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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 the typical regions, 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 filled to capacity and sometimes have to leave cargo behind.
A desired goal for most Shipping Lines is to concentrate industry efforts on reducing congestion in surplus ports and improving 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 that affect 63% of the afore-mentioned costs.
Unfortunately to use 100% of network assets is not always possible; although congestion in surplus ports is lightened by building vessels up to 9500 TEUs capacity; route restrictions are impacting empty positioning costs as empties are sometimes unable to ride all the way through on direct routes. Consequently extra charter vessels are frequently scheduled 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 a 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, the Panama Canal expansion project intends to increase capacity to one of the world's critical trade arteries; allowing the vital "All Water Route" to continue to grow. This would tighten the global supply chain and help empty containers get to the right port faster, thus saving time and money for the Industry.
The time has come for shipping industry carriers to join efforts in striving to satisfy the needs of their clients by reducing the cost of freight transportation. This is only possible if operating costs are reduced. Mv-Fleet has been developed by our company to facilitate this evolution.
