Business
CAPE TOWN: Why even giant ships can’t solve the shipping crisis
CAPE TOWN: Jared Chaitowitz has a fleet of around 300 rental bikes in Cape Town, South Africa. He relies on a steady supply of spare parts – from pedals to bells – to keep them running. But there’s a problem.
“The guy that supplies the tyres that we use on our bicycles, earlier this year gave us a 10 to 12 month waiting period for new tyres,” says Mr Chaitowitz, of Up Cycles. “It’s been stressful.”
The pandemic sparked a global cycling boom prompting an increase in demand for bikes whilst simultaneously wholesalers have been stung by a worldwide shipping container shortage.
Mr Chaitowitz is juggling multiple challenges to keep his business operating. He is also waiting for a container with 50 brand new bikes from France, though he says he has no idea when it will actually arrive.
And months ago, a local business asked him to repair some bicycles earmarked for donation to charity. That charity work is on hold because Mr Chaitowitz can’t get hold of the components he needs.
Mr Chaitowitz has taken to sourcing spare parts where he can from local bike shops. “A lot of times, they’ve been quite generous and able to help,” he says. But it’s far from an ideal solution.
Mr Chaitowitz is not alone, many businesses around the world have faced similar logistical headaches lately.
Lockdowns led to a massive drop in retail purchases, followed by a sharp rebound as countries started to open-up again.
At present, hundreds of container ships are queuing for access to overloaded ports, mostly in the US and China.
In addition, in Europe and the US, lorry driver shortages mean it is harder to move containers on to their destinations once on land. And port closures caused by Covid-19 outbreaks have further exacerbated the traffic jam.
It’s become common to hear stories about containers left idling on quaysides for months on end. Plus, prices for containers are through the roof.
Sending one 40ft container from Asia to Europe costs $17,500 (£12,650), more than 10 times the price of a year ago, says George Griffiths, editor of global container markets at S&P Global Platts.
He adds that some shipping companies are now charging premium rates to guarantee delivery within a few weeks, for example, and that importers are also attempting to outbid one another, offering extra cash to snap up containers over their rivals.
“It’s really starting to bite in the market,” says Mr Griffiths.
A perfect storm?
It all begs the question – is this just a momentary supply chain blip, or a sign that the great behemoth of container shipping can no longer keep pace with our changing world?
The container shipping industry is “creaking” under the strain of high demand at the moment, says Rose George, author of Ninety Percent of Everything, a book about the shipping industry.
“It’s always been absolutely vital, it’s just never been noticed,” she adds. It’s taken the current crisis to highlight how crucial shipping is to the global economy,
Recently, some big businesses have even decided to purchase their own containers and charter ships independently in response to shortages. Among them, the US giants Walmart and Home Depot, and the Swedish furniture brand Ikea.
A spokeswoman for Ikea confirms that the company has bought additional containers and chartered vessels in order to redress a product shortage.
“We have also sent goods by train from China to Europe and we have invested in temporary intermediate warehouses in China, Vietnam, India, Indonesia, and Thailand to support production,” she adds.
From toys to cars, countless industries rely on shipping containers moving steadily and continuously around the globe.
“I have a gut feeling that… we’re going to see empty shelves,” says Stavros Karamperidis, head of the Maritime Transport Research Group at the University of Plymouth, referring to the Christmas period. The particularly severe lorry driver shortage in the UK could make this especially pronounced in Britain, he adds.
Lorry driver shortages are particularly acute in Britain, in part, due to EU workers leaving the UK following Brexit as well as during the pandemic plus tax changes making it more expensive for drivers from elsewhere in Europe to work or be employed in the UK.
While shipping firms are expected to make record profits this year, to the tune of many billions of dollars, they continue to be beset by problems.
“We have deployed more vessels and containers than prior to the pandemic, yet we still see unfortunate delays leading to missed sailings and missed capacity,” says Concepción Boo Arias, a spokeswoman for Maersk, the largest shipping container line in the world.
Delays in ports are having knock-on effects on ship schedules, she says. A couple of days’ hold-up at one port can end up adding two weeks to a container ship’s total journey time.
The current pressures are creating awkward situations – such as empty containers piling up at some ports while becoming scarce in others.
So what can be done?
