Dear Editor,

When we speak about the supply chain of a certain trade or product, we almost never refer to its packaging. Supply chain refers to the physical movement of goods, which takes place irrespective of whether the cargo is packed or unpacked. Supply-chain of a heavy vehicle, for example, starts from the movement of raw resources, like iron ore and coal, to produce hot-rolled, and later cold-rolled steel. All of which are non-containerized. Semi-finished and finished steel products are then turned into various parts and equipment, which is only containerized before being delivered to the assembly line. And finally, when all is bolted together and a vehicle is produced, it is again shipped unpacked to its final customer overseas.

The latest hype in container-rates has shown how vulnerable and dependent international shipping in particular, and transportation in general is. Being an integral part of international trade, and serving the purpose of connecting overseas trading partners, it falls victim to various factors which continuously affect its stability. Regionalization, Trade-wars, sanctions, weather, riots, wars, lock-downs, breakdowns, delivery schedules, consumer demand, and many other factors dictate where the cargo is sourced from, and how and when it is delivered.

Having said this, we can often see shipments up to 20.000 mt of the commodity being shipped in bulk or containerized, depending on the spot rates, or availability of container liner service affected by a trade imbalance. Cargo that requires urgent delivery can easily be shipped by air, although road delivery, and, certainly, delivery by sea may be a lot cheaper.

Regular small-size shipments may turn big, and demand a different type and size of transport, sparked by an increase in consumption or in fear of future disruption of supply. And traders of dry-bulk commodities may suddenly turn to small size shipments to test a new trade or new delivery requirement.

The share of containers in international trade stands at around 21–22%, but, in reality, considering what is called “the last mile delivery”, it’s even smaller. This means that most of the cargo may not or never be at all containerized. Building your company’s supply-chain on container rates or container logistics only limits the company’s ability to stay competitive, flexible, and react to change.

Today, when container freights spike, many turn to breakbulk and dry-bulk trades in search for options and with the aim of saving their delivery plans.

We need companies that serve a combined role of the shipping marketplace as well as a platform for transportation and supply-chain management, that covers all types, sizes, and forms of cargo. But many, especially the so-called “digital forwarders”, are only capable of covering container trade.

Your Sincerely,

Alexander Varvarenko

Belgian businessman, Founder and CEO of SHIPNEXT

To cover all types of trades and destinations, Shipnext connects clients through email services, along with other data sources. Emails contain information, that relates to anonymized open fleet positions, market indications, freight reports.

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