STC considers market changes

INFLATION SITUATION

MARKETS • SHIPPERS MAY HAVE TO PUT UP WITH HIGHER COSTS FOR A LITTLE LONGER, WARNS STOLT TANK CONTAINERS, AS ADVERSE CONDITIONS CONTINUE TO MAKE LIFE TOUGH

GLOBAL TRUCKING AND shipping costs are likely to stay high for some time, Stolt Tank Containers (STC) expects. Changing trade patterns, increased volatility in supply chains and a low orderbook for containerships are all pushing up industry prices. Tight ocean freight capacity is likely to continue for the foreseeable future, STC says, with demand coming back as the global vaccine rollout prompts some economic recovery. Furthermore, the worldwide driver shortage is only getting worse as drivers have migrated to other services during the Covid-19 pandemic. “The last time our industry saw conditions even close to resembling the current market was prior to the fi nancial crisis of 2008,” says Mike Kramer, president of STC. “However, it is becoming increasingly clear that the conditions we face today are unprecedented in nature, with multiple issues occurring simultaneously.” The effects of the pandemic have lately been overlaid by several other unexpected

INTERMODAL OPERATORS ARE EXPOSED TO events, notably the Texas freeze in February and the closure of the Suez Canal, both of which impacted short-term trade. When viewed globally, these multiple factors are creating a very challenging market and the disruptions, shortages and ineffi cient service from carriers have caused a substantial increase in costs. “Along with rapidly rising ocean freight costs, other factors are also compounding the situation,” Kramer continues. “Adding to the size of our fl eet and hiring additional manpower to deal with the extra work generated by blank sailings and the subsequent rerouting of tanks and rising fuel prices all add to our costs.”

PASS IT ON “Unfortunately, like many logistics companies, producers, and even customers, we have no choice but to increase our prices to offset these cost increases and to ensure supply chain stability,” Kramer notes. “We have also increased our demurrage tariff rates and reduced free time included in our contracts. Forecasts indicate that the blank sailings, rolled bookings from carriers in all markets, port congestion and high demand, will continue well into the future and as a logistics provider we are not be able to absorb these, so they will be passed on to shippers. “One advantage that I believe we have at STC is our strong long-term relationships with our customers, our ocean carriers and other vendors that are helping us move our cargo,” Kramer continues. “In dealing with the unprecedented conditions, we are working with both our customers and vendors in a collaborative fashion to minimise cost increases and to digitise as much activity as possible and increase transparency in other areas of the supply chain. We have made signifi cant investments in digitalisation in recent years and have integrated our systems electronically with both shippers and vendors to reduce waste and ineffi ciencies so that we are able to keep related administrative costs low.” Despite the challenges, there are some opportunities ahead, explains Kramer. “We are seeing incredibly strong demand across all geographies and sectors of the market as economies begin to rebound from the pandemic and consumer confi dence improves. This is driving our customers to restock and restart, or increase, production to full capacity. We are also seeing very strong growth in demand as cargo moves from unsustainable fl exibags back into tank containers. “Our focus is to remain agile so that we can continue to deliver the highest levels of service at the lowest possible cost to our customers while working to create additional effi ciencies for the future.” www.stolttankcontainers.com