Jack Craig, head of global technical at APM Terminals, which is owned by A.P. Moller – Maersk, emphasises the role that data and automation can play at ports. Automated checkpoints at Gothenburg in Sweden, which scan every container coming into the port, have reduced idling times by 30%, he says.
But large infrastructural interventions are tougher. A brand new container ship takes about two or three years to build, so any vessels ordered now will not be able to assist in the short-term.
Mr Griffiths adds that uncertainty over how best to meet new regulations on shipping industry emissions, expected in 2050, also means that some companies are wary of expanding their fleets at present.
“It’s a very costly mistake if you order 10 big container ships that might cost you $100-200m apiece, if, come 2050, you can’t use them,” he explains.
For decades, container ships have become bigger and bigger. The largest in the world today can hold nearly 24,000 TEUs (twenty-foot equivalent unit) – that would allow 24,000 containers, each one 20 ft (6.1m) in length, to be packed on to a single vessel.
But such ships require large, deep ports and giant cranes, which limits where they can go. They also place heightened demand on resources at ports where they do call, says Dr Karamperidis. He argues that a greater number of medium-sized vessels could help to make supply chains more reliable in the future.
Marc Levinson, an economist and author of Outside the Box, a book about globalisation and container shipping, agrees that smaller ships are easier for ports to handle.
Dr Levinson adds that businesses may also have to rethink their reliance on global supply chains that bring parts or products from single factories halfway round the world. This approach can be cheap but it relies on everything always functioning as intended.
“The shipping crisis has really pointed out the riskiness of these kinds of business strategy,” says Dr Levinson.
Ms George goes further and suggests that we may all have to have a rethink on our shopping habits. “I don’t know where it’s going to go,” she says of the current situation. “But I do hope it goes more towards reduction of consumption.”
And in Cape Town, while Mr Chaitowitz entertains the idea of sourcing parts closer to home, to escape the ups and downs of international shipping, he admits that this probably isn’t a realistic solution.
“All of the little things that go in a bicycle are made so cheaply in Asia, I can’t see, locally, how we would ever be able to compete,” he says. “It seems like we’re trapped in the system.”
NEW YORK: Union Minister of Commerce and Industry, Piyush Goyal, declared that the H1B visa issue is now “a thing of the past” during a meeting at Vanijya Bhavan, New Delhi.
He emphasized that the topic would no longer be a point of discussion in international dialogues, marking a shift in focus towards other areas of economic and strategic partnerships.
Minister Goyal’s recent visit to the United States included a two-day stay in New York, where he met with CEOs of major companies to discuss reforms initiated by the Modi government aimed at boosting foreign investments in India, particularly in the pharmaceutical and diamond sectors.
Surat, a prominent hub for the diamond industry, was highlighted as a key region for such investments. Goyal met around thirty business leaders who have already established ventures in India, signalling continued interest in expanding business operations in the country.
Following his engagements in New York, the Minister travelled to Washington, where he had a luncheon meeting with 17 CEOs from the CEO forum, including Tata Sons’ top executive.
The discussions primarily centred on restructuring the forum, as the terms of several members are set to expire in December. Various Memorandums of Understanding (MoUs) were also signed during the visit, underscoring the commitment to deepening business ties.
The visit also involved meetings with Small and Medium-sized Enterprises (SMEs), think tanks, educators, and the Center for Strategic and International Studies (CSIS). Goyal described this visit as different from previous trips, noting that there were no “negative agendas” on the table, reflecting a more positive outlook towards Indo-US relations.
Discussions extended beyond traditional sectors, covering potential partnerships in critical areas such as clean energy development, technology transfer, digital telecommunications, and defence.
Talks on biosciences have been ongoing, though Goyal noted that progress on biofuels was limited due to the upcoming US elections.
There were also conversations about setting a stable exchange rate between the Indian rupee and the US dollar, which could benefit bilateral trade.
Tourism and the development of the digital economy were also focal points during his meetings. Goyal’s engagements at the CEO forum and with the CA forum aimed to showcase India’s evolving business landscape and ongoing economic reforms, positioning the country as an attractive destination for global investment.
LONDON: The two frontrunners in the race to replace Rishi Sunak as Conservative Party leader and take his place in the House of Commons as Leader of the Opposition have thrown the spotlight on cutting immigration into the UK, with visas for Indians being singled out in heated debates.
