May 17, 2020

How Global Shipping Has Overcome the Recession

Freddie Pierce
3 min
Global shipping has overcome the recession

Few industries were hit as hard by the global recession as the shipping sector, which lost an estimated $15-20 billion in 2009.

As Peter Sand, shippin...

Few industries were hit as hard by the global recession as the shipping sector, which lost an estimated $15-20 billion in 2009.

As Peter Sand, shipping analyst at The Baltic and International Maritime Council, explains: “Demand for ships to transport dry and wet bulk commodities completely collapsed. Evaporation of demand and difficulties getting letters-of-credit were important factors. For container ships, demand contracted by 10 percent year-on-year in 2009.”

The impact saw shipping lines falling into debt and some closing their doors. When Japanese shipping line NYK Line saw its net income fall from JPY56.1 billion in 2008 to a loss of JPY17.4 billion in 2009, it had to react.

Takeshi Morinaga, a spokesperson for NYK Line, said that the company focused on other regions and industries. “We are deepening the scope of global logistics business; strengthening our sea and land car transportation business in China and India; and expanding our natural resources and energy resources transportation business.”

Quick response

As volumes recovered, companies also increased their rates in the third quarter of 2009. Container line CMA CGM Group said: “Lines implemented measures such as newbuilding cancellations and delays, scrapping of older tonnage, return of chartered vessels to their owners, implementation of slow and extra-slow steaming, generating substantial fuel savings which have rebalanced supply and demand on the market.”

Others believe the reaction of global ruling powers helped the industry cope. “The world’s governments have acted sensibly. We haven’t seen heavy subsidising or protectionist measures to save national carriers and thereby prolonging the crisis and over tonnage in the marketplace,” Jan Fritz Hansen, executive vice-president of the Danish Shipowners´ Association, said.

By the end of 2009 things had started to improve. One of the world’s busiest ports, Hong Kong, saw monthly container throughput record year-on-year increases from December, while growth of 16 percent was recorded in the first half of 2010.

China emerged from the downturn as one of the world’s biggest economic powers. According to 2009 economic data, it replaced Germany as the world’s leading exporter, with 10.7 percent growth in the fourth quarter of 2009, while the Beijing government’s strong economic policy led to surging imports.

It is believed that Asian trade helped many lines survive the recession. “The intra-Asia trade remained stronger than the main East-West trades and that may have helped those carriers in that trade,” Anne Marie Kappel, vice-president of World Shipping Council, said. “Liner shipping is heavily reliant on consumer spending because most of what is carried on ships is finished consumer goods and the parts and materials used to manufacture those goods.”

Container shortage

The recovery has been hindered by a shortage in containers that hit in the second quarter of 2010, when a surge of volumes from Asia took lines by surprise. Problems occurred when the mostly Chinese container manufacturing factories closed because of the downturn, and many workers were hired for other work under the China Stimulus Plan. The global container fleet shrank by 4 percent in 2009, according to leasing firm Textainer Group.

The shortage was compounded by lines operating vessels more slowly to cut fuel costs, resulting in equipment spending more time at sea. As a result, China Cosco and China Shipping Container Lines imposed extra surcharges, while Maersk reactivated idled vessels to help relocate empty containers and ordered new boxes.

“In the meantime, carriers are asking their export customers to provide as much advance notice as possible for their requirements,” Kappel said.

Overall it appears that the first half of 2010 was positive for the shipping industry – volumes are rising, the container shortage is easing and carriers have been able to increase rates. Experts believe that the growth for 2010 will be respectable. However, caution remains about where new demand will come from.

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Jun 15, 2021

FedEx is Reshaping Last Mile with Autonomous Vehicles

3 min
FedEx is expanding a trial of autonomous vehicles in its last-mile logistics process with partner Nuro, including multi-stop and appointment deliveries

FedEx is embarking on an expanded test of autonomous, driver-less delivery vehicles to develop its last-mile logistics. 

The US logistics firm piloted autonomous vehicles from Nuro in April this year, and the pair will now explore that further in a multi-year partnership. Cosimo Leipold, Nuro’s head of partnerships, said the collaboration "will enable innovative, industry-first product offerings that will better everyday life and help make communities safer and greener". 

FedEx will explore a variety of on-road use cases for the autonomous fleet, including multi-stop and appointment-based deliveries, going beyond more traditional applications of the technology in single-route movement of goods from A-B. Exponential growth in ecommerce is spurring its broader experimentation in new autonomy solutions, Fed-Ex says, both in-warehouse and on-road. 

“FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy,” said Rebecca Yeung, Vice President, Advanced Technology and Innovation, FedEx Corporation. “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”


The changing role of couriers 

Unlike structured delivery networks, operating under long-term partnerships and contracts, agility is where couriers deliver true value - and their ability to deftly solve last-mile fulfilment has most acutely been felt during the pandemic. For the billions of people around the world forced to stay at home to protect themselves and their communities from the spreading COVID-19 virus, couriers have been a constant. They may have been the only knock at the door some people experienced for weeks or months at a time. 

But the last-mile has been uprooted by a boom in ecommerce, a shift that has been most apparent in the UK, US, China and Japan, according to the Global Parcel Delivery Market Insight Report 2021 by Apex Insight. These are markets with dominant economies and populations used to running their lives with a tap of a screen or double-click of a mouse. 

“Getting last mile delivery right has long been a challenge for retailers,” says Kees Jacobs, Vice President, Consumer Goods and Retail at Capgemini. “In 2019, 97% of retail organisations felt their last-mile delivery models were not sustainable for full-scale implementation across all locations. Despite increasing demand from customers, companies were struggling to make the last mile profitable and efficient.”

Jacobs says that the pandemic alleviated some of these stresses in the short term. With no other option, consumers were understanding and tolerant, if not entirely happy, with longer delivery times and less transparent tracking. “But, as extremely high delivery demand continues to be normal, customers will expect brands to contract their delivery times,” he adds. 

Last mile's role in ESG

Demand and volume weren’t the only things that have changed during the pandemic - businesses looked closer to home and as a result became more sustainable. Bricks and mortar stores were transformed from mini-showrooms to quasi-fulfilment centres. Online retailers and other businesses sought local solutions to ship more faster. In densely populated London, UK alone, Accenture found that delivery van emissions dropped by 17%, while Chicago, USA and Sydney, Australia saw similar emissions savings. 

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