In today’s blog, we will take a look at the logistics industry and how it deals with the incredible challenges of delivering packages to customers around the world. With the holiday season in full swing and as frantic shoppers look to purchase last minute gifts before Christmas, the shipping industry is forced to work 24/7 to meet demand. The holidays can make or break the year for many retailers and ecommerce websites, and these businesses depend on shipping companies to ensure their customers are satisfied.
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Celebrations and support from the people of Panama erupted on Sunday, when the expanded Panama Canal was opened on June 26th, 2016. Panama Canal is mainly used by the United States and China for trade and transportation. The new canal is said to allow for the passing of 98 percent of the ships in the ocean and will account for 80 percent of the current “world liquefied natural gas tanker fleet, compared with the 7 percent that could pass through old facilities.” With the $5 billion ten year expansion project, Panama hopes to generate three times the amount of revenue from canal shipping fees, and wants to make transportation more efficient with its new locks. However, these goals may still take some time to reach due to the drop in shipping prices and the unexpected problems that have arisen with the expanded canal.
As container ships continue to grow larger and as global trade increases, the need for automated shipping terminals is apparent. The United States has four such terminals, where computer-operated robots automatically load and unload shipping containers from massive cargo ships. There is no doubt that automation boosts productivity and cuts labor costs; however, it remains to be seen whether automation is worth the hefty investment.
Somali-based piracy cost the international community over $6 billion in 2012, but the decrease over the past few years has been due to increased reliance on maritime security. The decrease in piracy around the Eastern coasts of Africa can be seen as a success; however, piracy is increasing off the coast of Nigeria and the Gulf of Guinea. The piracy in the Gulf of Guinea is likely due to the lack of prevalent law enforcement, the easy access to illegal markets, and a target rich environment.
The expansion of the Panama Canal has overcome labor disputes, legal battles, and even technical issues, but the project is almost complete. When projects such as these occur on such a massive scale, big delays and budget overruns are inevitable, but usually the financial backers can always find the money to complete the projects. However, this may not be the case for the Nicaragua Canal. This canal is being built in order to allow large Post-Panamax ships to travel as the Panama Canal’s current locks are not big enough. Nicaraguan officials also believe that the investment will boost the economy and living standards. The canal would be one of the largest infrastructure projects in human history, but many are skeptical as no evidence of actual construction has been found since August 2015, despite the Nicaraguan government insisting that ground was being broken.
Since 2007, a construction project has been underway for a third set of locks for the Panama Canal. Undertaken by the GUPC, the completion of locks was delayed for years due to construction problems and contractual issues. However, it looks as though the project is nearing fulfillment. Earlier this month, the consortium behind the expansion announced they were ready to enter the trial phase for the expanded waterway. In a series of over 2,000 investigations, the GUPC plans to test the control systems and electric power that operate the new locks in the Pacific and Caribbean sections of the canal. After this phase, the plan is to run a set of navigation tests during the month of May. If all tests are successful, an expanded Panama Canal could become a reality in the second half of the year.
Arctic temperatures are rising at double the rate of anywhere else on the planet, subsequently leading to polar ice caps' permanent coverage to shrink by 10% a decade, a rate which could result in ice free summers in the Arctic by the end of this century. While the Arctic thaw is a major concern from an environmental standpoint, it is also having significant implications on the global transportation industry.
There is no question that a slowdown in global trade can have far-reaching implications. Weakened demand for commodities in Asia and an economic slowdown in key emerging markets, particularly China, have caused global trade to stall. This trade slowdown, coupled with falling freight rates, has left the global shipping industry in dire straits.
2015 has been a tough year for international trade, as new statistics show this year is on pace to be the worst year for trade since 2009. The numbers were a surprise compared with earlier projections, and have led to worries among some economists about the health of the global economy. The IMF had expected a 3.1% increase in trade volume compared to last year, but through three quarters of 2015, trade has only grown 0.7%. Analysts have highlighted lower demand from the Eurozone as well as an economic slowdown in China as major factors in the low trade numbers.
In 2014, 75 ships were lost at sea around the world, which is the lowest number in the last ten years. According to insurer Allianz Global Corporate and Specialty, sinking and submerging was the most common cause of ship loss, with 49 of the 75 losses resulting from this. Despite a downward trend in ships lost per year over the last decade, it is feared that the increasing size of container ships will make losses much more costly.
In what would be a great engineering feat, plans for a canal to connect the Atlantic and Pacific Oceans in Nicaragua have been finalized. The idea of a Nicaraguan canal goes back to the 19th century, when officials in the United States looked into the feasibility of a canal project. Nicaragua ended up being passed over when Panama was chosen as the site for a trans-oceanic canal by Congress in 1902. After the Panama Canal’s construction, talks of a Nicaraguan canal died down until the early 21st century. With increasing world trade and the need for quick shipping, the idea of a second canal connecting the Atlantic and Pacific Oceans was proposed by the Nicaraguan government.
