Maersk warns about dangers as trade grows fast

In the first quarter of 2024, A.P. Moller – Maersk will introduce the first of a series of eight container vessels capable of operation by carbon neutral methanol.

It is quite unusual for a shipping line to complain that it has too much business but that is essentially what Maersk told the Financial Times yesterday (Monday 6th September). Morten Engelstoft, CEO of APM Terminals said that the whole sector needed “lower [consumer demand] growth to give the supply chain time to catch up, or differently spread-out growth. Over a long period of time, we will need to recover efficiency” otherwise the “vicious circle” of logistics congestion would continue to get worse.

The reason there is such congestion in ports, shipping and landside transport is due to what Mr Engelstoft said was “the sheer size of business going through is so enormous that the amount of port capacity, truckers, warehouses and even labour to man all the equipment has created a bottleneck.”

Numbers from the World Trade Organisation seem to confirm this. Statistics released today show that trade in ‘intermediate goods’, such as components, increased year-on-year by 20% in the first quarter of 2021. This marks a continued recovery in global trade from the lows seen in the second quarter of 2020. Indeed, trade in intermediates is now around ten indexed points higher than its previous high-point in the third quarter of 2020. It is noticeable that Asia is the leading source of intermediates and that its export volumes have experienced a dramatic expansion over the past year, with volumes around 25% higher than a year ago, led by the sale of electronics and solar panels.  

Intermediates are not finished goods and their patterns of trade are different, however, their violent growth implies that the globalisation of supply chains has not abated, rather it has increased. This may explain why international logistics systems are bursting at the seams. Indeed, such numbers suggest that the problem is going to get worse, not better in the medium-term. The good news is that such a trend suggests that the logistics sector is likely to see higher long-term growth.

Source: Transport Intelligence, September 7 2021

Author: Thomas Cullen

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