The route round the Cape of Good Hope, which is a regression if ever there was one in terms of shipping economics, is now almost accepted as a necessary evil and even a buffer solution which has allowed the shipping companies to bring new capacity on to the market without creating excessive turbulence. Now that the route has been in use for nearly a new year, however, the surprise effect has worn off. The new route has become the norm, even though fresh capacity is continuing to come on to the market and force freight rates down.
Cargo volumes in the transpacific trades remain solid, as first half port results show. According to preliminary statistics, the favourable trend held up throughout the summer. It can be explained by demand growth but also by the expectation of new orders. This is due in part to the imposition of additional customs duties on certain products from China since 27 September. At the same time, there has been a deterioration in the industrial relations climate between the cargo-handling companies and port workers on the east coast of the United States and in the Gulf of Mexico as they negotiate a master agreement covering relations between the companies and their employees. As the days went by, strike action from 1 October became increasingly likely and this encouraged shippers to place their orders early. There was industrial action, but a provisional agreement was found on 3 October to bring the standstill in the ports to an end.
On Asia-Europe routes, on the other hand, cargo volumes are still disappointing, in line with the economic performance of the European Union. According to latest World Bank estimates, the Eurozone should see its gross domestic product increase by just 0.7% in 2024, compared to 2.5% for the United States.
Finally, traffic in the intra-Asian trades and the Indo-Pacific region is continuing to develop and grow, stimulating the development of shipping activity in this part of the world.
The Kaizen system, zero stock, lean management and the rest, which constitute the pillars on which the logistics business has been built since the 1980s and 1990s, collapsed suddenly under the impact of the first wave of Covid, and then again as the Middle East conflict returned to the fore. Shippers have distanced themselves from these fundamentals, based on constant improvement of delivery times and cost savings, preferring to reconstitute high stock levels and diversify their key supply sources and suppliers.
This new situation brings significant changes to relations between shipping companies and shippers regarding rate negotiations (...)