Calmer waters — the falling cost of ocean freight is good news for Global Mobility professionals. What’s happened, and what’s on the horizon?
Professionals planning moves to new countries and continents have endured a truly turbulent 24 months. But as the Global Mobility business returns to a relative sense of normality, there’s brighter news on the horizon when it comes to moving personal and household effects via surface and sea.
In this edition of Reloverse, we look at the changes in sea and ocean freight — from costs and efficiencies to future technologies.
Containing cost
The cost of shipping a container of furniture from Europe to the Far East has settled, and despite continued congestion at ports, pockets of industrial action, and high inflation — prices are set to fall further next year.
Ocean freight has a long reputation for volatility. But no forecast could have predicted the unprecedented profitability of a pandemic. Between 2020 and 2023, container shipping groups will have made as much money as they did in the previous 60-years put together. In other words — more in three years — than from the 1950s when container ships were first built, through to 2019.
Thankfully for our industry and our customers, these bumper returns have meant increased investment from the largest ocean freight operators. They’ve been correcting their balance sheets, which had barely recovered from the financial crisis of 2008, and invested hugely in integrated infrastructure, including land-based logistics facilities to complement their container businesses. They’re also adding more capacity through new vessels, though these take some three years to build — and some may be launched in a future of lower demand. The net result is a (relative) state of calm, with the average cost of moving a standard 40-foot container over our oceans now 45% lower than at the peak of Autumn 2021. In all, for a global, mobile workforce, there’s a lot to celebrate — in cost, efficiency and new technologies that make moving easier than ever before.
Super ships
We’ve been helping organisations to move people and their possessions for a long time. And container ships have certainly changed in the past five decades. There are some 5,500 container ships worldwide — meaning a capacity equivalent to 25,000,000 twenty-foot containers (TEUs).
Today, the largest vessels can each pack 24,000 TEUs on board — and there are now 50-ships capable of carrying over 21,000 TEUs. Amazingly, almost all of these were built in the past five years. To put that into context, two of these ultra-large ships stacked vertically, bow to stern, would be almost as tall as the world’s tallest building, Dubai’s Burj Khalifa skyscraper.
Leaner and greener
Bigger is also better when it comes to environmental goals. Container shipping is already the least damaging way to transport goods globally, but under pressure from customers and governments, operators are aiming for carbon neutral. This will mean new fuels and propulsion methods, and as those are being developed, leaders in sea logistics are reducing the movement of empty containers, and using carbon credits to offset their impact.
According to Steve Jordan, Editor of The Mover Magazine, reducing the carbon footprint of ocean freight operations is key to helping corporate clients to reduce their greenhouse gas emissions. “This has been a hot topic in the magazine and at conferences for some time,” he explained. “Large multinationals are targeted to reduce their Scope 3 emissions and can only do that with the cooperation of their extended supply chains. Those companies that do help them are likely to be first in line for contracts in the future.”
Lost at sea
We carry out 25,000 international moves a year. And while cost is a commercial consideration, the care with which people’s possessions are shipped is a paramount concern. In an average year, fewer than 1,000 containers are lost at sea worldwide — just 0.0006% — and these are often in unusual incidents. We’ve also seen the way port work change beyond all recognition — with more loading and unloading becoming fully automated. East Asian container ports are the most efficient, with Japan’s Yokohama taking the top of the league table, ahead of King Abdullah Port in Saudi Arabia and Qingdao in China. Europe’s most efficient is Algeciras in Spain and Canada’s Halifax is the only true North American port to rank in the top 50. In a standard port call, it now takes on average just 1.1 minutes to load or unload a container at Yokohama — with every unit tracked and traced in perfect position.
Current affairs
New, larger ships, automation and better integration of land and sea logistics benefit all of us in the Global Mobility community. Demand is expected to drop further in 2023, and with near zero vessels scrapped in the past 18-months, extra capacity should mean we’re able to pass on increasingly competitive rates to our customers. But we know only too well that geopolitical and global health events can cause catastrophic consequences at speed. In 2021, a single 400-metre vessel was stuck in the Suez Canal for just six days. A week after the container carrier, Ever Given, blocked the passage, 370-ships were queuing to navigate the canal, preventing some USD$10-billion of trade. That’s one ship, in one waterway.
Plain sailing
So, the global container shipping market is like a giant, ocean-going game of Jenga vs Tetris. But one that’s safer, more secure, professional, and predictable than at any time in our 130-year history of providing corporate and personal relocation services. The future is one of tighter cost control and more accurate real-time reporting, where technology and talent work in harmony.
If you’re looking for an expert partner to help you design and manage executive moves or business relocation, our experience is unrivalled. Whether that’s sailing the seven seas, or overland — to see how we make it easy, simply drop an email to reloverse@santaferelo.com and we’ll get back to you.
