The decline in supply restrictions and increase in demand for shipment of goods and containers have led to a fivefold increase in container transportation compared with the pre-Covid period.
The shipment of containers hit all-time highs in 2021, but started to fall in the middle of 2022. The outbreak of the Ukraine crisis in early 2022 once again underlined the importance of supply chain. It is necessary for us to learn from the crises of the current supply chain and brace ourselves for future global developments in transportation, logistics and supply chain.
Adopting temporary tactics without having a strategy in the face of economic, political, regional and global phenomena will reduce or even undermine the country’s transit and logistics advantages in the global supply chain in the long run.
Hossein Shahdadi, a senior official with Sistan-Baluchestan Ports and Maritime Organization, prefaced his write-up for the Persian daily Shargh with this note. A translation of the text follows:
Three main phenomena are taking shape in transportation and global supply chain:
1. The formation of large shipping companies: Between 1996 and 2022, the top 20 shipping companies in the world increased their share of container shipment from 48% to 91%, and particularly, during the last five years, the four largest shipping companies, namely CMA, Maersk, MSC and COSCO are increasing their activities to account for more than half of the world’s container shipment capacity. Over 85% of the total container transportation capacity in the world are owned by the 10 largest shipping lines and the Islamic Republic of Iran Shipping Line Group ranks 15th with half a percent of the global transportation capacity.
2. Port participation of the world’s major operators in the supply chain and goods transportation: As a major maritime operator in the world, the UAE’s DP World is currently focusing on logistics in Uzbekistan, a landlocked country. Also, DP World is active in Kazakhstan in a rail border terminal on the border of China, in addition to Aktay Port. Recently, DP World and Lingang Group are offering the WPL plan to help Chinese businesses get access to the markets of Asia, Latin America, the Middle East and Africa. India’s Adani Group’s participation in logistics of Central Asia and Arab countries is an example of these activities.
3. The formation of regional and global agreements in logistics, regardless of political borders: The closure of the Suez Canal in 2021 by a container ship and the war between Ukraine and Russia have compelled countries to seek alternative routes for transportation of goods by cooperating with each other. An example of which is the European Union’s support for the Trans-Caspian International Transport Route and the participation of the rail, sea and port transport sectors of Kazakhstan, Azerbaijan, Georgia and Turkey. Also, the agreement between India, the UAE, Israel and Saudi Arabia to transfer goods and containers from Haifa Port through Arab countries without the need to pass through the Suez Canal is another aspect of these efforts.
Goods Transit via North-South Corridor
An increase in the volume of goods transit through the North-South Corridor was expected last year.
According to reports, the total annual capacity of the North-South Corridor, including all its branches, is expected to stand at 15 million tons. Nevertheless, member states, especially Iran and Russia, are planning to increase this capacity to 35 million tons.
But what happened was not to the advantage of our country. Following the Ukraine crisis, part of the cargoes passing through the Northern Corridor and Russia were transferred to the Middle Corridor that goes through China, Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and Turkey. Regular container shipping services between Russia’s St. Petersburg and important ports in India were expanded. And the cancellation of liner services to Russia’s Novorossiysk by most of the international shipping lines offered special opportunities to Turkey’s feeder operators.
It seems that once again the failure in transferring goods through the North-South Corridor must be closely surveyed.
Surely, the improvement of infrastructures, regional partnerships and the possibility of the participation of the strong private sector by removing administrative bureaucracy will be helpful.
