The crises in the Red Sea and Suez are putting Italian break bulk and the Mediterranean at risk.
Animp’s focus on the geopolitical crisis highlights how it not only increases expenses and transit times but also prevents transportation planning.
Animp’s focus on the geopolitical crisis highlights how it not only increases expenses and transit times but also prevents transportation planning.
The abandonment of the Suez route in favor of circumnavigating Africa, the first effect on global trade of the geopolitical crisis in the Middle East, has significantly impacted transportation costs and transit times. However, what worries many operators even more is the inability to plan future activities due to the uncertainty of the scenario.
This emerged from a webinar organized by the logistics and transportation section of Animp (National Association of Industrial Plant Engineering) and focused, moderated by Enrico Salvatico (Mordiglia Law Firm), on the break bulk and Epc (engineering procurement and construction) segment. There was ample space for Lino Papetti and Fabrizio Spaziani. The first, ‘Category Manager Transport, Logistic & Heavy Lifting’ at Saipem, for example, highlighted how it is now “standard practice to request, in tenders, dual quoting, with the chosen route and any potential re-routing. The ranges are very wide, usually between 50-70% difference. In addition, there is the enormous difficulty of providing the customer with guarantees on timing.”
In addition to “updating frame agreements with transport service providers to provide operatives with reliable tariffs to negotiate with customers,” among the solutions, the colleague, Head of Transport Operations Management at Technip Energies Italy, added “the renegotiation of contracts with end customers, the inclusion of safeguard clauses against fluctuations, and mechanisms to incentivize freight forwarders.”
Moreover, Marco Lopez de Gonzalo (Mordiglia Law Firm) had already explained how, “rather than relying on possible legislative interventions, the most effective way to address this crisis is to act at the contractual level,” followed by a brief discussion on possible clauses to use and their effects. Similarly, Fabrizio Pescaglia, Manager of the Claims Department at Lockton PL Ferrari, had illustrated the immediate reaction of the insurance market and P&I to the turbulence in the Red Sea, starting from the “additional premium on ships, ranging from 0.2 to 2% depending on the potential connection of the ship and/or cargo with more at-risk interests such as Israeli, American, or British ones.”
Representatives of the sector’s shipowners who intervened returned from this more technical-operational uncertainty about what to do to a more structural one. “If normally our annual passages through Suez were around 35-40, in the first months of 2024 they are at 0, with 6 ships already rescheduled via the Cape of Good Hope and 4 more to follow in the coming weeks. The first effect of this phenomenon is that embarkation in the Mediterranean is no longer more appealing than that on the European Atlantic coast, and we don’t know if and when it will return to be so,” emphasized Giuseppe Alberti, a broker in the sales and chartering department at Spliethoff.
“For us, the problem has been managing the rerouting of ongoing trips. By now, we have also canceled Suez and only travel to the other side. And certainly, the cost increases, even more pronounced in the Persian Gulf (particularly interesting for our Epc) than they are on routes to Asia, are a problem. As well as the extended transit times. But in the medium term, what worries me is that the Mediterranean is no longer a transit area: this could have dramatic effects not only on the offices of shipowning companies but also on ports and the entire hinterland if the crisis does not resolve soon. Here too, the problem is that no one can make any predictions about it,” echoed Matteo Fortuna, executive managing director of Bbc Chartering, before giving the floor to those tasked with looking at the glass half full.
“There are several data showing the growth, in volumes and turnover, of alternative transportation methods induced by the crisis in the Red Sea. Air, rail, and combined sea-air are a good answer but only in terms of transit time because in terms of costs they are not comparable alternatives to sea transport. In addition to this, the problem is planning, both because Suez is not unavailable, it just presents a difficulty to frame, and because it is impossible to look beyond horizons of 2-3 months,” concluded Leonardo Baldi, regional vice president Italy at Jas.
SOURCE: A.M. / EDITORIAL STAFF SHIPPING ITALY – APRIL 19, 2024
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