Inventory of hazardous materials (IHM) is one of the requirements of the Hong Kong convention for the safe and environmentally sound recycling of ships. The conference where the convention was held was attended by members of 63 countries. It was held in 2009. The convention would become necessary by 2015 and then all the vessels which weigh over 500 GT will have to carry the inventory.

The purpose of an IHM survey is to provide ship owners, managing agents, crews, engineers and workers with a management report of all the hazardous materials, which are on-board the vessel.

The main materials that the IHM survey covers are; Asbestos, PCB’s TBT’s ODS and PFOS. Other materials maybe determined in later part of the report (PBDE, PBB, Mercury & lead).

We can carry out the IHM survey around your schedule, this can be carried out while the vessel is in China port. The IHM Report is valid for 5 years and requires an annual inspection by a competent person.

Source: seawaymos

These are tough times for supply chains and business leaders who depend on them. Brexit. The pandemic. Congestion at major ports. Now a 1,300-foot-long container ship is preventing hundreds of other vessels from using the Suez Canal, one of the most important waterways in the world.

If corporate officials needed to be reminded about the importance of preparing or updating their crisis management plans in these uncertain times, the headlines about the stranded ship should be enough to make their plans a top priority—whether they rely on supply chains or not.

Company executives who don’t know today how they would respond to a crisis tomorrow could make a bad situation worse when hit with a crisis, and harder to address and recover from it.

Fragile Situation

To the untrained eye, supply chains can appear to be strong, dependable, and built on a solid foundation. But as the Suez Canal crisis shows, looks are deceiving.

Chris Nicholson is the CEO of Pathmind, which uses AI to help companies optimize supply chains. He observed the global supply chain has been built “…” on top of ice shavings and toothpicks. There are weak points everywhere. Suez isn’t the only one.

“A lot of companies outsource different parts of their supply chain to be managed by others, which makes them passive consumers of other peoples’ mistakes. They don’t have the ability to react. They don’t know what their alternatives are.”

He noted that, “There are cheap manufacturers on different continents, but you pay the price in the complexity of your supply chain. It is a hidden price until Suez happen[ed], and then it is not hidden anymore.”

Nicholson predicted the current canal blockage, “…. and other events are going to push companies to look at more alternatives like onshoring and nearshoring, which will coincide with Biden’s policies to recenter the U.S. supply chain in North America.”

Sudden Impact

It did not take long for the stranded ship to create crisis situations for others.

Lukas Kinigadner is the CEO and co-founder of Anyline, a mobile data company. “Our supply chains are the arteries of industry, and in the era of same-day delivery and ‘just-in-time’ inventory, even a small blockage can cause headaches and disruptions down the line,” he observed.

The delays caused by the blockage of the Suez Canal,” … are already mounting, with oil prices already jumping, while car and computer manufacturers have raised the alarm over a worsening shortage of computer chips,” Kinigadner said.

Paul Hong is the Distinguished University Professor of global supply chain management and Asian studies at The University of Toledo’s College of Business and Innovation. “The Suez Canal is the gateway for the movement of goods between Europe and Asia—annually, more than 1.2 billion tons of cargo represents 12% of world trade. Even temporary blockage is likely to have a significant impact on multiple fronts,” he observed.

“Any delays of thousands of other bulk carriers and containers will slow down [the] circulation of consumer goods. In principle, unnecessary waiting time means wastes in the system.

‘The stranded ships in the Suez Canal not only slow down the whole supply chain process but also increase inefficacies in the system. For example, many containers are not able to be turned around to transport goods that are waiting to be loaded and shipped. This will disrupt factory production schedules,” he noted.

Have Options

In any crisis, it is important to have as many alternative courses of action as possible for dealing with the emergency.

David Paulson is global vice president of Avnet, an information technology and services company. He said, “…having visibility into every end of your supply chain can help to ensure transparency and agility when unexpected disruptions do occur. This—in addition to lessons recently learned about increased product demand, carrier delays and airplane shortages from the early days of the pandemic—will benefit all shippers at a time like this.”
Make The Right Decisions

Having options is one thing. But knowing how to choose the right and best alternative is another matter.

Brett Rose is a national retail expert and founder and CEO of United National Consumer Suppliers, an international wholesale distribution company. He said, “The Suez Canal issue is just another example of how business is not a round peg in a round hole.

“Agility is paramount and the key to success. Leadership must rely on their team to solve the problem and figure out a way to get the round hole in the square peg. I have found that many organizations have more knowledge within therefore walls than leadership sometimes realizes. It is imperative to utilize a team to strategize when real-time issues like this arise that require fast thinking and a quick solution.”

Pierre Subeh is a business expert and chief operating officer of marketing technology firm X Network. He noted, “Oftentimes, supply chains are planned based on demand, and financial controllers advise to only purchase what is needed until the next planned cargo shipment.

“[But] inventory deprivation can cause a downhill dip for any business, and many cannot survive a downfall. Having no inventory gives customers an opportunity to go venture out to competitors. Making inventory decisions should never rely solely on financial controllers, those are important decisions that should be taken more seriously by executive leaders,” he advised.

Prolonged Impact

The Suez Canal crisis will have short and long term consequences for weeks and months to come.

Ripples

Avnet’s Paulson said a prolonged blockage of the canal could lead to temporary shortages of finished goods throughout Europe. “For the U.S. supply chain, the longer-term impacts will be increased shipping container shortages as these containers will remain stuck on ships much longer than planned.

