In the second interactive session of the Maritime Analytics Conference that MarineTraffic hosted a while ago, we had the opportunity to hear from a group of experts from multinational companies discussing all things trade. From the latest trends to a deep-dive into the global trade activities and the data that this ever-changing trade industry should embrace.
The 990 attendees who joined this MarineTraffic webinar from all across the globe found answers to some key questions on the topics covered including, among others, “What are the major factors that will shape the future of trade?”, and “What’s the role of maritime analytics in understanding the impact of Covid-19 and addressing key disruptions effectively?”. Our audience also had the chance to participate in the chat and engage with our poll. As seen below, most of them agreed that among the top challenges the global trade was facing at that time was the congested ports worldwide.
Watch the full webinar on-demand:
Adil: Hello, everybody, and welcome to the second session of the Maritime Analytics Conference hosted by MarineTraffic. We’re delighted to have everyone here today. From our audience, thank you so much for participating to learn more about what we’ll be discussing about maritime analytics and how it helps to understand global trade.
And to our panelists, thank you all so much for being here. It’s a pleasure to have you all. And excited to talk about a very broad topic but has a lot of implications for how the world is connected in terms of global trade, and a lot of different little facets that, you know, it impacts supply chains, logistics, geopolitics, many, many things.
So without further ado, I would like to just introduce our panelists to our participants. We have Tugce Senguller. She’s a Trade Analyst at CMA CGM. We have Richard Matthews. Richard is the Director of Consultancy and Research at Gibson Shipbrokers. We have Jasper Verschuur, PhD candidate at Oxford University at the Environmental Change Institute. We have Judah Levine, Head of Research at Freightos. And last but not least, we have Oscar Pernia, Founder at Next-Port AI. So welcome, our panelists. Thank you so much for being here.
So to kick off today’s webinar, of course, it’s about maritime analytics and the impact it has on global trade and understanding global trade.
But, you know, interestingly enough, a few days ago, I was messaged by a university student on LinkedIn. And they asked me the question of, “How do you define global trade?”. So that gave me the idea to ask the question, which I would actually like to ask Jasper to start with, what is global trade to you and how is it all connected to the way the world functions?
Jasper: Thank you, Adil. That’s obviously a big question to start with. So let me give you my perspective on this. So within our group, we focus on quantifying what we call systemic risks to transportation networks and to economic networks. So how you can envision this is saying, “Okay, there’s a certain network that causes something to be interconnected with each other in terms of trade. You connect one country with another country.”
But I like to think about trade, like take it one step further and think about like, what does trade actually mean. And in a sense, trade is actually more a means to an end. It’s about connecting supply chains in one country to another. And trade is just the way that the supply chains are, you know, connected with each other. And maritime trade, obviously, is a big component of this. And it’s not only about sort of the monetary value of this trade and how the supply chains are connected with each other, but also how does it get there? And that adds even more complexity to the system because it’s not only about two countries that are connected with each other.
It’s also about how does it get there from one country to another because in a lot of cases it cannot go to directly. So, yes, I would say global trade is more of the connecting nodes between countries and the sort of main driver of what we see in our maritime network on a daily basis.
Adil: Very excellent perspective and I wish I could have responded to that university student with such detail, but absolutely correct. You know, it’s the nodes, right? It’s the different stakeholders that make those goods and services move. There are a lot of moving parts with that. Judah, I would love to hear your perspective about what you feel global trade is as well.
Judah: Yes, I think, you know, as Jasper said, it’s a very big question. He gave a very eloquent perspective. Just a little bit about my perspective. So I’m head of research at Freightos. And we are a logistics technology company. So we have an online marketplace that connects importers and exporters with freight forwarders and other types of digital tools connecting ocean and air carriers with freight forwarders. So, you know, I think my perspective really looks at the freight aspect of it and the international logistics part. And, you know, the number thrown around is like $19 trillion in goods is what, you know, crosses borders and global trade, which is tremendous. The ocean freight carries about 90% of those goods by volume.
