In this week’s Roar: ocean reliability looking good, green resources remain scarce, things getting worse in Panama, unhappiness with ETS, and tips for vetting new suppliers.
Maersk came out of October as a winner — at least in terms of schedule reliability. Overall, schedule reliability remained unchanged from September at 64.4%. Maersk was the most reliable with a score of 71.1%, while each and the least reliable with a score of 53.7%. According to Sea Intelligence, the average delay continues to increase in tiny increments. Overall, 11 of the 13 carriers analyzed showed year-over-year improvement.
The industry is aiming for a green future, but there’s a good chance things will remain gray for a while. Green resources remain scarce, meaning synthetics like e-LNG, e-methanol, and e-hydrogen. However, fossil fuels such as regular LNG, methanol, and hydrogen are nowhere near as scarce. The industry is recognizing the benefits of using LNG as a fuel in the short term since it’s readily available and can still reduce emissions up to 23%. At least until they figure out the challenges of using e-LNG and the associated high cost and limited availability.
The continued bottleneck at the Panama Canal is seriously limiting the number of ships that can pass through. In the past, an average of 38 ships a day passed through the Canal, but that number is expected to drop to 18 in February. This means shippers have the option of simply waiting in line for days or weeks, paying millions of dollars to jump ahead in the queue, or sailing around continents — potentially adding thousands of miles and more than a week at sea. According to one industry CEO, “we face less capacity, more trips, higher costs, and a less efficient supply chain.” Overall, the Panama Canal bottleneck is a significant challenge for global trade, adding costs and delays for shippers.
We’ve mentioned this before, but companies shouldn’t forget that starting January 1, 2024, the EU’s Emissions Trading Scheme (ETS) will begin to phase in and, in general, ship owners aren’t too happy about it. The ATS will require operators to pay for their carbon emissions, and some theorize this could lead them to avoid EU ports, since it would save them money. Naturally, European port operators are concerned about this as it could lead to a loss of business.
Not too long ago, inefficiencies in the supply chain were brought into sharp focus, and many manufacturers needed to change suppliers, which isn’t as easy as it may sound. Instead of trying to fix things after the fact, proactively vetting suppliers makes better sense. In brief, some things to consider should include determining the quality of their systems and whether or not you fit within their scale of business, how flexible they can be as an organization, their logistics network, and even their overall company culture. Knowing these things before entering into a partnership can help contribute to success.