The national shipping sector affirms that the disproportionate increase in shipping costs is a global problem and is far from over

Both for this Christmas and for the purposes of planning imports of goods from the People’s Republic of China, companies could adjust their prices as a result of the increased cost of maritime transport.

In addition, it is reiterated that there may be a certain shortage of products or raw materials that are imported from the Asian country, since despite the fact that the Christmas season is approaching, dozens of merchants preferred not to place new orders.

Despite this, China became the second largest supplier to Guatemala and from January to August goods were imported for US $ 2.322 million, which meant an increase of US $ 896 million compared to the same period of the previous year.

Turns up significant

In 2017, the average cost for the transfer of a 40-foot container on the Asia-Guatemala route was US $ 2 thousand and the cost jump began to be experienced in 2019-2020 when it climbed to US $ 4 thousand and US $ 4 thousand 500 But a year later, the same freight was quoted at US $ 12,000 to US $ 14,000, according to the National Port Commission (CPN), which presented a report last Monday. This variation represents an increase of 200%, which exceeds the value of the goods.

The global freight index for container transport from July 2019 to August 2021 also shows substantial increases. For example, in July 2019 -before the pandemic- the cost was US $ 1,342 and last August it stood at US $ 10,323, according to the table presented by the Commission.

The price impact occurs in the movement of containerized goods, and according to the CPN study, it begins to affect the logistics chain of maritime transport.

Container shortage

Antonio Asencio, CPN analyst, said that the rise in freight rates is due to several factors, which are not only hitting Guatemala but on a global scale. Among them is the shortage of containers and equipment, delays in shipments, less labor and restrictions due to covid-19, especially in ports in China.

Also read: How “imported” inflation can modify prices in Guatemala

At the same time, an “imbalance” has been created between supply and demand in services; that is, market situations that have the effect of increasing the prices of international transport. “The headquarters of the shipping companies are the ones that establish the freight costs,” he said.

World funnel

Pedro Barnoya Sanchinelli, director of the China-Guatemala Cooperation Chamber, affirmed that trade between China, Guatemala and other countries has not stopped, despite “exaggerated” changes in rates for transportation services. And although, at the beginning of the pandemic, global trade decreased, the effect that this causes in a context of economic reactivation is not due to the supply and demand of containers, but to other factors.

Among these, he mentioned the operation of ports with lower capacity, which is why containers have lagged behind in their supply returns, apart from the fact that China’s ports are important players on a global scale.

He explained that, for the Christmas season, the large importers are already stocked, so that the increase in prices is due to a price increase in the previous season and warned that some shortages could be expected in some goods, because many importers prefer to wait for a low prices to stock. However, the trend is not downward, but on the contrary for the next few months.

He stressed that, however, this situation also represents an opportunity for entrepreneurs to explore new markets.

Roberto Papadopolo president of Asonav. (Free Press Photo: Courtesy)

Asonav: “It is a global situation and you have to understand”

Roberto Papadopolo, president of the board of the Guatemalan Shipowners Association (Asonav) provided a diagram of the current situation and anticipates that the problem could continue in 2022, for which he recommends that economic agents inform themselves about the current crisis to plan , adjust and make appropriate decisions.

How should this behavior be analyzed?

We must understand the origin of the global logistics problem that is being suffered at this time and, above all, understand what is happening in the 21st century. When it comes to freight, it is the final point of visibility of a global problem, and it’s the latest to hit the market.

It is necessary to understand what the role of maritime transport is in global logistics and the origin of the problem: The primary resources of maritime transport are ships and containers and to have an adequate maritime transport service, these resources must be in constant motion and consistent.

The origin of the current problem in logistics is the lack of adequate port infrastructure on a global scale.

What explains it?

If there is no port infrastructure that serves maritime transport, it will not be able to maintain its primary concept of the adequate use of its resources, which must be in motion.

Some example?

We have a port in the US, on the West Coast, Los Angeles, and there are currently 51 ships waiting to dock; Those 51 ships have an average wait of 14 days, so those container ships are not in motion.

There we must quantify the number of immobilized containers, which are about 765 thousand TEUs that are on board, since there is not enough port infrastructure to attend the unloading. Similarly, there are another 600 thousand TEUs that are waiting to board the ships.

In other ports there are delays and we quantify that there are a hundred ships that are waiting to dock due to a lack of infrastructure that can serve maritime transport and, consequently, international trade.

What are the implications?

There is a cost structure that means that these resources are not moving and there is a cost matrix factor that maritime transport uses which is how much a ship and a container cost per day. And that daily cost factor multiplied by these one hundred ships and by the average of 14 days, is a factor that affects the maritime cost as such.

For this reason, I reiterate, freight is the final point of visibility that is achieved in trade, but you have to see the origin, which was not prepared globally in the last two decades to create proper programming and planning of port infrastructure. that managed to serve international trade. And these investments in infrastructure take several years to make.

In these first 20 years of the century, there was already a weakness in port infrastructure on a global scale and when the pandemic caused a decline in volume, but then there was a reactivation, a percentage of the port activity that is needed increased.

What is the reaction of importers and what do they observe for the volume of cargo?

Like Asonav, what we would like is to keep the information, which is a problem at a global level and in first world countries. The United States is going through a logistics crisis in the last 50 years and they not only have a maritime transport problem, but also a land one.

Now, there is going to be an impact not only in Guatemala, but in the entire region of the Americas, Europe and Asia and it is the consequence of the origin of the problem and each local commercial or industrial sector must make the adjustments it deems appropriate in its own area. economic action and achieve better planning for the future.

Also read: How they see the use of bitcoin in El Salvador from Guatemala, one month after its arrival (and why it is still an experiment)

When could it stabilize?

When the global port infrastructure manages to stabilize and serve maritime transport. It was believed that it was a six-month affair, but we are already one year with this problem and it could continue in 2022.

What do you recommend to economic agents?

Our suggestion as Asonav is that you spend a little time investigating the situation at a global level so that, with that information, you can make visible the trend and where we are going.

The more informed they are, they will have a better planning and reaction towards the flow and dependence of trade and obviously, on the availability of raw material, finished product and resources for export. And for the public sector, it is important that the current authorities have an aggressive project to modernize the national port system.

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