Over the past 25 years, the global shipping industry has gradually evolved from a fiercely competitive market to a carrier-controlled industry. Driven mainly by external shocks and internal strategies, this trend has led to a huge change in the global trading environment, with cargo owners facing transport instability and rising costs.
In the early 2000s, shipping companies generally believed they had to provide enough momentum to meet market demands and put competition at the heart of their business. However, the financial crisis of 2008—09 changed everything. In order to reduce losses, carriers began to reduce cruise speed, essentially cutting manpower. Since then, cancelling flights (BlankSailings), reducing the size of the fleet has become commonplace.
Prior to the pandemic, many carriers were unwilling to cancel flights at will, fearing the impact on the shippers supply chain. However, after the pandemic, this practice has gradually been adopted by the industry, and momentum control has become an important strategy for increasing profitability.
In addition to carrier proactive control, external factors have exacerbated the shortage of momentum. For example, geopolitical conflicts, the Panama Canal drought caused by climate change, and the global public health crisis have severely affected the supply capacity of shipping markets. In addition, port congestion continues to worsen due to the chaos of ship to port times, further limiting market capacity.
On the other hand, shipping companies are also actively looking for ways to reduce traffic. For example, Maersk recently said it would manage its throughput by scrapping old ships, returning leased vessels, and further reducing cruise speeds. JPMorgan noted in an analysis report on February 7 that this strategy is beneficial for carriers' finances because they can sustain higher freight rates even if demand fluctuates.
For shippers, the uncertainty of shipping services has become a sore point. Recently, Masky and Hapag-Lloyd formed the “GeminicoOperation” alliance, which promises to deliver an accuracy rate of more than 90%, compared with the current global average accuracy rate of only 54%. This is primarily intended to appeal to shippers who are dissatisfied with the instability of momentum and to provide more reliable services.
However, despite the fact that shipping companies have invested billions of dollars in new ships in recent years, they continue to restrict supply, indicating that traffic control strategies will become a long-term trend.
In addition to momentum issues, the shipping industry is also under pressure to reduce carbon emissions. The International Maritime Organization (IMO) has committed to achieving zero greenhouse gas emissions for shipping by 2050 and plans to start implementing stricter emission reduction standards in 2028.
In the past, carriers often struggled to pass on fuel costs to shippers when the market was buoyant. But in the current environment, as market momentum continues to shrink, it will be easier for carriers to pass on the costs of alternative fuels to customers, further increasing logistics costs.
At present, the global shipping market has entered a new era. Whether it's cancelling flights, slowing down sailings, or tackling carbon emissions regulations, power constraints have become an irreversible trend. For shippers, the future challenge is not only finding the right transportation solutions, but also creating flexible and resilient supply chain strategies to deal with market uncertainties.
Source: https://www.joc.com/article/ocean-carriers-ever-tightening-grip-on-capacity-control-shows-no-signs-of-loosening-5946744
