News / TPM24: 'Frenetic interaction', insight and advice – it's a 'people business'

Although the main focus of the S&P Global TPM24 conference and networking event in Long Beach this week is, of course, the transpacific container supply chain, its multinational delegate attendance ensured there was plenty of coverage of other tradelanes.

Notwithstanding TPM’s raison d’etre, company ambassadors from the US and across the globe came to talk and learn more about their industry, confirming an oft-repeated phrase about shipping: that, despite the huge advances in technology, it remains a “people business”.

An Asia-Europe market panel session on Tuesday debated the short-, mid- and long-term impact on the supply chain of the decision by the three alliances – bar the ‘case-by-case’ exception of CMA CGM-operated ships – to stop routing vessels through the Red Sea and Suez Canal.

The Houthi attacks on commercial shipping, and the re-routing of Asia-North Europe and Asia-Mediterranean ships around the Cape of Good Hope, saw spot rates to North Europe spike from around $1,500, in mid-December, to a peak of $5,000 at the end of January, while Mediterranean short-term rates leapt from $1,700 to $6,500 per 40ft during the same period.

The fear of a recurring nightmare of significant supply chain disruptions, caused by port and landside congestion  and out-of-kilter equipment supply proved, however, to be unfounded as shippers judiciously managed those temporary shortages and carriers had ships and containers in abundance to fill service gaps.

Indeed, both shippers and carriers have adapted well to the new temporary networks, and the tradelane focus panel session, moderated by S&P Global senior editor for Europe Greg Knowler, provided a fascinating insight to the mechanics of this unforeseen obstacle in the return to normalisation.

Carriers declared force majeure on bill of lading contracts when they took decisions to re-route vessels around the Cape and subsequently impose a wide range of disruption surcharges, which some lines have now incorporated into their FAK (freight all kinds) rates.

Although spot rates for North Europe and the Mediterranean are beginning to erode, a good quantum of the increases have been baked in, suggesting that Asia-Europe carriers, awash with surplus tonnage, may not be in a hurry to return networks to a Suez Canal routing if, and when, the Houthis stop firing rockets at commercial shipping.

A particularly interesting point concerning the temporary networks was raised by beneficial cargo owner network Xstaff’s managing partner, Antonios Rigalos, who questioned the ad hoc strategy of some carriers to still use the Suez Canal route without reference.

Mr Antonios said he had had specific instructions from one client NOT to send their goods via the Red Sea, only to find out that the directive to the line was ignored, thus putting the cargo at risk of potentially being uninsured.

Mr Knowler returned to the stage at a later session to moderate a fascinating transatlantic-focused panel on the modest success of carriers in restoring profitability to the historically robust tradelane.

Drewry Shipping Consultants director Chantal McRoberts provided, and explained, extensive data, while the highly regarded forwarder and now ocean freight Americas head at Rhenus Logistics, Stephanie Loomis, gave attendees the benefit of her many years of experience in the sector.

And the session was greatly enhanced by the vast experience, from a shipper’s perspective, of Wine and Spirits Shippers Association MD Alison Leavitt.

Aptly summing up the three-to-four days of frenetic carrier-shipper interaction at TPM24, Ms Leavitt imparted some good advice for carriers trying to take advantage of a disruption to raise freight rates too high.

“We will accept reasonable rate increases and surcharges, but not crazy prices,” she said, recounting how she had refused to accept out-of-context Red Sea disruption surcharges on the transatlantic route earlier in the year.