But, you know, with that, and so, you know, global trade touches almost, you know, for most of us, many or most of the almost all the goods that we’re, you know, currently using right now, or that we consume.
But the trade logistics part, for the most part, is in the background. And it just kind of works and we don’t really think about it. And I think that’s what’s been so startling about the pandemic that has brought this all to the fore when all of a sudden things are working like they usually do. So thinking in terms of how things are connected, normally, you know, the global trade in terms of the logistics and freight part works well enough and works in the background in such an extreme kind of outlier, what we’re going through now has kind of brought, you know, some of the weaker points of the stresses to the floor.
So if we talk about how it’s connected from our perspective, or from my perspective what comes to mind is the connections between the different parts of the supply chain in terms of communication and in terms of making, you know, all the different arrangements that need to be done in order for freight to move. And as an industry, there’s really been a lag in terms of how much is digitised.
So a lot of the communication between different parties will still be done by email or sending Excel sheets or PDFs or phone calls. And a lot of that as in many parts of, you know, not just in logistics but in the world, the way that the pandemic has changed how we behave has served as a catalyst for other trends. So we’re seeing more of a turn towards ways of communicating and executing things in low-touch digital ways, which is certainly something that we’ve witnessed over the course of the pandemic. So I think it’s very connected and it works very well but there’s a lot of places for improvement that, kind of, during the pandemic has highlighted.
Adil: No. Yeah, definitely great points. And you know, as you mentioned, because of what COVID has done to our supply chain, a lot of these gaps, pain points have come to the floor. And what do you believe is the people’s general knowledge of the supply chain? Do you feel that they have a good understanding of what the supply chain and global trade really entails or there is still some lack of knowledge? Because it’s very complex. And I remember a recent quote from President Joe Biden, at least here in the United States, that he mentioned that no one can actually explain to me how the supply chain truly works in a clear, concise matter.
So what is your opinion about the knowledge and the awareness of the supply chain and the global trade to the average consumer?
Judah: Yeah. So, I think, you know, like I said, normally, we’re all used to it as consumers of just working in the background, and especially, you know, if we talked about not the international part but the last mile part, you know, we’ve become used to clicking a button and things arriving at our doorstep in a matter of hours or at least within a couple days. So, no, I think we all kind of have a very cheerful…a blissful ignorance about what goes on because normally it works so well.
But, yeah, it’s extremely complex. There are parts of the supply chain that are extremely consolidated, there are other parts that are extremely fragmented. And just the actual…the physical moving of goods and the different players and the different ways that all these things are removed and organised, yeah, it’s certainly very complex and it’s something that normally we don’t have to think about. Like I said, kind of the additional stress has also been kind of a catalyst for innovation of trying to find ways to, you know, not only to protect the supply chain in another whatever the next crisis is but also to improve operations and see where there were inefficiencies that can also improve things even when there is no crisis.
Adil: Absolutely. And that digitisation, we’ll definitely talk about that and we’ll be discussing that with Oscar for sure. But what I’d like to do now, thank you, Judah, for the audience is we are going to run a quick poll. We will allow this poll to be up for 30 seconds. It should be appearing on your screens right now. And once you have answered, we will have our panelists comment on these results. So poll is live, so please go ahead and vote and we’ll check back in 30 seconds.
We have about 10 more seconds remaining. And I believe the poll will end now. So let’s see these results. All right, numbers are in. So, at this point, I would just go down the row here and I would love to get your perspective on things. So I’ll start with you, Oscar. What do you think about the results from this question?
Oscar: Well, my perspective is, of course, on the port perspective. I think that port congestion and the racing federates are quantified as the most important trends in the supply chain. Talking about the ports, I’ve seen that also you mentioned the congestion problem in the U.S. West Coast. And the ports on the terminal we are seeing as they also supply chain, black boxes, right? And this is not, in general, a good perception, right, when talking about creating a global trade more efficient, more secure, more sustainable for everyone across the planet.
So I think that there are different problems that are being identified, let’s say, point to point, okay, but at the end of the day, I think that’s also Judah mentioned that it is a very complex environment.
