Last year, the Los Angeles long beach port complex became famous as dozens of enormous cargo ships lined up offshore, waiting to unload cargo. The reason was that COVID caused a shortage of both trucks and drivers to take goods to their final destination.
The scenes of row upon row of cued vessels at the only ports on the US West Coast that can handle the new breed of mega-ships encapsulates both the challenges and the vulnerability that 150 years of trade growth has wrought on global shipping.
In this 8th episode of the Trading Places podcast, we explore these challenges.
Tune in and you'll learn:
02:03 — Shipping faced two main challenges
"The supply chain is broken, disrupted congested, but demand is still there. You still have 7 billion people to feed. You still have markets apart from each other. Consumption and production are still separated by water. So you still need shipping to keep the global machine work."
05:12 — The system is vulnerable
"The vulnerability appears very abusively when in the case of events like the blockade of the Swiss canal with the ever given, blocking the entrance by accident. It was only temporary and it recovered quite well afterworld. But what is more important is not the impact itself. It's the, um, the fact that the system can be disrupted so easily. And so fastly only with small distortion, just one ship can cause so much delay."
07:14 — An increasing monopoly in terms of control of the whole global transport system
"Global transport companies that are merging with each other at the fast pace in shipping since the 1990s, and who control through alliances or individually, are increasing."
08:21 — Consequences of the COVID
"You have some shippers who invested in their own. For example, smaller vessels serving their own business. So it is a reverse vertical integration."
"And another aspect is that you have major shipping lines like CMA-CGM or MASK. They are now investing in two new businesses. One of them is airlines. They have realized that because of the crisis, it is very lucrative now to ship a high valued, but light goods and the high-valued goods by air."
15:25 — How the wine logistics was affected by the pandemic
"The ships are seemingly passing us by. You should wait for nothing for four months and then everything at once. It's really difficult to plan your production schedule and posting when it gets to the other side, especially in North America. There are no truck drivers to take her to warehouses. And once it is in the warehouse, they're not enough courier drivers."
19:27 — Why shippers struggling to find containers
"The main problem behind the CT of containers and their price is that you had, production and consumption markets, closing factories, closing their ports, not at the same time. So China started to close itself right after discovering the COVID, on its territory."
20:42 — That question of container availability is less of a problem for India relative to its competitors
"This is actually supported smaller businesses who can move smaller consignments to various markets."
"The prices have converged. So Indian price does not have that advantage anymore. So all the other prices have. More or less to a narrow band. So as a buyer, you actually have more options between countries, varieties, and price.
So you can make decisions now. And what we would say probably today is that the decision is going to be made by your ability to ship shipping costs, proximity, and things like that.
So this is going to allow more exporters to partake in the global trade, which is not so much of a detriment to India, but it has done its part over the last two years."
Where to find this episode:
Dr. César Ducruet — geographer and Research Director for the French National Centre for Scientific Research (CNRS) at the research laboratory EconomiX.
Mike Grill — eCommerce and Digital Marketing Director at Boost Oxygen LLC.
Erica Crawford — Owner, Loveblock Wines.
Richard Tegoni — Executive Chairman SECOS Group Ltd.
V Subramanian — Vice President, Asia at The Rice Trader.
Cristina Aleixendri Muñoz — COO & Co-founder at bound4blue | Shipping | Wind propulsion for sustainable maritime transport.
Producer: Sonny Sanjay Vadgama
Showrunner: Sergey Faldin
Illustration: Kate Faldina