【Ferro-alloys.com】:Poor port infrastructure and high concentration in the shipping market have contributed to the current crisis in maritime transport, which has become a driver for inflation globally, according to the senior VP of the International Federation of Freight Forwarders Associations (FIATA), Jens Roemer.

Between the first quarter of 2020 and the third quarter of 2021 freight rates jumped from an average of 3% of overall costs to 19% globally.

“This may have killed some business models of shipping low value goods, and also suggests that most prices must go up in order for the merchant to remain profitable,” Roemer said, adding that it is estimated that the shipping rate increase has added 1.5 percentage points to global inflation.

The FIATA VP was speaking during a maritime transport webinar held by Chile’s national chamber of commerce.

One cause is increased schedule uncertainty, meaning shipments are being delayed more often.

If before the pandemic 62% of ships arrived on time, by late 2021 that had fallen to only 32%, while the delays lengthened from four to seven days during the same period, he said.

Despite this, Roemer said the world’s main shipping companies are reporting record profits, and claims that concentration in the industry is partially responsible for the increased costs, alongside higher consumer demand after 2020’s lockdowns.

“Do we want a market with few players to manage your entire supply chain from door to door?” he asked, saying that most of the market has been cornered by less than a dozen shipping lines in three major alliances, namely 2M, Ocean Alliance and THE Alliance.

Ten years ago, these firms went into what Roemer called a “rat race” to develop larger vessels.

However, while in theory this would have contributed to lowering costs, instead it caused further congestion at ports as infrastructure faced difficulties dealing with these new ships, while smaller companies were pushed further out.

“Big ships enjoy priority by the terminal, neglecting smaller vessels and increasing congestion,” he said, adding that ports were already operating at their limits before the pandemic, and a shipping crisis would have been triggered eventually anyway.

“There’s a big question mark on what’s coming and many terminals are unready,” Roemer warned, saying that container transport is expected to increase during the northern hemisphere summer. 

• [Editor:Alakay]