In 2012 alone, piracy in Somalia cost shipping companies $6 billion. Teresa Stevens and her husband have come up with a product that aims to make it a lot more difficult for pirates to board ships. The product is called the Guardian Anti-Piracy Barrier. It is a simply-designed plastic barrier which fits over the rails of a ship and makes it nearly impossible for pirates to board ships using ladders or grappling hooks. This invention has the potential to lead to huge cost savings for global shipping companies and have a positive impact on neighboring African countries’ economies.
In 2006, the people of Panama overwhelmingly approved a national referendum to expand and enlarge the Panama Canal. This $5.25 Billion project, currently 6 months behind schedule, is due to be finished around June 2015. The project will double the capacity of the canal by adding 4 new locks, which will be able to handle much larger ships, known as New Panamax. The question becomes how the expansion will impact global trade and shipping routes.
The Arctic Ocean has traditionally been covered in ice and very difficult to travel through with a ship. Currently the ocean is travelable for four months a year as polar ice caps melt due to global warming. One country taking advantage of the newly opened route is China. A Chinese shipping company, COSCO, sent a ship from the port of Dalian to Rotterdam in the Netherlands, a 3,380 mile route that would take just over 30 days.
It is well known that areas in Asia, specifically Hong Kong and Beijing, are reputable for their dangerous air pollution and constant smog. In response, Hong Kong has begun to implement restrictions for the transportation industry regarding fuel and emissions, while even offering up to 50% savings on port fees for those vessels switching to fuel that doesn’t contain sulfur. However, these incentives aren’t enough to make the switch for some large container-shipping vessels, because it is simply too expensive to switch from the dirtier oil. When transportation companies refuse to use clean fuel, it gives them a competitive advantage that energy-conscious companies won’t tolerate any longer.
The way in which shipping is conducted can have huge implications for consumers and businesses around the world. As talks of sustainability and green energy continue to dominate the energy sector, businesses are looking for ways to make shipping less harmful to the environment. Hence, some companies have begun to ship their goods via sailing ships that use the wind as the source of energy. The organic and eco-friendly sector has jumped on this idea because the maritime industry is said to currently produce 3-5% of global carbon dioxide emissions.
Over the years, clean energy sources have become extremely popular as countries and governments around the world try to mitigate climate change by reducing carbon emissions. One of these clean energy sources is solar power which converts sunlight directly into electricity. Solar power has been used as a major energy source for many applications such as providing electricity for residential homes and industrial equipment. Recently, solar power has been applied to many new projects. One of which is shipping and if successful, solar powered shipping can have large impacts on the environment as well as international trade.
Most people view pirates as bandits dressed in funny outfits who sail around the world stealing treasure and stashing it on small, hidden islands. This may be a fun way to imagine the world, but modern day pirates are a real concern for shipping companies. Instead of stealing golden treasure, pirates commandeer ships with precious cargo and demand large ransoms from its owners.
You have to pay to ship your products to another country, but you don’t want it to cost you an arm and a leg. So what can you do? To be successful internationally, you must know how to get your products to your customers all over the world in a timely manner and at the lowest cost.
What was once an ancient risk now has a modern face, and is a growing concern for shipping companies. Following the release of the Maersk Alabama, the media has paid much less attention to the infamous Somali pirates. These pirates are still very much active. The number of piracy incidents has risen drastically since 2008. Back then, most of the acitivity conducted by pirates consisted of simply plundering the ship and fleeing. Now, the pirates are not only plundering the ships, but are also taking the ships and crews hostage for ransom. What changes could the piracy resurgence bring to the shipping industry?
Need to know how to complete a NAFTA Certificate of Origin or comply with customs regulations for outbound shipments? How about finding your Harmonized Code or Schedule B number? Head on over to the U.S. Census Bureau site and watch short, entertaining videos which provide step-by-step instructions. Save yourself time, money, and headaches by learning how to get your goods to the buyer.
A while back I wrote a post on the recent upsurge in piracy. At the time, a Saudi supertanker carrying $100 million in crude oil had just been commandeered, and the global shipping industry was unwillingly thrust into news headlines worldwide. In the end, the tanker was released for an undisclosed ransom, but the incident served as a catalyst for discussions on how to deal with the threat of piracy.
Navies from around the world have responded by sending ships to the coast of Africa to stave off attacks and hunt down the buccaneers. Even Japan sent forces to the region in a rare, post-WWII military action. The pirates are operating in an area larger than 1 million square miles however, making it nearly impossible for these forces to ensure the safety of shipping vessels. Shipping companies, consequently, must address the question of how they will manage the risk of piracy.
The latest event in a recent upsurge in pirate activity off Africa’s coast was also the biggest attack yet. A Saudi Arabian supertanker carrying $100 million worth of oil was commandeered by pirates 450 nautical miles away from the Kenyan coastline. This attack was unprecedented in both the size of the target and its distance away from shore, and as such represents a higher level of boldness on the part of the pirates.