Freight rates soared more than 300% between September 2019 and October 2021 and this has to stop, according to recovered paper trader Ranjit Baxi.
At the latest BIR Paper Division webinar Baxi called for the formation of a Global Shippers Alliance to defend the interests of customers like the recycling industry. ‘At the moment, we shippers haven’t got a voice,’ he complained.
Baxi was responding to a keynote presentation by Florent Noblet, deputy managing director at French transport and logistics trade body Union TLF and managing director of TLF Overseas. He characterised the period since the onset of the Covid pandemic as one of shipping delays, blank sailings, roll-overs, port congestion and surging freight rates. Against this ‘completely unprecedented’ backdrop, he noted, customers ‘are suffering from a very poor quality of service from the ocean carriers’.
Major ocean carriers have faced problems over a number of years with overcapacity, high levels of debt and a lack of operational profitability. When Covid began to impact global trade in the first half of 2020, they scrapped or sold vessels in a bid to adjust capacities.
However, the subsequent renewed growth in shipping demand has caused ‘total disruption in the maritime supply chain,’ according to Noblet. ‘We have to face the fact that this situation will last at least until the end of next year and maybe most of 2023.’
The nine leading ocean carriers account for an estimated 98% of the global sea freight market and have significant political power on their side – particularly within Europe, contended Noblet.
In the USA, meanwhile, the government has looked to be ‘more proactive’ through an audit of carriers in a bid to prevent abuse in demurrage/detention costs and surcharges.