Major disruption in the container shipping sector has led to more shippers moving their cargo to sea-air services, as a catalogue of problems continue to disrupt deep sea carrier schedules.
Robin Knopf, CEO of SAT Albatros Sea-Air Transport, has suggested the falling dependability of deep-sea shipping is attributed to the many mounting difficulties in the ocean carrier sector, and the growing focus on supply chain sustainability. These factors are driving increasing demand for reliable and environmentally friendly alternatives to the more traditional delivery methods.
As demand for faster, more reliable transport modes gains pace through snowballing drivers such as online trading, Knopf is convinced the demand for sea-air will expand in the long term. He explained, “There is a massive shift in transport mode by shippers. The shipping industry has been beset by problems in recent years, and unreliable ocean carriers are playing a major part in our ability to secure business.”
Problems surrounding the shipping industry are longstanding, according to Tan Hua Hoo of Alphaliner: overcapacity, lack of profitability, government support for weak shipping lines that would otherwise exit the industry, changes in regulatory regimes, and the role of alliances.
These “unreliable ocean carriers” were recently alluded to by Sunny Ho, Executive Director of the Hong Kong Shipper’s Council. He suggested that carriers in recent weeks have struggled under the burden of bad weather, port congestion, a shortage of containers and a vessel capacity shortfall. This, in turn, was frustrating shippers whose supply chains and marketing plans were being disrupted just before the onset of the peak season. Furthermore, Ho bemoaned, equipment shortages and vessel deployment would not be resolved until the last quarter, and numerous surveys revealed global carrier reliability had fallen over the previous year.
While shippers still try to move goods on low-cost shipping options where possible, it is against this backdrop that sea-air companies can tap into the pent-up demand from frustrated shippers.
Knopf continued, “Another major reason is high spot rates and lower capacity in airfreight.”
Cargo that is less time-sensitive could take advantage of the many sea-air lead time options at lower-than-airfreight rates while avoiding the disruption of ocean carriers. Some commentators in recent weeks, including the European Shippers Council (ESC), have noted unsustainable price hikes in airfreight rates and this is causing a destabilising effect on the air cargo supply chain, as stated in The Loadstar. These price hikes were partly stimulated by growth in worldwide air cargo traffic climbing at its fastest pace since 2010 during March, according to IATA.
Environmental considerations also weigh heavily in explaining the growing popularity of sea-air transport as increasing legal and social responsibilities in this area affect the international supply chain. Knopf commented, “The saving on CO2 emissions is huge – about 50% – compared to airfreight.”
Knopf also stated that Dubai is ideally placed to capture this shift to sea-air as it affords cost savings and can facilitate upgrades from ocean to sea-air. Compared to other routes, the impact of vessel delays on routes to the Middle East is minimal.
The shift of international shipping habits to reliable intermodal solutions such as sea-air are being defined through significant demand for goods to be shipped to ever tightening deadlines while mitigating both cost and emissions.