Shadow inflation: Shipping costs are up way more than you think

This article gives lots of measures of factors contributing to supply chain cost. There are good graphs indicating the changes.

But these are contributing hidden costs to products, and those costs will be borne by consumers of the final products. That’s inflation.

It may be the first time that inflation is influenced by marine supply chain problems since the incessant wars on the seas in the 17th and 18th century. And in those days, frequent shooting wars guaranteed recessions; it was leisure goods like tea that had inflated prices. World Wars I and II also caused inflation, and shortages, but these were only partly caused by pillaging of marine traffic on the high seas. In most cases price controls were put into effect to resist inflation for ordinary people; and the extra goods were needed for the soldiers. We don’t have those now.

Somehow in the US and EU we need to find people to do the hard jobs in the supply chain to keep goods moving— warehouse jobs and driving jobs.

Greg Miller, Senior Editor Friday, October 22, 2021

Shadow inflation: Shipping costs are up way more than you think

Maersk’s forwarder move could be abuse of its dominant position, says Clecat

Apparently I’m not the only one who thinks Maersk is staking out a monopoly position, discriminating against forwarders.

I think Maersk and others are in danger of killing off forwarders, and also customers. Larger customers will look at private transport. Small customers will mistrust Maersk’s platform, and evaluate its performance against the others out there, such as DP World’s. So it better work lots better than the others, not likely an advantage that can be sustained for long, nor for every type of customer. Many forwarders have end-to-end booking platforms.

I bet even large forwarders will start chartering ships if current price conditions for container shipments continue for long, like till Spring 2023.

And actually, I did not have to wait long. IN THE SAME LOADSTAR, on 10/22/2021, I found the second article.

By Nick Savvides 22/10/2021

Maersk’s forwarder move could be abuse of its dominant position, says Clecat – The Loadstar

UK forwarder turns the tide on container lines with direct China-UK service – The Loadstar

DP World launches ‘end-to-end logistics platform’ to compete with carriers

DP World has not waited to announce their complete booking and shipping system to compete with Maersk’s announcement.

Maersk has Tradelens, a booking systme using blockchain concepts, which is a partnership with IBM, and purports to allow a shipper to book end-to-end delivery of cargo.

The DP World version is called CARGOES. According to the article, DP World claims that while blockchain is not part of their system now, they are looking at including it.

And why would they want to, if the standard database technology works well? It surely would not perform as well, and once they have the permissions set up, registered users can query whatever they set up to allow.

But more important, both of these announcements tend to render ocean freight brokers less relevant for smaller shippers. While there are other services brokers could perform, the one-stop booking and tracing they offered can be obtained elsewhere.

Brokers can still provide customized help with freight services. And they may have a customer relationship that cannot be obtained through an app. And remember, brokers still buy 40% of ocean shipping space, so that competing with brokers may cut off your nose if they shift where they buy their space for resale.

It’s most useful now, with rates at an all-time high for containers, from say Asia to EU or US. The platforms may help the firms keep some of the margin they are able to command right now. They won’t have to discount so much for brokers who book larger volumes Bu tthe ocean shipping firms can’t expect to maintain their blanked sailings and late deliveries as a means of holding prices up. That’s anathema for shippers, who can’t see their cargo tied up in shipping delays of various sorts.

The high prices are going to create big incentives to figure out how to cut them out. We already see large shippers such as Amazon and Walmart and IKEA turning to chartering their own ships. There will be more of that.

These chartered ships are going to create dedicated fleets. And there is no reason they cannot offer some of their unused capacity for sale to some partners. Ocean liner companies may well be creating a secondary carrier set and find themselves serving far more small shippers and fewer of the megashippers, which were their primary source of revenue for years.

That would put them in a long-term starvation system, with megaships to fill and not enough large shippers to fill them. There would be massive retrenchment and only a few carriers would survive. That could be the future 10 years from now, after the supply chain disruption blip of the Covid period.

It’s good to remember that apps by themselves can’t create huge value; it’s the actual services and products they provide that are the real source of value. The shipping itself has to be conducted in a way that’s worth it for the customer.

By Charlie Bartlett, European Correspondent 21/10/2021

DP World launches ‘end-to-end logistics platform’ to compete with carriers – The Loadstar