The crisis in maritime freight transport has raised freight prices and generated increases in the prices of raw materials for basic necessities.
Taken from Diario Libre
It won't end soon. Delays in maritime cargo and high freight prices are expected throughout 2022 and may begin to normalize in January 2023. This is according to Gaetan Bucher and Alexander Schad, president and vice president of the Dominican-Swiss Chamber of Commerce and Tourism, respectively.
“This was thought to be over quickly, but the latest forecasts say it will last another 12 or 13 months, that is, until Christmas next year. The logistics industry is doing everything it can to try to meet that demand, but even so, the demand has overwhelmed us,” says Schad.
Bucher reinforces this by saying that most analyses from Swiss banks indicate that high freight rates will continue until January-March 2023 "if nothing changes. If there is another wave (of COVID-19), if other issues arise, that will change again," he says.
During their participation in the "Diálogo Libre" segment of Grupo Diario Libre, both executives explained that the cargo situation worsened because ports in China and California were closed on weekdays, halting ships. Each vessel costs approximately US$80,000 per day. "This also increases the shipping line's costs, which are then passed on to the freight," Schad noted.
US President Joe Biden said last week that he hopes to fix the congestion in the national supply chain by keeping the country's most important ports open around the clock, seven days a week.
The EFE news agency reported that Biden hosted the leaders of the ports of Los Angeles and Long Beach, both in California and through which 40% of containers enter the United States, at the White House, along with representatives from longshoremen's unions, warehouse workers, and multinational companies. The standard operating procedure at these ports was to operate on weekdays and close at night and on weekends.
Schad explains that freight rates rise and fall in three-year cycles. This is because it takes three years to build a ship, and when prices are high, the industry orders many ships. “That has never been able to stabilize, but now it has been an unprecedented peak; some freight rates have been 10 times higher than normal. Before, they would rise 30 percent, 40 percent, but not 1,000 percent,” Schad remarks.
He points out that China halted production for a month and a half due to the pandemic. When those factories restarted, they had all the demand, but there weren't enough ships to transport the goods. This was compounded by the trend of buying products instead of services during the pandemic. Ports for large ships
The country has two main ports: Haina and Caucedo. The former handles the flow of ships to the United States, and the latter handles large, long-distance vessels after passing through Panama. Manzanillo will also be ready to become another deep-water port capable of attracting large ships, Bucher points out.
Logistics solutions provider DP World recently reported that it received a large vessel at the port of Caucedo for the second time this year. It was the MSC Virgo, owned by the Mediterranean Shipping Company (MSC), with a cargo capacity of 15,000 TEUs and a length of 366 meters by a width of 51 meters, allowing it to accommodate up to 20 rows of containers on deck.
“We have an advantage over our main competitor as a hub, which is Panama. Panama’s main advantage is its canal; if it no longer has to go through that canal, it opens up a bigger door for us with the ships coming from Europe to Brazil,” says Alexander Schad.
“Nearshoring gives us the opportunity to produce more in the Dominican Republic and export it to the United States,” said Alexander Schad, CEO of Think Logistics.
Fenatrado 's participation
The Dominican National Transportation Federation (Fenatrado) has historically been an obstacle for the sector, says Alexander Schad. However, he acknowledges that in recent years the federation has become more open to dialogue and that conversations are flowing smoothly. The CEO of Schad Logistics insists that Fenatrado must understand the existence of free transportation and should not obstruct it in order to achieve its goals. He also highlights that they have modernized and updated their fleet with the help of companies in the sector. “Honestly, the relationship with Fenatrado has improved. We're not where we'd like to be… Also, it's a large organization, with some hotheads and some more reasonable people,” he says. Schad recognizes that Fenatrado's trucks are needed, but a more modern fleet of vehicles is required.
Shipments from entrepreneurs who sell through social media
The COVID-19 pandemic expanded an entrepreneurial market that large distribution companies embraced to deliver goods to the interior of the country purchased through social networks, WhatsApp and other digital platforms.
“Small business owners could never ship a full truckload or a van, a container, because they simply don’t have that level of sales. Some could wait to accumulate the merchandise for two weeks, but their customers had to wait two weeks for the shipment,” says Alexander Schad, CEO of Schad Logistics.
Now, he says, since there are shipping routes and delivery lines that go specifically to homes, offices, or other final destinations, this has boosted e-commerce and entrepreneurship.
He indicates that when a consumer went to a store, they didn't find what they wanted more than 20% of the time, "and this has decreased significantly because there is now a much greater supply from many more retailers." From large stores to small ones, they have relied on distribution companies to expand online sales locally.
“Before, everything was done through physical stores, and not everyone has the money to open one, and stores are located in specific geographic areas,” says Schad. “Now, with e-commerce, the doors are open to all towns and municipalities in the country, and there are logistics operators who go to all those municipalities every day.”.
Deliveries can be made within 24 hours, after the goods are collected from various suppliers. "This has been enabled and has given small businesses an opportunity," he points out.
Shipments from entrepreneurs who sell through social media
The COVID-19 pandemic expanded an entrepreneurial market that large distribution companies embraced to deliver goods to the interior of the country purchased through social networks, WhatsApp and other digital platforms.
“Small business owners could never ship a full truckload or a van, a container, because they simply don’t have that level of sales. Some could wait to accumulate the merchandise for two weeks, but their customers had to wait two weeks for the shipment,” says Alexander Schad, CEO of Schad Logistics.
Now, he says, since there are shipping routes and delivery lines that go specifically to homes, offices, or other final destinations, this has boosted e-commerce and entrepreneurship.
He indicates that when a consumer went to a store, they didn't find what they wanted more than 20% of the time, "and this has decreased significantly because there is now a much greater supply from many more retailers." From large stores to small ones, they have relied on distribution companies to expand online sales locally.
“Before, everything was done through physical stores, and not everyone has the money to open one, and stores are located in specific geographic areas,” says Schad. “Now, with e-commerce, the doors are open to all towns and municipalities in the country, and there are logistics operators who go to all those municipalities every day.”.
Deliveries can be made within 24 hours, after the goods are collected from various suppliers. "This has been enabled and has given small businesses an opportunity," he points out.
