Pandemic’s impact on tank containers

CHINA TURNAROUND

TANK CONTAINERS • CHINA HAS FOR MANY YEARS BEEN THE MOTOR OF CHEMICAL TRADE BUT SOME SURPRISING TRENDS HAVE EMERGED SINCE THE START OF THE COVID-19 CRISIS

FOR TANK CONTAINER operators, China is a vital piece of the global jigsaw of chemical trade. While once being a major importer, the development of its domestic chemical industry has in more recent years seen it emerge as a source of product for the rest of the world.

While China was the first nation to experience the disruption caused by the Covid-19 pandemic, it was also the first to re-emerge and has managed to keep the virus at bay to a large extent. As a result, trade patterns might have been expected to return to normal but there are other trends at work, as Bertschi’s William Leigh-Pemberton, an old China hand with many years’ experience in the market, explained to operator and lessor members of the International Tank Container Organisation (ITCO) during a virtual meeting this past 19 January.

China is currently importing record volumes of chemicals to replace domestic production that has been lost due to an increased awareness of and enforcement action against small, locally owned operators. This has led to a shortage of some products, Leigh-Pemberton explained.

It has though, also come at a time when ocean freight costs have rocketed, after the major liner operators brought their services into line with the changing demand patterns. One thing that has meant is that the number of trans-continental rail movements from China via Russia has shot up after the price differential narrowed.

THE AVAILABILITY OF CLEANING STATIONS IS A MAJOR Unfortunately, rail exports of hazardous chemicals are still not allowed but LeighPemberton said he expects this to become a more mainstream route for Chinese goods to Europe.

DAMAGE FROM THE ENVIRONMENT So, while there is a better balance between imports and exports in tank containers, that new-found enthusiasm for environmental enforcement is causing problems in accessing acceptable cleaning stations for tanks.

The authorities have been showing a reluctance to license new depots, in response to the public’s aversion to chemical facilities following a series of high-profile accidents in the country. Furthermore, that same pressure has forced a number of existing facilities out of the market, making it necessary for tank container operators to move their tanks empty, uncleaned if they are to get a return load.

Leigh-Pemberton said that, a few weeks into the new year, there are no signs that this situation will change during 2021 and, he said, bookings are currently very good both in the global deepsea sector and in European land transport.

But the new situation in China does worry some and Den Hartogh’s Mark Warner, also speaking during the meeting, warned that tank operators need to be able to offer stability during this period of volatility. They need to be clear with their customers, especially on cost, if they are to be able to tempt cargo away from parcel tankers and into tanks.

Leigh-Pemberton had already discussed the advantages of tank containers over parcel tankers, particularly in view of the emerging need for greater flexibility in the chemical supply chain that has become evident during the course of the Covid-19 crisis. Oceangoing tankers represent a fixed cost over a lengthy period and are constrained by the location of loading and receiving terminals. Tank containers can be hired on an as-needed basis, with the ability to scale up or down and to set up stocks wherever they are needed. www.itco.org