business matters
October/November june/july 2019 2021 business edge
Net Zero “This is the decisive decade.” That is the clear message from COP26 President Alok Sharma and he called for “every country and every part of society to embrace their responsibility” if the world is to achieve the target of being carbon neutral – or net zero – by 2050.
Chris Peer Managing Director, Maritime House
The Reality of Global Trade Disruption
There is no doubt in my mind that the debate about climate change has moved on significantly since COP25 but turning debate and targets into meaningful action across the globe still remains a
I was already in the export trade when Harold Macmillan said that exporting is fun, an early experience of the disconnect between reality and the statements of politicians, but I have never previously experienced anything approaching the present difficulties in moving goods around the world.
huge challenge. For business, implementing change also has to make commercial sense. In a challenging trading environment social conscience is of itself probably not enough to drive real and rapid change. This is particularly so for the many SMEs that don’t access capital markets or
We are an international trading company, so shipping is central to our business and the impact of the pandemic has been dramatic. First, several parties are involved in moving our goods from factory to destination, not only the shipping lines but also freight forwarders, Customs authorities, port operators, stevedoring companies, railways, and trucking companies. Ships call at many ports en route to our destinations so delays at any point can hold up the delivery of our goods to our customers. Covid-19 has kept ships’ crews at sea for months on end without a break and temporarily closed ports in China have caused containers to be in the wrong places and disrupted the activities of the other parties. Hundreds of container ships are waiting to dock at major ports worldwide. Second, freight rates have been depressed for years, which has led to much reduced competition in the shipping industry as lines have merged and reduced capacity. Consequently, when worldwide demand responded to the financial stimulus provided by several countries, in particular the USA, to speed up recovery from the economic impact
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of the pandemic, there was a shortage of capacity to meet the spike in demand, so freight rates have rocketed. The rates we pay have increased 200-300% since April and rates from China have increased by 500-1000%. Third, some customers who have got used to reliable deliveries and keeping low stocks to reduce working capital have been caught unawares and sometimes run out of stocks because they did not heed our warnings of the likely delays in delivery. This, combined with the large, frequent and unpredictable increases in freight rates which are imposed at very short notice, is testing the long-term relationships we have built up over the years. We expect rates to remain high and unpredictable at least until the end of this year. Thereafter, they are likely to stabilise as trading patterns become more regular but certainly at significantly higher levels than pre-pandemic. Meanwhile, the shipping lines are the current masters of the universe, and their profits reflect that; Hapag-Lloyd have just reported half-year profits which exceeded their cumulative profit over the previous 10 years!
www.sussexchamberofcommerce.co.uk
come under the scrutiny of regulators. Some SMEs are taking the lead because “it’s the right thing to do” and they are to be applauded for that, but many have other fires to fight, perhaps don’t know where to start or feel that small changes won’t make a difference. Sussex Chamber of Commerce is committed to helping businesses play their role through a wide range of initiatives. Our Green Sustainability hub Green Sustainability | Sussex Chamber of Commerce has been created to give more insight, support and best practice help, allowing businesses to understand how they can make their contribution to the challenge we all share.
tel: 01444 259 259
Rob Clare Chairman Sussex Chamber of Commerce
