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Shifts in the Shipping Modes Used for Commodity Trading in Recent Years

todayFebruary 21, 2023

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Shifts in the Shipping Modes Used for Commodity Trading in Recent Years

The shipping industry plays a vital role in global trade and commerce. With the rise of e-commerce and increasing concerns about sustainability, there has been a significant shift in the shipping modes used for commodity trading in recent years. A recent poll we ran on the Commodities People LinkedIn page asked voters “have you observed a shift in the shipping modes used for commodity trading in recent years?”, and the results highlight some interesting trends.

Shift Towards Faster but More Expensive Options:

The poll shows that 43% of voters have noticed a trend towards faster but more expensive shipping options. This shift is mainly driven by the increasing demand for faster delivery times, which is being fueled by the rise of e-commerce and online shopping. Customers now expect faster delivery times, even if it comes at a higher cost. In response to this demand, the shipping industry is investing in high-speed vessels that can travel faster, such as the CMA CGM Bougainville, which is the world's largest container ship and can travel up to 22 knots. The vessel features cutting-edge technology, including a state-of-the-art engine that is designed to reduce its environmental impact. The autonomous shipping market is projected to grow at a compound annual growth rate (CAGR) of 7.00% during the forecast period, 2020-2030.

Shift Towards More Environmentally Friendly Options:

Another key trend that has emerged from the poll is the shift towards more environmentally friendly shipping options. Almost one-third of voters (29%) have observed this shift. This trend reflects the growing concerns about sustainability and the need to reduce carbon emissions in the shipping industry. To address this concern, the industry is now exploring cleaner fuels such as biofuels and liquefied natural gas (LNG), and investing in more efficient vessels such as the Energy Observer, the world's first hydrogen-powered vessel.

Shift Towards Cheaper but Slower Options:

While the majority of voters observed a shift towards faster but more expensive options, a smaller percentage (14%) reported a shift towards cheaper but slower shipping options. This trend may be due to the economic downturn and the need to reduce costs in commodity trading. Some companies may be willing to sacrifice speed to reduce their costs and maintain profitability, even if it means a longer delivery time. To achieve this, some shipping companies are resorting to slower, more cost-effective transport methods such as bulk shipping.

It's also worth noting that a small percentage of voters (14%) indicated that they had not observed any significant changes in the shipping modes used for commodity trading in recent years. While this may seem like a relatively low number, it's important to consider that changes in the shipping industry can take time to develop and may not always be immediately noticeable. Additionally, the respondents may not be directly involved in the shipping industry and therefore may not have had much visibility into any changes that have occurred. Nonetheless, it will be interesting to see whether this trend continues or whether more significant changes become apparent in the future.

Scott Wellcome, Director of Grains Risk Management at GoodMills Group GmbH, provided an interesting perspective on his poll vote, stating that he has seen no significant changes in shipping modes for the main grain commodities of soybeans, corn, and wheat. He explained that there is currently no better or cheaper alternative to shipping these products from the main origination countries to the main destination countries other than the traditional panamax/supramax vessels, whether in bulk or on container. Wellcome also noted that, in mainland Europe, it is still more cost-effective and reliable to transport these same products by road, as the European rail system remains too decentralised and crossing borders remains problematic due to red tape. This response highlights the complexities and nuances of the shipping industry and how different factors can impact the choice of shipping mode for different products and regions.

In conclusion, the shipping modes used for commodity trading are undergoing significant changes in response to a range of factors, including consumer demands, sustainability concerns, and economic factors. As the demand for faster and more sustainable shipping options continues to grow, the industry will need to adapt to meet these changing needs. At the same time, the industry will need to balance the need for speed and cost efficiency to ensure the long-term viability of commodity trading. It is essential to monitor these trends closely to stay ahead of the curve in the ever-changing shipping industry.

Written by: Commodities People


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