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Breakbulk September 2022

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4 The Journal of Commerce | September 2022 www.joc.com Editorial September 2022 Janet Nodar Breakbulk and Project Cargo Executive Editor, The Journal of Commerce and JOC Events: Chris Brooks 609 649 2181, chris.brooks@ihsmarkit.com Executive Editor, The Journal of Commerce and JOC.com: Mark Szakonyi 202 872 1234, mark.szakonyi@ihsmarkit.com Managing Editor: Benjamin Meyer 916 716 6272, benjamin.meyer@ihsmarkit.com Managing Editor: Kevin Saville, 212 488 4282, kevin.saville@ihsmarkit.com. Senior Editors: William B. Cassidy Trucking and Domestic Transportation 202 872 1228, bill.cassidy@ihsmarkit.com Bill Mongelluzzo, West Coast 562 428 5999, bill.mongelluzzo@ihsmarkit.com Eric Johnson, Technology 213 444 9326, eric.johnson@ihsmarkit.com Janet Nodar, Breakbulk and Heavy Li 251 473 2742, janet.nodar@ihsmarkit.com Greg Knowler, Europe +44 7976798770, greg.knowler@ihsmarkit.com Ari Ashe, Southeast Ports, Intermodal Rail 202 548 7895, ari.ashe@ihsmarkit.com Associate Editor, Northeast and Gulf: Michael Angell, 646 505 4712, michael.angell@ihsmarkit.com Associate Editor: Teri Gri‹ is, 919 890 5602, teri.gri‹ is@ihsmarkit.com Senior Contributor: Cathy Morrow Roberson, 732 730 2533, cathy.morrowroberso@ihsmarkit.com Data Analyst: Marcin Lejk , +44 58 741 6270, marcin.lejk@ihsmarkit.com Shipper Engagement Manager, Breakbulk: Diana Hamm, 832 499 7368, diana.hamm@ihsmarkit.com Senior Editor, Special Projects: Alessandra Gregory Barrett, 860 248 5238, alessandra.barrett@ihsmarkit.com Senior Designer: Sue Abt, sue.abt@ihsmarkit.com Associate Production Manager: Kate Binder, 603 346 4680, kate.binder@ihsmarkit.com Designer: Hannah Kidd, +44 203 253 2134, hannah.kidd@ihsmarkit.com Sales: Cindy Cronin, Director APAC sales, 954 260 6061 Jean Gibbons, Senior Sales Executive West Coast, FL, GA sales, 706 469 7160 John Knowles, Senior Sales Executive EMEA, AU sales, +44 777 997 4677 Allyson Marek, Senior Sales Executive Northeast sales, 862 754 8012 Elaine Nosaka, Senior Sales Executive VA, NC, SC, Canada sales, 703 447 9555 Judy Welp, Senior Sales Executive Midwest, Gulf, Latin America sales, 512 284 2878 For Magazine Subscription Customer Service: www.joc.com/help 55 Water St., 39th Floor, New York, N.Y. 10038 Vice President, Maritime & Trade, IHS Markit, Peter Tirschwell Manager, Production, Carmen Verenna ©2022 The Journal of Commerce — All Rights Reserved For more information, visit our website, www.joc.com. RufusFrere-Smith, regional head of Americas for Swire Projects, said during the webcast. Multipurpose carrier AAL is hear- ing similar ideas from shippers, Marc Willim, AAL's general manager and head of chartering, said during the webcast. Although carrying a higher percentage of containers during the spillover market was relatively simple for AAL, shifting cargo out of containers to breakbulk modes can be di cult, he said. Palletized cargo that stacks neatly in two tiers inside a container may need to be stacked six tiers high in the hold of a 32,000-deadweight-ton MPV, but this can be problematic, depending on the cargo, he said. AAL is now working with some shippers to design packaging that will allow them to more easily ship these types of palletized cargo, Willim said. Feeder services using smaller container vessels to call niche, under-served ports with high-speed, reliable, direct services — i.e., no transshipment — are another adaptation that might "have legs," Wright said. Such services would have less complicated rotations and simpler shipping out of smaller ports than those operated by the large container lines. They would avoid the major trade lanes, he said. As spillover demand softens, small or "ad hoc" operators who chartered container and MPV ships at extremely high rates for 12, 18 or even 24 months at the height of the boom are now accepting much lower rates from shippers "just to get the vessel moving," Willim said during the webcast. "There was a lot of speculation and a lot of opportunity last year," agreed Frere-Smith. Experienced operators, particularly those familiar with the US market, have done well, while some smaller operators "didn't realize what they were getting into, and they've gotten their fi ngers burned," he said. THE GREAT PANDEMIC "spillover" market is slowly unwinding. From mid-2021 through early 2022, con- gestion, pulverizing spot rates, and chronically unreliable service in the mainline container trades pushed both containers and normally con- tainerized cargo toward a range of niche, specialized fl eets, including multipurpose, roll-on/roll-o• , and specialized reefer vessels. Now, the breakbulk shipping market is tip- toeing back towards normal — or at least a new normal. Containerized supply chains con- tinue to su• er from congestion, but freight demand has fallen such that global average spot rates measured by Drewry's World Container Index fell to $5,986 per FEU as of Aug. 25, a 39percent year-over-year decrease and a 42 percent drop from the Sep- tember 2021 high of $10,377 per FEU. In contrast, multipurpose vessel (MPV) charter rates have softened slightly but plateaued well above pre-pandemic levels over the summer. The sector outlook is strong thanks to improving demand on the traditional proj- ect and break- bulk cargo side, even as the spillover- driven "panic percentage," as dship Carriers President Lars Feller puts it, dissipates. Many shippers were deeply shocked to discover how vulnerable their supply chains were to disrup- tion. As a result, logistics, long taken for granted and often seen as a cost center rather than a critical part of business, "has a seat at the table now," Duncan Wright, president of forwarder UWL, said during the JOC Midyear Breakbulk and Project Cargo Webcast on Aug. 18. Some shippers are discussing keeping as much as 10 percent to 20 percent of their volume away from the mainline operators to mitigate risk, even if it costs more, Relief valves Logistics "has a seat at the table now."

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