The rising cost of ocean freight rates could see traders - eager to widen their profit margins – coming up with alternatives to the status quo.
Commenting on the sharp increase in global container rates, reported to be as high 335% in certain instances, lecturer at the Norwegian School of Economics, Roar Adland, said carriers were mistaken it they thought they were insulated against possible freight alternatives.
Considering the extreme profit erosion experienced by traders who have had to factor sharp shipping rate rises into their bottom line, with many claiming to have gone under because of it, Adland said liner cargo could be at risk of disruption.
Speaking to mercantile journalist Brian Gicheru Kinyua, he said such alternatives could entail “point-to-point services on East-West trade lanes, using smaller vessels and secondary ports where congestion may be minimal”.
A case in point, he added, was the manner in which low-cost airlines had eaten into the business model of conventional airlines who believed they were bulletproof against disruption.
Of course that was long before Covid-19, the ultimate disruptor, came along and changed the whole supply-chain industry from which the liner business is currently benefiting.
