COSCO hurt by global shipping slip
China’s state-owned shipping giant COSCO has outgrown itself at one of the worst possible times.
The freight shipping company has seen its fleet size more than double over the last decade, but that growing capacity can’t deal with a slowing global economy that has hit the brakes since record-breaking growth levels in the early 2000s.
COSCO is taking action, demanding that ship-owners reduce rental costs, while simultaneously working to put political pressure on Beijing to halt competition within the industry.
“Being the key import country in the dry cargo business and almost everything else, they want to throw their weight around and secure more of the business themselves,” Anders Karlsen, an analyst for Nordea Markets, told Reuters.
COSCO recently halted some payments for vessels it had chartered to negotiate better terms, which angered many in the shipping industry. Some ship-owners threatened to seize COSCO-operated vessels.
“For any charterer not to pay hiring costs in an attempt to renegotiate charter rates is very bad business,” Arthur Bowring, managing director of Hong Kong Shipowners Association, told Reuters.
“If there are people out there doing that and COSCO is one of them, I do hope it will come back to bite them.”
SEE OTHER TOP OCEAN FREIGHT STORIES ON THE SUPPLY CHAIN DIGITAL CONTENT NETWORK
COSCO has reportedly reached deals with ship-owners on 18 vessels, and Greece-based DryShips said that the company had resumed payments on three of its ships.
Many shipping contracts held by COSCO were struck in 2008 during the global shipping explosion, when large capesize vessels were being rented by COSCO and other shipping companies for more than $100,000 a day.
According to Reuters, the dry bulk market has fallen sharply since then, “leaving COSCO paying 2008 prices for ships that now rent for less than $25,000 a day.”
DHL Claim Multi-Sector Collaboration Key to Fighting COVID
Since January, global logistics leader DHL has distributed more than 200 million doses of the COVID vaccine to 120+ countries around the globe. While the US and UK recently rolled out immunisation plans to most citizens, countries with less developed infrastructure still desperately need more doses. In the United Arab Emirates (UAE), which currently has one of the highest per-capita immunisation rates, the government set up storage facilities to cover domestic and international demand. But storage, as we’ve learned, is little help if you can’t transport the goods.
This is where logistics leaders such as DHL make their impact. The company built over 50 new partnerships, bilateral and multilateral, to collaborate with pharmaceutical and private sector firms. With more than 350 DHL centres pressed into service, the group operated 9,000+ flights to ship the vaccine where it needed to go.
With new pandemic knowledge, DHL just released its “Revisiting Pandemic Resilience” white paper, which examined the role of logistics and supply chain companies in handling COVID-19. As Thomas Ellman, Head of Clinical Trials Logistics at DHL, said: “The past one year has highlighted the importance of logistics and supply chain management to manage the pandemic, ensure business continuity and protect public health. It has also shown us that together we are stronger”.
Multisector partnerships, DHL said, enabled rapid, effective vaccine distribution. While international scientists developed a vaccine in record time—five times faster than any other vaccine in history—manufacturers ramped up production and logistics teams rolled out distribution three times faster than expected. When commercial routes faced backups, logistics operators worked with military officers to transport vaccines via helicopters and boats.
In the UAE, the public-private HOPE Consortium distributed billions of COVID-19 doses to its civilians as well as other countries in need by partnering with commercial organisations such as DHL. For the first time, apropo for an unprecedented pandemic, logistics companies made strong connections with public health and government.
“While the race against the virus continues, leveraging the power of such collaborations and data analytics will be key”, said Katja Busch, Chief Commercial Officer DHL and Head of DHL Customer Solutions & Innovation. “We need to remain prepared for high patient and vaccine volumes, maintain logistics infrastructure and capacity, while planning for seasonal fluctuations by providing a stable and well-equipped platform for the years to come”.
How Do We Sustain Immunisation?
By the end of 2021, experts estimate that we need approximately 10 billion doses of vaccines—many of which will be shipped to areas of the world, such as India, South Africa, and Brazil, that lack significant infrastructure. This is perhaps the greatest divide between countries that have rolled out successful immunisation programmes and those that have not. As Busch noted, “the UAE’s significant investments in creating robust air, sea, and land infrastructure facilitated logistics and vaccine distribution, helping us keep supply chains resilient”.
Neither is the novel coronavirus a one-time affair. If predictions hold, COVID will be similar to seasonal colds or the flu: here to stay. When fall comes around each year, governments will need to vaccinate the world as quickly as possible to ensure long-term immunisation against the virus. This time, logistics companies must be better prepared.
Yet global immunisation, year after year, is no small order. To keep reinfection rates low and slow the spread of COVID, governments will likely need 7-9 billion annual doses of the vaccine to meet that mark. And if DHL’s white paper is any judge of success, multi-sector supply chain partnerships will set the gold standard.