By Arthur Chen   Photo：jan_paulussen ，Link：Pixabay

The 4th quarter is the peak consumption season in Europe and the United States. The pressure on the global supply chain will increase due to port congestion and the continued high-end freight rates. The current imbalance between supply and demand in market may continue in the foreseeable future until the middle of next year. At present, the delays in the US West Port are serious. According to the information available in the market, there are about 30 ships waiting at the anchorage in San Pedro Bay, not far from the ports of LA and LB, data from the signal platform of the Port of LA shows that there are 19 ships waiting at the Southern California anchorage and 11 ships waiting outside the port. The average waiting time is more than five days. Due to the continued tight supply and demand, it is expected that the ports on the west coast of the United States will be under severe pressure throughout August, and the on-time rate may further decline. Most shipping companies have recently predicted that port congestion will not be eased in the short term, and the overall container shipping market volume growth will continue until the beginning of next year, or even longer.

Due to severe global port congestion, there were long lines of containers are waiting in mid-August. In addition, when a worker at Meidong Container Terminal was found to be positive of Covid-19, there were 30 ships waiting and 40 at the outer anchorage in Zhoushan waiting. The market pointed out that 7.5% of carriers around the world are parked near Chinese ports waiting to be unloaded.

In the continued tension in the global supply chain, many shippers, to ensure the stability of their cargo transportation, they spend a lot of money on renting containers and ships to carry out their own transportation. In order to solve the transportation problem, some the cargo owner even decided to purchase the terminal.

Canadian Tire, Canada's largest container importer, is acquiring a 25% stake in Ashcroft Terminal, the largest inland port in British Columbia, Canada. It is understood that Ashcroft Wharf is located about 185 miles east of Vancouver and intersects with the railway lines operated by the Canadian Pacific Railway Company and the Canadian National Railway Company. The terminal can handle 7,000 trains and 6,000 trucks each year.

The transaction was 40 million Canadian dollars. At the same time, the operator of the terminal, Singapore International Ports Group, will continue to retain 60% of the shares. It is understood that Canadian Tire is one of Canada's most popular retail brands. Founded in 1922 and headquartered in Toronto, there are more than 1,000 retail stores. The business covers the retail of automotive supplies, sports goods, household products, oil and gas industry and financial services. The purpose of this transaction is simple, to enable Canadian Tire to transport containers more efficiently from the Port of Vancouver, Canada, and to solve the problem of tight land transportation.

The company said, “Obtaining high-demand capacity allows us to better control the end-to-end supply chain. This is becoming more and more important in the current global supply chain.” At present, there is a shortage of capacity and containers, freight costs have risen sharply. However, the stability of transportation has declined. In order to cope with the market environment, many cargo owners have taken a different approach and solved transportation problems through self-built supply chains and other methods.

Prior to this, companies including Alibaba, Amazon, Home Depot and others have used their own ships to ship cargo to meet the surge in transportation demand. Cargo owners’ intervention in transportation is still an extraordinary means in extraordinary times, but this way puts pressure on shipping companies. The freight rate is rising all the way due to the continuous shortage of capacity, and the carriers seems to be making a lot of money, but the fragility of the entire supply chain is weak, forcing cargo owners to have to spend high rents to transport goods by themselves. .

In the long run, if carriers want to have stable and higher returns, they need to focus on the improvement of service. How to optimize the overall route, especially solving the problems of empty container, providing stable and reliable shipping schedules, and improving end-to-end service, is the key to stabilizing the supply chain. However, at present, carriers seem to be aiming at maximizing profits, taking advantage of the expansion of the epidemic and gain more customers, hoping to make up for the losses and small profits of the past 10 years with the profits of this year. I personally think that the current carrier's approach is to allow the large shippers to think about their own cross-border businesses. Once the service successfully run, it is undoubtedly that the shipping company has created a competitor for itself.