I have been dealing with containerisation vs. carriers in the tuna industry for a while now. The number of times over the last two decades that I have heard carriers are out (mostly from consultants and bureaucrats) … feels bigger than the number of containers exported with tuna from the region.
too many variables and preconditions…
In fact, I wrote a couple of reports for FFA and then FAO about this, as well as many blogs about the separation of containerisation (which implies landing) from Transhipment.
In a nutshell, I firmly believe that containerisation in the Pacific will always be, at best, a minor complementary activity to transhipment.
This is not because of any particular issue surrounding the activities and/or actions of the Pacific island administrations themselves… but mainly because of economies of scale, geographic isolation, and the monstrous investments necessary to develop, build, upgrade, and maintain capable ports able to handle container vessels.
And if that wasn’t enough, the fishing effort epicenters are behaving erratically due ti the intrinsic variability of climate change, and then you need to add the massive volatility in the container transport costs
The FFA TRADE AND INDUSTRY NEWS, a publication I find to be an excellent and somewhat undervalued resource, recently featured an article that delves into the challenges of container freight charges in the seafood import industry.
More and more of what is called “black swans,” either coming from climate change and/or geopolitics, will be intertwined with the container trade, and fishermen are very fiscally conservative, so they will not put all their eggs in one basket. As long as tuna is still processed in Thailand, Vietnam, and Ecuador, Carriers will continue to reign, as they are a much more solid and price-stable platform that only needs a lagoon to anchor….
I quote it below… but read the whole newsletter
EU and US seafood importers suffer from soaring container freight charges
In May 2024, US President Joe Biden announced steep tariff increases would be introduced on a range of products imported from China, including electric vehicles, batteries, semi-conductors and solar cells, effective 1 August.
This drove a rush of exports of these products from China to beat the 1 August deadline, resulting in a shortage of containers and subsequently, a steep increase in freight charges. At the beginning of the year, freight rates for 40-foot freezer containers from Asia to Europe were around USD 2,500-3,000.
By July, rates had reportedly more than doubled or tripled reaching above USD 9,000. In addition, many Asian-based exporters struggled to secure bookings for containers on ships, typically experiencing delays of up to 4-6 weeks. This marks the third event post-COVID to negatively impact freight rates and shipping times.
In early 2023, Panama suffered a severe drought with Gatún Lake, which supplies water to operate Panama Canal’s Atlantic and Pacific locks, experiencing historically low water levels. This resulted in a restriction being placed on vessel traffic passing through Panama Canal from typically 36 crossings to 24 crossings per day in November 2023 (over 30% reduction).
Fewer booking slots available via the Panama Canal resulted in shipping delays, with vessels queuing much longer to transit the canal. According to industry sources, reefer carriers and container ships servicing the tuna industry experienced delays of at least 10 days waiting to pass through Panama Canal.
Ships moving between Asia and Europe via the Suez Canal must pass through the narrow Bab el-Mandeb Strait that borders the Yemeni Coast, connecting the Red Sea to the Gulf of Aden. In November 2023, around the same time Panama Canal transits became more restricted, Yemen-based Houthi militia commenced attacking merchant ships in the Red Sea. Some vessels have opted to avoid the Suez Canal and take the longer and hence, more costly route around Southern Africa, which according to industry sources adds an additional 7-10 days’ transit time.
Delays at the Panama Canal, disruptions to the Red Sea shipping route and now, changes in US tariff rates for China have created a triple-squeeze on global shipping capacity and thus bumped up freight prices. Longer routes put upward pressure on freight rates because of fuel costs.
Also longer voyages require more ships to maintain the same delivery schedule, resulting in fewer available ships to carry products. Ships continuing to route through the Red Sea are also subject to higher risk insurance premiums. In turn, high freight costs places pressure on both seafood exporters and importers, and ultimately, results in higher retail prices when these costs are passed onto consumers.
While the Red Sea issue remains, following increased rainfall and restoration of water levels in Gatún Lake, the Panama Canal Authority announced a return to 35 booking slots for early August 2024. The Biden Administration has also delayed an announcement on final determinations regarding the planned tariff hikes for Chinese goods which were due to come into effect on 1 August.
Pending no further major disruptions, shipping rates are expected to return to more reasonable levels (USD 3,000-3,500), assisted largely by more capacity being added to the global container ship fleet due to new builds.