Blog December 2, 2019

2019 in review – statistics, standards and swine fever

By Nicola Byers

As the year draws to a close, it is a good time to look back at a period that has had its share of ups and downs. For example, in TV series we have gone from the low of the final series of Game of Thrones, to the high of the second season of Succession, in film from the excellence of The Irishman to the tedium of Last Christmas. And in intermodal logistics, we have gone from the low of a forecast 40% drop in dry box building, to the high of continued strong demand for reefers.

How did we get here? The 40% drop, reported by World Cargo News a few weeks ago, is a result primarily of a slowdown in the global economy and geopolitical uncertainty, particularly the continuing US-China trade spat. A Drewry report lowered its forecast for global container port throughput for 2019, estimating that over 1 million TEU of containers were stockpiled in China. Lower prices for dry containers have dramatically increased pressure on manufacturers. Singamas sold its dry box business to Cosco Shipping in May while CIMC was forced to issue a profit warning a few days ago. Further rationalisation in this sector is likely in 2020.

This bleak outlook contrasts sharply with stronger prospects for reefers. Ronald Veldman, a leading consultant, told delegates at the 11th Cool Logistics conference in September that containerised perishable trade volume had grown 7% up to that point in 2019. The reason? China.

So far this year we have witnessed a great example of what is known as the butterfly effect – the phenomenon in which a small change in one place can lead to many unforeseen bigger changes elsewhere. In the textbook case, a butterfly flaps its wings in Chicago and a tornado occurs in Tokyo. In intermodal logistics, an outbreak of African Swine Fever in in China first reported in August 2018 has led, over a year later, to people talking about how there is “not enough pork in the world” to cope with China’s demand for the meat now that is domestic supplies have collapsed and how there simply aren’t enough reefers out there to shift the pork that does exist.

It’s not just pork. Beef and poultry imports are also up in China as a result of recent regulatory changes and changing diets. China now accounts for 25% of the world’s containerised trade in beef. With the US/China trade war affecting trade between the two countries, the two biggest winners for now are the Asia-Pacific region and Brazil. Is growth that is almost entirely down to strong demand for fresh and frozen goods in one country sustainable? That is one story to watch closely in 2020.

In tank containers, a largely positive 2019 ITCO global tank container survey showed continued growth with a record number of new tank containers being manufactured – growth that was in part also driven by China and, in particular, by increasing use of tank containers there to transport domestic bulk liquids.

Elsewhere, 2019 has of course seen progress in digitalisation, including a welcome move to introduce some standardisation in the industry through the launch of the Digital Container Shipping Association, which released its first standards for data flows in August. This long-overdue move will help to break down silos within the industry and ensure that we can start to focus more on collaboration and using technology to enhance customer service and improve efficiency.

This industry is built on standardisation, going back at least to 1956, when the dimensions of the standard shipping container were first established. That fact was highlighted in a thought-provoking article in the Financial Times that looks at how technology, particularly in ports, could transform the industry, saving time and supporting increased automation. The article predicts that manufacturing may start to move away from Asia and closer to the final destination of the goods, leading to increased demand for smaller ships.

However that plays out, we at MRI Intermodal, boosted by a successful rebrand this year, will be ready to provide solutions to whatever challenges 2020 has to offer – though we can’t do anything about disappointing TV series! We would like to wish season’s greetings and a Happy New Year to all our customers.