We asked shipping companies about their near-term outlooks
Cargo traffic has had to adapt to a broad variety of circumstances: extensive lockdowns during the coronavirus pandemic, the blockage of the Suez Canal and its consequences, the global shortage of containers, and congestion at oceanic ports. And now it’s facing an economic downswing, rising energy prices and capacity adjustments.
Staffan Herlin, Head of Group Marketing, Sales and Customer Service at Finnlines, says that the opening of the company’s new route between Ireland and Belgium has been well received in the market, and that the original ro-ro vessel was quickly replaced by a larger one with almost 4,200 lane metres for cargo.
“The recently opened Zeebrugge-Rosslare line will bring welcome new revenue, and the long-planned opening of a route between Poland and Sweden is already showing signs of becoming a reality.”
“There’s already been a slight contraction in volumes, and a clear fall has been seen in construction-related goods flows in particular. By the early year at the latest, we’re also expecting weakened purchasing power to be reflected in consumption and, above all, thereby in import volumes as well.”
Herlin has identified a potential challenge in sensibly adjusting capacity to decreasing volumes without causing a significant reduction in service level. Yet he anticipates that new opportunities will also be found in the near future.
“Investments are being made in passenger traffic, and we have confidence in the success of the RoPax concept. We’re compensating for the loss of Russian traffic by opening up new markets within our own transport network. We’re also well equipped to adapt to changing volumes, and our cost-effective tonnage will ensure a high level of competitiveness even in challenging market situations.”
Herlin says that the three large Eco-class RoRo vessels that entered service this year have already lived up to expectations in terms of cargo handling, fuel economy and environmental friendliness.
“We’re now focusing on the two new Superstar-class RoPax vessels that will start running on the Naantali–Kapellskär route next year. Their passenger capacity is double that of our current tonnage, and they will have an additional one thousand lane metres of cargo capacity.”
“We’re investing in our customer service through the continuous development of digital applications. We’re also working hard to prepare for tightening environmental regulations, both in the short and long term.”
Maersk hopes the investment boom will continue
Satu Lindeberg, Managing Director of Maersk Finland, says that the greatest challenges seen in overseas cargo traffic in the last few years have recently levelled off.
“The worst disturbances have ended for the time being, and we’re returning to a new normal. However, the global political situation may quickly cause new disturbances, as could congestion and strikes at ports around the world.”
“The outlook for global economic growth forecasts a recession next year, and the emergence of new tonnage in the market will certainly make strategic planning and alignment more challenging for shipping companies. When it comes to capacity, supply is currently outweighing demand. Shipping companies are therefore cutting capacity by reducing their number of weekly departures.”
Both Finnish and foreign investments in Finland are opening up new opportunities in cargo transport.
“Lately, I’ve been delighted to read about these investments on such a frequent basis, and I hope this ‘boom’ will continue.”
“Maersk has global ferry connections both to and from Finland, via feeder lines to transit ports in Central Europe and from there to all the continents of the world. We intend to maintain this level of coverage in the future, and routes will be added according to customer needs.”
Lindeberg says that Maersk is committed to reducing its carbon footprint, with the goal of having emission-free logistics integrator operations by 2040.
“We’ll be introducing the first 2100 TUE vessel to the Scandinavian region towards the end of next year. This ship runs on methanol, and will support both our own and our customers’ sustainable development goals.”
Hapag Lloyd praises delivery reliability
Leo Vapalahti, CEO of Hapag Lloyd Finland, says that, in spite of some local congestion, there has recently been a considerable improvement in global delivery reliability.
“The worst congestion at ports has eased, particularly in Asia and on the west coast of the USA. This has improved the availability and circulation of vessels and containers, and has also helped ships to keep to their schedules. Although we still have a long way to go to reach 2018–19 levels, when 75% per cent of deliveries were made on schedule.”
Vapalahti says that the outlook for shipping companies in certain fields is economically challenging due to increased capacity coupled with a downswing in demand.
“Inflation, energy prices and the fact that consumption is increasingly shifting towards services are all having a direct impact on volumes.”
