Articles
To the right place - Right away.
By Harm Jansen, CC&S - November 6, 2007.
Every year several billion dollars are spent, by Shipping Lines, on empty container repositioning.
Worldwide there is an on-going network challenges to supply the right equipment type to the right port at the right time, particularly into deficits regions like China. Surplus remains in typical region, including Africa, East Coast North America, Central America, and South America.
Despite this, some container vessels sail with open space to Asia while others are extremely tight, allocation wise.
A desired goal for most Shipping Lines is to concentrate industry efforts to reduce congestion in surplus ports and improve network utilization.
Reducing congestion in surplus ports will immediately reduce an inventory cost which actually represents 33% of container costs for the industry; while improving network utilization saves transport costs affecting 63% of mentioned costs.
Unfortunately to use 100% of network is not always possible; although congestion in surplus ports is lighten by building vessels up to 9500 TEUs capacity; route restrictions are impacting empty positioning costs as empties are unable to ride al the way through on direct strings on due time. Consequently extra charter vessels are commonly routed to make up for deployment network inefficiencies and try to improve empty positioning to the right ports.
Network issues are by no means limited to surplus theaters and they are in fact even more pronounced in some deficit regions.
Locally, one potential improvement of the networks could be to liberalize cabotage services, because along a coast you find parallel services, one for national cargo and one for international cargo, and they do not necessarily have the same imbalances. The ship with foreign flag is not allowed to move the cabotage cargo, e.g. Jones Act in US, but also Brazil, Chile, Argentina, Colombia, Venezuela, Mexico are all cases where this matters.
Internationally, Panama Canal expansion project intends to increase capacity to one of the world's critical trade arteries; allow the vital "All Water Route" to continue to grow, it would tighten the global supply chain and help empty containers get to the right port faster, thus saving time and money for the Industry.
It is time for the carriers to join efforts and note that their clients’ intention is to reduce the freight (which is only possible if the costs are reduced). In order to continue to compete it creates the need for sharing costs among the industry players in which our Company can help.
