrial equipment. "The waiting time for access to a container for exporters is now two-three weeks, compared with a maximum of four days earlier," they added. Record losses in 2009 were followed by strong profits in 2010―and significant losses again in 2011 (Exhibit 1). Rising fuel prices have made bunker the largest cost item for shipping lines, more than fleet or overhead, and often exceeding 40 percent of all costs. Steering with artificial intelligence to combat maritime piracy, USCG Signals intent to require Safety Management Systems for domestic passenger vessels, Preparing for the extensions to US Coast Guard Alternate Management System, 5 Digital transformation mistakes to avoid in the shipping industry, Scrubbers optimised for fine dust separation, Update November 12: Live map depicts spread of coronavirus, Crew feels forgotten and abandoned, LR survey reveals, Lessons Learned: Contact with crane reveals that vessel's SMS lacks information on dealing with cranes, New project focusing on seafarers’ human rights launched, Lessons learned: VTS team has a vital role in assisting with collision avoidance. Procurement. "As a result, the shipping lines which until July 2020 used to ship out empty containers from India, had to start repositioning empty boxes into the country and move them inland to demand locations at a huge cost for the shipping lines," Container Shipping Lines Association (CSLA) executive director Sunil Vaswani told ET. Required fields are marked *. These special containers include open end, open side, open top, half-height, flat rack, refrigerated (known as "reefer"), liquid bulk (tank), and modular all built to same exterior lengths and widths as the standard dry cargo containers. Since stowage is a tension point between operations (which wants certainty) and commercial (which prizes flexibility), companies need to clearly define processes, handovers, cutoff times, and so on.