It’s getting out of one and getting into another. The pandemic and the war have completely unbalanced the global logistics industry and it does not seem that the situation will normalize in the short term. From Europe, work is being done to moderate the price scale, but there are still too many open fronts. The last factor facing the sector is a direct consequence of previous problems. There is a shortage of boats available.

The ships are busy. The shipping industry has encountered a problem of lack of ships. The reason behind it is that many of them are being used for other tasks beyond shipping goods.

Specifically, it is gas that is conditioning the market. The alternative to Russian gas is being exported as liquefied natural gas (LNG) on large cargo ships. Along with LNG is also the shipment of gasoline and diesel. This shipment of raw materials for energy is at a maximum due to high prices. The point is that these ships are making longer and longer routes and spending more time at sea (because it still pays off), which is reducing access to ships.

And winter is coming. The famous slogan of ‘Game of Thrones’ has become one of the most repeated mantras in Europe. The war does not seem to end and the lack of freighters is extending in time. As winter approaches, the demand for LNG will increase and this could again significantly increase shipping costs despite the moderation in demand, experts consulted by Bloomberg point out.

The cost of shipping by ship is again at a maximum. So it is difficult for inflation to go down. The logistics crisis is a faithful scale to understand the economic crisis and we see how the prices of international shipping costs by ship are at very high levels.

Shipping from China to the United States is as expensive as it peaked in 2020 just after the pandemic, while shipping from the Middle East to Japan is now twice as expensive as it was at the beginning of the year. The reason is the lack of available boats, which increases the price of those that are offered.

Companies that have ships do not release them. After the summer it is common for companies such as gas freighters to stop using them but they are seeing how these companies are retaining them for longer. It also happens with oil tankers, which even stay afloat by making alternative routes only for the fact of having them at their disposal, according to Bloomberg.

One counterweight that may come too late is the Suez Canal tariff increase of 15% by 2023. This will contribute to higher shipping costs by ship, but could also help companies free up ships because some shipments it doesn’t matter to them anymore.

And the stranded ports. A solution could be to take advantage of the different ships that are in the ports, but it does not seem that it will happen soon. As CNBC describes, a large number of ports continue to have dozens of ships held up due to previous chaos.

Cargo ships are getting bigger and bigger.  And that's a problem, especially when they run aground

Shipping companies turn to cargo planes. If by sea it is not possible, the plane can be a situation. Large shipping companies such as Maersk, MSC or CMA are looking for alternatives and seem to have found a park in cargo planes.

According to WSJ data, the cargo aircraft industry grew by more than 20% last year and is expected to grow even more in 2022. According to Espiral21, Boeing estimates that the world fleet of cargo planes will grow from the current 2,000 to about 3,600 planes in 2040.

Image | Егор Журавлёв


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Tarun Kumar

Tarun Kumar has worked in the News sector for 05 years and is currently the Owner and Editor of Then24. He reside in Delhi, India with his Family.

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