Over 99% of the distilled spirits produced around the world are consumed in places other than where they are bottled. As such, transportation of finished goods plays a very important role in the domino effect needed to get the bottles into consumers’ hands. Multi-modal shipping using steel containers is at the core of this process, and keeping an eye on the challenges faced by the transportation companies is always a good thing for producers.
Lailah Gifty Akita, Author of Think Great, once wrote:
Luis Ayala
“Good roads
coupled with good transportation
are essential for good trading.”
As with many other industries, there is a lot of consolidation going in the freight industry, and many smaller players are facing existential dilemmas.
Happag-Lloyd is in the process of acquiring ZIM, reducing the number of players and increasing the market share of the remaining ones. After the acquisition, seven carriers will be in control of almost 80% of the global capacity, with three of these carriers accounting for almost half of the global shipping volume!
Looking ahead, upward pressure on rates is expected due to:
- Rising fuel and energy costs (very low Sulphur fuel oil rising by approximately 76% between late February and mid-March).
- War risk and insurance surcharges.
- Capacity management measures by carriers.
- Additional cost pressures include terminal renegotiations, charter rate increases, insurance premiums, and diversion-related costs (caused by blockades, natural disasters and other obstacles to commerce).
What does all this mean for alcohol producers and, ultimately, for their consumers? Fewer routes, longer transit times, higher prices and reduced rate competition.
Cheers!
Luis Ayala, Editor and Publisher