Lars Jensen said, “Today we are moving more cargo than ever in history and there is absolutely no indication that the number of ships now is the problem. The problem is that they are stuck in queues outside ports and terminals.”
Mr Jensen added that it was not a question of port efficiency but the problem lay with moving the cargo further inland on trucks and trains. The inland problem needs to be solved to free up the ports which in turn, will free up the ships. “And that is going to take a long time. We cannot build our way out of this with ships.”
Pointing to the overcapacity built up by shipping lines coming out of the financial crisis 10 years ago, Mr Jensen said that the pace of new buildings in the last decade has significantly come down and today the gap between average and maximum capacity is much reduced than earlier. So the shock we can absorb today is smaller than what we had been used to in the past.
According to Mr Jensen, this is unlikely to change moving into the future because in the medium and long term nobody in the supply chain is going to be willing to pay more for assets that are able to absorb occasional spikes in cargo volumes but otherwise sit idle for most of the time.
Pointing to the “older” shipping industry of tankers and bulkers (vis-à-vis container shipping), Mr Jensen said that it has been relatively normal for shippers to pay much higher costs for short periods from time to time over the last 30-40 years.
“The reason that nobody wants to pay for overcapacity is that the money you save for most of the time far exceeds the cost of those tiny intervals when supply chains become stressed,” concluded Mr Jensen.
Read More: Port Congestion is a Consequence of Global Ripple Effects
