Splash Extra

Container shipping and the Markov chain

Knock-on effects are propelling the sector to dizzying heights

It just gets better and better for the carriers in term of profits, as more parts of the global supply chain clogs up. That is no one’s fault really; and it can be put into a statistical and mathematical model – it even has a name to it: a continuous-time Markov chain. A Markov chain is described as a sequence of possible events in which the probability of each event depends only on the state attained in the previous event.

This may help to comprehend the ripple effects caused by several and different parts of the global supply chain, with liner shipping appearing to be the catalyst, but the real causes are to be found ashore. In the manufacturing export hubs of the Far East and in the receiving end of the containerised goods.

The result of it all? According to Hapag-Lloyd, the party is far from over, as they aim to claim another $3,000 per feu on the transpacific headhaul from June 15. On June 15 2020, shippers paid $2,319 per feu plus some surcharges. One year on they are paying four to five times that price, all-inclusive.

On the backhaul, the money more than covers cost these days too. Carriers could not care less right now, but it all adds to the profit tally though.

River deep, mountain high

The Ever Given merely made a bad day worse in the Mediterranean and north European ports. As it remains in an Egyptian prison called the Great Bitter Lake, Splash Extra urges the Suez Canal Authority to fold and admit their apparent responsibility. It was a clever idea to keep Ever Given within Egyptian jurisdiction, but as president al-Sisi by mid-May backed dredging work to widen and deepen the southern section of the canal where she got stuck, the blame game seems lost.

Splash Extra has a partiality to the San Pedro Bay ports on the US west coast. Amidst their continuous reporting of higher throughput records, they face the worst possible situation too – as boxes keep arriving, while hinterland connectivity cannot move the boxes at a matching pace. Handling 15 ships a day, when the norm is 10. And when those 15 ships carry 50% more containers than the 10 regular sized containerships, it is easy to grasp the mess. Many studies contemplating the arrival of ultra-large container ships in Rotterdam, now find relevance on the US west coast too. The industry has consistently avoided to bring in the ultra-large ships to the San Pedro Bay ports, as they are notoriously inefficient.

Net Zero by 2050

Is the title of the Roadmap for the Global Energy Sector – IEA’s just published landmark project that will guide the agency going forward. The pathway has no need for investment in new fossil fuel supply projects. For container shipping, the impact of such a scenario, as unlikely to happen as it may be, is not straightforward to decipher.

But looking in another direction – inwards and towards the Arctic region, changes could happen. As the shipping industry decarbonises towards 2050 and beyond, nuclear propulsion will be debated especially following the investment made by X-Press Feeders into the most dedicated venture behind such a push right now – Core Power.

Splash Extra questions whether this investment is because they believe in it or because they are making so much money right now that they no longer know how to spend it, so they might as well polish their ESG profile a bit while waiting for better ways to burn cash.

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