Turbulent Waters

At DOBAS, we provide everything from a single source, including ensuring that the interior furnishings produced in Central Switzerland are delivered to their destination on time.

For international transport, we usually opt for sea freight. DOBAS ships around 25 containers annually – in a normal business year, at least. However, the past months have been anything but «normal.» The exceptional situation caused by Covid-19 has, of course, also impacted cross-border transport. Suddenly, punctuality – a core value at DOBAS – became an unpredictable variable.

We spoke with Patrick Rodenburg, Director of Sea Freight Switzerland at our logistics partner Agility, about the recent challenges in the shipping market.

Let’s start with some context: How important is sea freight for international trade?
Patrick Rodenburg (PR): According to the International Chamber of Shipping (ICS), around 90 per cent of cross-border trade is conducted by sea. In 2019, more than 11 billion tonnes of goods were transported this way, which equates to almost 1.5 tonnes per person per year.
 

The recent blockage of the Suez Canal made headlines worldwide. What specific impact did the «Ever Given» incident have on the shipping market?
PR: The Suez Canal is one of the most critical trade routes, and the «Ever Given,» at 400 metres long, is among the largest container ships in the world. It can carry around 20,000 twenty-foot standard containers. The blockade lasted nearly a week, delaying both imports and exports. Our import customers faced delays of between seven and 14 days.

Many companies now operate on a «just-in-time» basis. Events like the Suez Canal blockage can lead to stock shortages. The problem didn’t end when the canal reopened, as approximately twice the usual number of ships passed through immediately afterward. This caused congestion at European ports and left ships waiting at anchor.

The Covid-19 pandemic has also had a significant impact on global trade and transport. What challenges did it create for the shipping industry?
PR:

At the start of 2020, lockdowns led to a sharp decline in demand for container transport. Shipping companies had to quickly return leased ships and containers. When production resumed, these assets had to be leased again at significantly higher costs, which were then passed on to transport prices.
Moreover, consumer spending shifted from services and travel to online shopping. From summer 2020, there was a surge in demand on the Far East-US route, followed later by the Far East-Europe route. This created shortages of ship capacity and containers. US terminals became congested, with insufficient trucks and chassis to handle the volume. At the end of 2020, over 25 container ships were waiting to be unloaded in Los Angeles. Similar situations occurred in England and Australia.
With reduced capacity, freight prices became highly volatile, similar to stock market trading. The cost of shipping a container from Asia increased sixfold between January 2020 and January 2021. Prices from Europe began rising in early 2021, as capacity and container shortages also began affecting the region.

Political events, such as the US-China trade conflict, have also influenced global trade. How has this impacted sea freight?
PR: The US-China trade conflict has, among other things, led to increased exports from other countries like Vietnam. Ships from the Far East to America remain fully booked, while demand for the reverse route – America to the Far East – is lower, resulting in reduced costs. Shipping companies now transport empty containers from America to the Far East to meet demand on the higher-revenue routes.
Overall, freight prices have become much more volatile due to these challenges. In the past, prices were set monthly and announced two weeks in advance. Now, rates are valid for a maximum of 14 days and are often confirmed only shortly before they take effect.

When can we expect the situation to stabilise?
PR: Major shipping companies have placed the largest container orders in 15 years. Stabilisation can likely only occur once these containers are delivered or demand decreases.

The logistics sector has faced numerous challenges. Are there any opportunities arising from these events?
PR: Logistics has gained recognition as a vital component of trade due to these challenges. Without transport, there would be no international trade, which would have significant consequences for global prosperity.