Container shipping has been considered the epitome of the modernisation of seaborne transport for decades, but with port congestions, skyrocketing freight rates and the capacity crunch causing great disruption in supply chains, maritime now seems to be moving closer to its ancient roots. Is breakbulk making a comeback?
“Bulking” up for Christmas
Breakbulk, one of the earliest forms of shipping which, since containerisation has been used for transport of very specific type of cargo, is making a dynamic comeback in accommodating all types of cargo. While additionally, we have seen a rising trend of multinational companies such as Coca-Cola, Ikea, Amazon and Home Depot thinking out of the “box” and chartering their own vessels, in order to avoid disruptions in production and to adequately accommodate demand for Christmas in Europe and the US.
The initial port closures which COVID-19 brought, followed by increased demand, led to severe shortages of container spaces and a sharp increase in freight rates to astronomical levels. In fact, since January 2020 there was an increase of global container freight rates, (from 1,514 USD to 10,839 USD in September 2021), creating a ripple effect which neither shipping liners nor ports could deal with. The situation was further exacerbated when Ever Given blocked the Suez Canal for 6 days, adding to that the recent closures of two of China’s ports Yantian, one of the top 10 ports in the world and most recently the third busiest container port of Ningbo-Zhoushan, freight rates undoubtedly will continue to increase unabated.
Anything from minerals, project cargo to practically any cargo that can and has been traditionally been shipped via containers, is now shifting to breakbulk transport, due to greater availability, costs and supply chain and production disruption management.
Talking to Muriel Maurizzio, Chartering Manager at Oceanway S.A. based in Argentina, who specialises in breakbulk and bulk shipping, she advised that they “are seeing a great shift in requests of shipping options, with breakbulk shipments doubling if not trebling in amount. Practically any good which has been traditionally and customary shipped via containers is now being shipped via breakbulk.”
Mrs. Maurizzio explained that the process of shifting from containerised shipments to breakbulk is more about the fear of the unknown rather than actual complexities. Breakbulk shipping is not necessarily complex, it simply requires skilled expertise to attend to the necessary considerations.
Such considerations would include:
- Possibility of detention or demurrage of vessel due to incorrect reporting of freight quantities or freight condition;
- Packaging which is evidently different than for containers, thus cargo must be adequately secured;
- Insurance is also a matter of consideration given the risks and that they are much fewer shipper interest on board. Those shipping with containers which are hundreds, will usually not pay any consideration to insurance provisions or for example whether force majeure clauses are included;
- Being based in Argentina, Mrs. Maurizzio also highlighted the local restriction of paying for freight in dollars. With container shipping you would pay your local container line, so this is not an issue;
- Another consideration is that in breakbulk there is no liner service, which includes more planning for timely shipments as to which owner can take your cargo and when.
As Mrs. Maurizzio explained, while you do need to consider more on the positives the costs at the moment are significantly lower, capacity is greater and it also provides more options and flexibility in discharging. Breakbulk is deliverable to most ports around the world and requires little to no deconsolidation or reconsolidation. When loading and discharging goods at a port, equipment is already available on the ship, all you need is a truck to load and unload. Furthermore, you do not need to worry about things like cleaning the container and its’ redelivery.
Rising freight prices have set off a domino effect manifesting across supply chains, leading to shifting dynamics and new trends. Evidently, it seems that breakbulk is not only saving the day, but could also save Christmas this year and for many more to come.