Issue link: https://jocdigital.uberflip.com/i/1488405
Januar y 2, 2023 | Journal of Commerce 63 www.joc.com EXECUTIVE COMMENTARY 2023 ANNUAL REVIEW & OUTLOOK Maritime ◀ "We can hardly deny that the supply chain has become a miniature version of the global economy, faithfully reflecting its ups and downs rather than simply delivering goods." P.T. Chen ◀ ◀ "Each node along the supply chain is interconnected and reliant on the success — and fluidity — of the others." Stephen Edwards terminals, warehouse storage, land- side distributors, and the ship's crew — a key element. We can hardly deny that the supply chain has become a miniature version of the global economy, faithfully reflecting its ups and downs rather than simply delivering goods. Due to increasing energy prices caused by geographical tension in February 2022, along with other fac - tors such as unstable food supply and abnormal weather, inflation is now a major global issue. An increasing number of pessimistic analyses casts a darker shadow on the 2023–24 economic outlook, which signifi- cantly affects freight levels and has the shape of the shipping industry reverting back to its pre-pandemic version. The orderbook of new ships in the container sector — which is showing a 28 percent increase in new construction by 2025 — is another issue. However, the IMO EEXI/CII regulation is estimated to countervail 5 to 15 percent of the global tonnage based on prevailing service routes and the ship age industry. We must take from the les- sons of the last two and a half years and know that greater resiliency is required to meet further challenges that lie ahead. Wan Hai Lines, Ltd. P.T. Chen Chairman wanhai.com Over the past two and a half years, supply chain disrup- tion has redefined the traditional transporta- tion sector. No one would ever have imagined that it could take as long as six months to receive a parcel that was purchased online or ordered from an authorized store. To ensure the smooth and timely delivery of goods, we rely not only on sea trans - port providers, but also on container This will take great efforts, but adapting to challenges was always one of the key abilities of our sector. Virginia Port Authority Stephen Edwards CEO and Executive Director portofvirginia.com The biggest and most permanent change to the container shipping industry brought about in the last two and a half years may be the public's understanding of what "supply chain" truly means and the impact of our business on the world's economy and the everyday consumer. The pandemic and its results fueled a supply chain strengths-and- weaknesses assessment, and one of the most important points to arise is the importance of having strong, well-managed, and long-term inves - tors as your supply chain partners. We learned that without this, even paying a higher short-term price cannot buy success. It also provided an invaluable, real-time lesson on how each node along the supply chain is intercon - nected and reliant on the success — and fluidity — of the others. When one stumbles, the ripple effect is wide-ranging and not easily, quickly, or inexpensively "fixed." We learned that the most capable ports and supply chain gateways are those that can integrate operations and best manage the relationships with all partners within the "supply chain village." Finally, the industry learned that in order to avoid the aforemen - tioned realities, we must continually invest in infrastructure and technol- ogy to handle the next supply-chain disruption. What will not change are the increasing demands and expecta- tions on this industry to seamlessly and sustainably move goods around the globe — it is imperative to understand this reality. The benefits of this education are important, but so now are the expectations of this Unique Logistics International Christian Sur Executive Vice President unique-logistics.com The container shipping industry is quickly adjusting to a post-COVID-19 environment, perhaps too quickly considering all the challenges endured in the past two years of supply chain "disorder." Despite historically high logistics costs for provided services that deteriorated to also be the most historically unreliable, as volume demand slowed in 2022, the industry is swiftly returning to pre-pandemic hab - its. Shippers are more than willing to seek lower price options to move their goods, which are less in demand on top of high inventory levels. Ocean carriers are also willingly lowering spot price levels with hopes of maintaining vessel utilization at acceptable levels with more effective supply becoming available, as vessels are no longer loitering around US ports waiting for berth space. We have clients who were looking for space at premium pricing at the beginning of 2022 now seeking lower spot prices instead. Even with relatively strong holiday sales, US importers are not expected to meaningfully increase their orders in spring 2023. Such prospects will continue to press shipowners to lay up ships, including delaying delivery of new vessel orders. With high inflation and interest rates and recessionary eco - nomic conditions in the US to prevail for at least the first half of 2023, the container shipping industry will see all of its players — from beneficial cargo owners, asset operators, and non-asset service providers — step back into their tripartite relationship. The brokering role of non-asset players such as ourselves will be even more important in 2023, especially in the contract process and throughout seasons to offer more wide-ranging options, which have become more critical if any lessons were learned in the last two years. One key concern that will continue to linger and potentially and adversely affect the industry heading into 2023 will be unending labor tensions with both US West Coast dockworkers and Class I railroad unions. "Even with relatively strong holiday sales, US importers are not expected to meaningfully increase their orders in spring 2023."