Shipowners finding a new role
In conversation with Andreas Stepan, spokesman for the association of Austrian shipping agents. The dangers on the Suez Canal route have had a strong impact on sea freight rates. Shippers are increasingly seeking direct contact with shipowners and splitting invitations to tender between forwarders and shipowners. ITJ correspondent Josef Müller spoke to Andreas Stepan about the emotional roller-coaster ride for a profession that sees signs of hope beyond the cape of the same name.
Andreas Stepan, talking to the ITJ recently, called ongoing developments in the maritime shipping sector “rather mixed.” There are several major challenges facing shipowners these days, after all.
They reacted to the shutdown around the Chinese New Year with many a blank sailing, that is to say the withdrawal of shipping capacities from the market, and laid their ships up until ‘the workbench of the world’ returned to work.
The global fleet of maritime shipping vessels is currently large. Shipowners added more new units to their fleets in 2023 than ever before – no less than 350 vessels. Some older ships have been replaced, and others have been upgraded with modern technology. This means there’s a lot more shipping space available, which is currently offset by a rather subdued global economy.
On top of this, sea freight rates were in free fall from autumn 2022 to the end of 2023, as a result of economic stagnation – which caused some joy among shippers, and anxiety among shipowners.
Stepan’s familiar with the scenario. He’s in charge of the Austrian branch of the French shipping line CMA CGM and has been in the business for 20 years.
Rates picking up again
The rates are now soaring again, which is related to dangers to shipping in the Red Sea region. A trip around the Cape of Good Hope to escape the Houthi rebels from Yemen in said region can mean facing much rougher seas and the ship potentially being damaged in an accident. Ships also consume three times as much fuel in such seas, and the detour disrupts supply chains too.
“Today we no longer cite ‘the day when a ship comes in’, but rather the week in which we expect it to arrive,” is how Stepan describes his everyday experiences. All this leads to a shortage of containers for exports from Europe, including Austria, Stepan states. “I expect the shortage of empty containers to worsen in the coming weeks, although it probably won’t get as bad as during the pandemic.”
Shipowners are trying to offer exporters enough empty boxes, which isn’t easy “and costs a lot of money,” even when compared with the approximately USD 150,000 that is spent on a 15,000 teu vessel sailing through the Suez Canal. Markets such as the Hungarian, Czech and Slovak ones offer a ray of hope. They receive masses of cargo from the Far East for their automotive industry, but have much fewer exports, compared to other markets.
Shipowners are therefore trying to bring empty containers from these countries to those places where they’re urgently needed. Stepan added that “the rates will fall again as soon as it’s safe to travel through the Suez Canal again.”
Tendencies and solutions
Forwarders are sceptical about a trend that began ten years ago, namely to bring cargo flows from the port to the hinterland or vice versa under the direction of shipping companies or their partners.
“It’s not shipowners who proactively approach potential shippers to the hinterlands, it’s the large shippers who look for direct contact with shipowners,” Stepan counters. This can be seen in invitations to tender for transport services, which are often placed on the market in two packages – one for forwarders and one for shipowners.
In many countries it’s long been common to award hinterland services to shipowners. “The situation in Austria is unique, as forwarders are more involved in hinterland business,” says Stepan. For him the maritime trade narrative – shipowners provide the hardware, forwarders the software – is now no longer valid.