“Given that shipping containers are already in short supply due to the spike in sea freight demand and the more complex logistics associated with this method of shipping, that further exacerbates the issue. Additionally, some shippers will begin converting sea freight to air freight in light of the situation, which will further tighten already-limited air cargo capacity and could lead to increased costs in order to secure space,” Paulson predicted.
Snowballs and Avalanches

David Macknin is a principal of risk assessment and management firm ChicagoRisk. He warned that there is a potential that the snow ball effect could turn into an avalanche if the Suez Canal crisis is not resolved quickly.“The snowball is forming now, as the more days that pass with the boat (and others that are blocked because of it). [This] one incident will inflict harm on manufacturers’ long-term planning and short-term results of business operations of companies, no matter their size or industry.

“Supply chains will be constricted, and anyone expecting payment will be waiting because the goods aren’t there. If a company imports or exports, one could expect [an] impact on margins and bottom lines.”

Macknin asked, “Can the snowball turn into an avalanche? Should a company not have some sort of trade credit insurance to protect its accounts receivable, losses could easily accrue due to companies becoming insolvent or going into default on payments. Trade credit insurance can mitigate political risk caused by such issues as currency troubles, political unrest, tariffs (and yes, a boat blocking a canal).”

Source: hellenicshippingnews

For the past 20 years, the Port of Los Angeles has been the busiest seaport in the Western Hemisphere, responsible for exporting commodities such as soybeans and raw cotton and importing everything from furniture to electronics. In 2020, container volume reached 9.2 million 20-foot equivalent units (TEUs), with total cargo handled valued at $259 billion.

Last month, the Port of L.A. saw an incredible 47% increase in container traffic compared to February 2020, representing the strongest February in its 114-year history. The port processed nearly 800,000 TEUs during the month, marking the seventh straight month of year-over-year growth.

Granted, last February was near the beginning of the lockdown in China, America’s biggest trading partner. Growth was therefore all but guaranteed a year later.

But I believe something much larger is happening here. L.A.’s phenomenal surge isn’t a one-off event. We’re seeing a massive, synchronized explosion in global trade as economies reopen and fiscal stimulus measures ignite consumption.

Here are just a couple more examples of what I’m talking about: On the East Coast, the Port of New York and New Jersey saw not only double-digit container traffic growth in January compared to last year but also its highest January on record for volume. In China, volume at major Chinese ports were up 14.5% in the first half of March versus the same period last year.

Freight Rates Expected to Remain Elevated, Boosting Shipping Stock Investment Case

This heightened trade activity is leading to a number of supply-demand imbalances that are ultimately pushing up freight rates, benefiting container ship operators.

Congestion at ports is on the rise, leading to longer wait times. According to S&P Global Platts, turnaround times at the Port of Singapore have increased from around two days to as many as five or even seven days. Some retailers are reportedly paying more to have goods flown by air cargo to the U.S. to bypass long port delays. Demand for new shipping containers has outpaced new orders, leading to a global shortage.

Again, this is all putting massive upward pressure on rates. For the 12-month period through March 19, global container rates jumped nearly 195%, from an average of $1,377 per 40-foot container to $4,045.

Among the routes with the biggest year-over-year increases was China/East Asia to North Europe. The cost to ship a single container from Shanghai to Rotterdam rose an astonishing 418%, according to Freightos data. (I expect these rates to go up even more due to the recent logjam in the important Suez Canal caused by a lone container ship run aground.)

What’s been a huge headache for importers and exporters has been a boon for investors of shipping stocks.

Dry bulk stocks were the best performers, up 50.4% year-to-date through March 19, among the sectors tracked by maritime research and consulting firm Drewry.

According to Drewry analyst Ishan Dafaria, the second week of February was the best week of the 21st century for the derivative dry freight market, with trading volume exceeding $1 billion.

The current rally, which began in December 2020, “has defied the usual trend of a seasonally weak first quarter,” Dafaria writes.

Among the best NYSE or Nasdaq-listed cargo stocks were Golden Ocean (up 65.4%), Scorpio Tankers (77.5%), Diana Shipping (84.0%) and Star Bulk Carriers (91.1%). Microcap Navios Maritime Holdings, with a market valuation of only $140 million, was the top performer, up a jaw-dropping 456.9% year-to-date, on news of its merger with Navios Maritime Containers.

But Is the Rally Sustainable?

That depends on who you ask of course, but many analysts right now see freight costs remaining elevated for a year or more as consumer demand and capacity stay tight.

That includes McKinsey & Company’s Ludwig Hausmann, who told Bloomberg recently that he sees prices staying high “for the next one or two years” due to a lull in price wars and the fact that many shippers have already locked in long-term contracts.

Analysts at UBS and Morgan Stanley are likewise bullish on the industry, with UBS’s Tom Wadewitz saying he sees a “perfect storm” for freight demand right now thanks to tight capacity, inventory rebuilding and ongoing fiscal stimulus. His economic team believes spending on goods is “well supported” through the second quarter of 2022.

Morgan Stanley’s Ravi Shanker, meanwhile, says that economic reopenings are supportive not just of services spending but goods spending as well.

As we come out of the pandemic, many assets are on the rise, including commodities, energy, home valuations and more. With so much economic activity coming back online, it only makes sense to me that container ship operators will see some of the biggest gains as a result.

Source: hellenicshippingnews

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Source: ship-technology