Against the backdrop of the launch of the Conservative Party conference in Birmingham on Sunday, former immigration minister Robert Jenrick singled out India as one of the countries that should be subjected to tough visa restrictions across all categories unless it takes back its nationals who enter Britain illegally.
His closest contender, shadow housing secretary Kemi Badenoch, has also zeroed in on the same issue and condemned new migrants bringing their disputes from India to cause unrest on the streets of the country.
“It is quite clear that there are many people who have recently come to this country who have brought views from their countries of origin that have no place here,” Badenoch told the BBC.
“I saw as equalities minister people bringing cultural disputes from India to the streets of Leicester… we need to make sure that when people come to this country, they leave their previous differences behind. This is not a controversial thing to say,” she said.
Nigerian-heritage Badenoch, considered among the favourites to win the ongoing Tory leadership election, was apparently referencing the clashes that broke out in Leicester in September 2022 in the wake of an India-Pakistan Asia Cup cricket match.
Meanwhile, her former ministerial colleague Robert Jenrick who has notched up an early lead in the contest told ‘The Daily Telegraph’ earlier this week that while India benefited from 250,000 visas in the past year, there were as many as 100,000 Indian nationals estimated to be illegally residing in the UK.
He lamented that deportations or removals to India remain stuck in the hundreds despite an India-UK Migration and Mobility Partnership which is designed to cover such returns of illegal migrants.
“The government must stop other countries exploiting our generosity by imposing severe visa restrictions and restricting foreign aid to countries that do not take back their nationals here illegally,” said Jenrick.
Over the four-day Tory conference starting on Sunday, Jenrick and Badenoch will go head-to-head with two other party colleagues – former Cabinet ministers James Cleverly and Tom Tugendhat – as they make their leadership pitches before MPs vote in the next round. This time the field will be whittled down to the final two candidates who will then fight it out for the online ballot of the wider Conservative Party membership, many of whom will be making up their minds during the party conference. The new Conservative Party chief and Opposition Leader is then scheduled to be declared on November 2 after the voting closes.
The election follows the resignation of Sunak as Tory leader in the wake of the party’s bruising general election defeat in July under his leadership. The British Indian politician, who was re-elected member of Parliament from Richmond and Northallerton in northern England, has meanwhile been serving as interim leader until his successor is elected.
ATHENS: Greece has witnessed a remarkable 37 per cent surge in property purchases by Indian investors between July and August. This flurry of activity is driven by Indian buyers eager to secure permanent residency under Greece’s Golden Visa Programme before significant regulatory changes took effect on September 1.
Launched in 2013, Greece’s Golden Visa programme offers residency permits in exchange for property investments, making it an attractive option for non-EU citizens. Its initial €250,000 (Rs 2.2 crore) threshold was one of Europe’s lowest, drawing significant investment and boosting Greece’s real estate market.
However, the surge in demand pushed up property prices, particularly in high-demand areas like Athens, Thessaloniki, Mykonos and Santorini. To address this, the Greek government raised the investment threshold to €800,000 (approx Rs 7 crore) for properties in these regions, effective September 1 2024.
Sanjay Sachdev, Global Marketing Director of Leptos Estates, noted an “unprecedented rush” of Indian homebuyers in recent months. “Many investors purchased under-construction projects with handover periods of six-twelve months,” said Sanjay Sachdev, as per MoneyControl.
Many invested in properties under construction, with completion timelines of six to twelve months. Leptos Estates reported selling out its available residential stock in Greece due to this surge.
Effective September 2024, the revised Golden Visa programme seeks to:
– Temper rapid price increases
– Promote equitable development
– Direct investment towards less saturated areas
The appeal of Greece’s Golden Visa Programme for Indian investors
– Greece offers attractive rental yields of 3-5 per cent annually, making property investments financially rewarding.
– Property values in Greece have been increasing at an impressive rate of 10 per cent year-on-year, with significant growth following the pandemic.
– Investors gain access to high-quality healthcare, education, and the opportunity to establish businesses within the EU.
Before the rule changes, Indian investors gravitated towards popular Greek islands like Paros, Crete, and Santorini for property purchases.
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