“In addition to adapting to evolving customer behaviour, companies are also attempting to be better prepared for the kinds of supply chain disruptions and component availability issues that we’ve been witnessing over the past few years. This may even out traditional seasonal variations in certain areas that have previously experienced a shortage of capacity.”
“Shipping companies’ order backlogs for new ships are also at a record high of about 27 per cent of current capacity. Growing capacity is mainly an issue in Asian, European and Transpacific traffic.”
“We should bear in mind that the average age of current tonnage is higher than ever before, and that many ships will be either retired or temporarily taken out of service while undergoing modifications to meet future environmental regulations.”
Digitalisation and automation will also change the way shipping companies operate.
“Shipping companies are constantly offering their customers new options for purchasing, booking and documenting deliveries, and for tracking cargo. Dynamic pricing is already a reality in today’s container traffic, and digital bills of lading are on their way.”
Viking Line is under price pressures
Harri Tamminen, Vice President and Freight Director at Viking Line, says that forecasting is difficult at the moment.
“However, the situation is by no means impossible. Goods will always need to be moved, and that will be the case in the near future too.”
Tamminen says that increased costs are putting the company under great pressure to raise prices.
“We can alleviate some of this pressure by streamlining production, but a large percentage of these increased costs should be passed on to prices.” However, it’s difficult to raise prices at the moment.”
Shipping companies need to adapt to changes in demand within the sector.
“We must also find new opportunities in these changes, and offer our customers something that will help them in their own business.”
“Demand for transport is rarely – if ever – stable. Companies must be able to adapt and adjust their operations to meet market demand in whatever way they see fit.”
“We take a long-term approach to our business. No substantial changes will be announced in the near future. We’ve already made some changes, and we’re trying to make the most efficient use of our existing ship capacity.”
Eckerö Line adds a departure to Muuga
Eckerö Line’s Cargo Director Markku Onniselkä says that things seem as uncertain as they were at the beginning of the coronavirus pandemic.
“Based on discussions with transport companies, the outlook for the coming months is uncertain. The war in Ukraine, the high price of energy and sharply rising costs are of concern to everyone. Consumers’ weakening purchasing power will affect demand for delivery services and delay larger household purchases, which will in turn affect corporate investments. Some of our customers believe this will also weaken demand for deliveries.”
“From the shipping company’s perspective, the biggest challenge has long been the doubled price of fuel, which has not been fully transferred to customer prices due to unhealthy price competition on the Helsinki-Tallinn route.”
“So far, there hasn’t been a significant reduction in demand. The entire Helsinki-Tallinn cargo market has been solidly in the black for the first ten months of the year.”
Onniselkä notes that when delivery volumes have decreased during a recession, unitised traffic has always emerged victorious.
“Fast and flexible road transport services help companies to adjust their foreign deliveries when batch sizes decrease and customers want ever faster delivery times. In this kind of competitive environment, the high capacity and very high frequency of vessel traffic between Helsinki and Tallinn is a competitive advantage for Finnish companies.”
“Eckerö Line will continue to operate according to this year’s schedule, with three round trips per day from the West Harbour. We’re awaiting completion of the double-storey ramp at Vuosaari Harbour, and will then increase Finbo Cargo’s departures from two to three daily departures to Muuga Harbour. This will increase our capacity on this route by 35 per cent.”
Energy prices a challenge for Tallink
Kadri Land, a member of the Tallink Group’s Management Team, says that the near future looks more unpredictable than ever before.
“The continuous sharp rise in energy prices is having a major impact throughout the entire cargo chain, all the way from producers to transport companies. The geopolitical situation is also bringing its own pressures.”
Land says that the twin crises in energy and the global economy are making it very difficult to make near-future forecasts.
“Small companies and producers in particular are now under pressure. Over time, we’ll see where trade balances will land in various countries. All this will have a direct impact on the future cargo market.”
Land notes that challenging times also drive development. For example, digital app development has made great leaps and bounds in the sector in recent years.
The Tallink Group recently released a mobile check-in app for cargo customers as well.
“This new app has been very well received by our customers. We received even more positive feedback than we expected. It seems that we released this app at exactly the right time.”
“We listen to our customers, and will continue to develop new digital solutions. We want to make the kind of changes to our processes that will generate concrete benefits.”