Starting from July 2020 a combination of rebounding demand for goods, container box shortages and port congestions due to pandemic-related operational disruptions have extended container ships' turnaround times, drove container freight rates up, starting on the routes from China to US. As European Commission Trade Policy review underlines, trade is one of the EU’s most powerful tools. It is at the centre of Europe’s economic prosperity and competitiveness, supporting a vibrant internal market and assertive external action. consequences of the China-Europe freight rates bubble will not be limited to abnormally high profits for shipping lines, but rebound effects might hit also the other transport operators in the supply chains and could generate new costs to firms and families. These effects are expected to be disproportionally high for the European market compared to other world regions and could have a cascade effect on other routes than China to Europe. Shipping lines market power could increase through the new investment capacity for vertical integration (terminal, intermodal) creating risks of product bundling, predatory pricing, or forcing of own services promoting carrier haulage instead of merchant haulage. EU policies should consider ports and shipping as a relevant component of policy agenda for strengthening the resilience and sustainability of the EU economy because European companies should rely on open supply chains, supported by stable, predictable, competitive and transparent trading context
Navigating Towards “ New Normal” in Liner Shipping: Risk and Uncertainties
Oliviero Baccelli
2021
Abstract
Starting from July 2020 a combination of rebounding demand for goods, container box shortages and port congestions due to pandemic-related operational disruptions have extended container ships' turnaround times, drove container freight rates up, starting on the routes from China to US. As European Commission Trade Policy review underlines, trade is one of the EU’s most powerful tools. It is at the centre of Europe’s economic prosperity and competitiveness, supporting a vibrant internal market and assertive external action. consequences of the China-Europe freight rates bubble will not be limited to abnormally high profits for shipping lines, but rebound effects might hit also the other transport operators in the supply chains and could generate new costs to firms and families. These effects are expected to be disproportionally high for the European market compared to other world regions and could have a cascade effect on other routes than China to Europe. Shipping lines market power could increase through the new investment capacity for vertical integration (terminal, intermodal) creating risks of product bundling, predatory pricing, or forcing of own services promoting carrier haulage instead of merchant haulage. EU policies should consider ports and shipping as a relevant component of policy agenda for strengthening the resilience and sustainability of the EU economy because European companies should rely on open supply chains, supported by stable, predictable, competitive and transparent trading context
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