Page 5 - Al-Rashed Newsletter April 2021

POTPOURRI
CONTAINER SHIPPING TURNS 65 RATTLED YET

MORE RESILIENT

The 65th anniversary of the dawn of containerization on April 26, 1956, finds the industry struggling to

handle a continuing surge of pandemic-driven trade, with delays endemic and costs and frustrations rising,
but in an increasingly robust financial condition and no less essential as a key facilitator of global trade.

It took nearly a decade from the first sailing of American trucker Malcom McLean’s Ideal X, a converted
World War II tanker, from Newark, New Jersey, to Houston, Texas, for containerized ships to replace
traditional breakbulk liner services on the major east-west trade routes. But today, container ships are
ubiquitous in all of the world’s major and minor trade lanes, responsible for moving an estimated 45
percent of total global trade, according to United Nations Conference on Trade and Development.

With half of international air freight capacity removed due to the shutdown of passenger service during the
COVID-19 pandemic, container ships have become even more the workhorses of international trade,
handling the surge in volumes driven by shift in spending by homebound consumers from travel and
leisure to home improvement goods. But those additional volumes have brought with them unprecedented
challenges in moving goods through an end-to-end system beset by COVID-related impacts on the
transportation workforce. The practical result is that containers aren’t being unloaded, reloaded, and
returned to origin points fast enough, resulting fewer containers available, despite a ramp-up in new
container production, and chronic delays for shippers that many believe could persist throughout 2021.

Container shipping has become increasingly prone to disruption and inconsistent service; the Suez Canal
blockage in late March was only the most recent example. And yet, there is no evidence that shippers
regard it as risky enough to prompt a wholesale rethinking of long-haul supply chains due to transport
disruption.

Multiple tailwinds are propelling the market from one characterized by chronic overcapacity and financial
underperformance over the past two decades, to one in which shipping lines are firmly in the driver’s seat.

Malcom McLean’s Ideal X (pictured) was the first
vessel to carry cargo in the standard shipping
MR. GOLDY CHADHA
containers that have since become ubiquitous in
global trade. Photo credit: Sea Land/JOC Image
Archives. KEY ACCOUNT MANAGER
Source: thenationalnews,.com, joc.com