And sometimes we are pointing into one direction thinking that this is the bottleneck or this is where the focus should be. And at the end it’s about the whole thing. How the whole supply chain work end to end and how in the current inflection point, not only because the pandemia but also because the increase of e-commerce. So their supply chain, they also have supply chain, in particular, it’s not sustainable anymore.
And then the ports, of course, are facing a huge congestion problem, coordination problems, stakeholder fragmentation, and all that. So, in general, I think that, as ports, we have great responsibility on sustainable development for the global trade, but in general, for all the areas like climate change, and so on. But this is not an easy and trivial problem to solve. So I think that sometimes we are having understanding that the problem is here and this is the area to focus on. But at the end of the day, when you are solving only one part of the problem, the end-to-end supply chain will remain inefficient. And I think this is something that we need to always take into account.
Adil: Very good points there. You know, you mentioned maybe carbon being part of it. But from your perspective, it’s not too much of a priority to solve right now. There are bigger issues at hand, of course, especially from a port level. The second most answer response was about rising freight rates. So naturally, Judah, I’m gonna gravitate to you, could you please shed some light, what you believe, your perspective?
Judah: Yeah. So, I mean, I think it depends on where you’re positioned within the supply chain or which part you think is the most serious right now. But when I look at that list, I think they’re all interconnected. So, again, it’s been such an outlier event that’s totally shifted the way consumers behave and there’s been such a shift towards increasing demand for goods in place of services as people are at home. That’s kind of the underlying driver but each of these things are results of that underlying demand.
So when, you know, demand shifts for an unusual spike in demand for certain goods or the raw materials needed to make those goods suddenly become scarce and that makes the goods more expensive and that’s reflected in some of the inflation that we’re seeing.
But like you said, that increase in demand also puts pressure on the cost of ocean freight. So we’ve seen rates from Asia to the U.S. now are still like 10 times what they normally are. Normally around $1,500, and they were as high as almost $20,000. And, you know, Asia to Europe is also extremely elevated. So all these things are connected and that additional demand also, you know, the ocean carriers, at least from Asia to the U.S. as an example, have added a significant amount of capacity to try and meet that demand.
But, you know, even if it’s relatively easy to add ocean capacity, it’s not as easy to increase the port capacity that, you know, is limited to what’s already there. So that results in that port congestion.
And so if I had to say what are the most significant choke point now would be that port congestion, which, again, is kind of a feedback to all these other things, when the ports are congested and ships, you know, as we have off the coast of California, there are more than 80 ships waiting there holding a tremendous amount of capacity, that capacity essentially is being removed from the market. So even adding capacity to it, it’s essentially not being used, and that puts additional pressure on rates.
And I think that the specific choke point now, I think Oscar was talking about, is the pressure in the ports themselves, the container guys themselves, which if there’s no space for containers in the container yard then the arriving can’t be unloaded as quickly. And this backs up into all the kinds of problems we’re having inland.
So it’s kind of, you know, as the supply chain is so is the supply chain problems. It’s kind of all interconnected.
What ultimately will make it go away is when we have some kind of shift back towards normal consuming patterns. But interestingly, you know, there’s been a tremendous increase in demand on the Trans-Pacific, so from Asia to the U.S. But Asia to Europe, there has been increase in demand but not as dramatic, but there’s still very severe port congestion.
But also shows just what an orchestrated event the supply chain is and that, you know, if there are different types of delays in different places that are putting ships off their schedules, it causes a tremendous amount of pressure on the ports if ships arrive at the same time and creates congestion even when demand hasn’t gone through the roof like it has on the Trans-Pacific.
Adil: Excellent. Excellent points. Tugce, I would love to hear your perspective. Being at CMA CGM and a trade analyst, I feel that port congestion would probably be something that you’re monitoring very closely. Could you elaborate?
Tugce: Yeah. Yeah. Yes, we are actually facing with everyday with port congestion. You know, congestion in ports is a phenomenon associated with delays, queuing, and extra time of voyage and develop ships and cargo at the port which always occur with unpleasant consequences on logistics and supply chain. And this often translates for me and also from my colleagues also for the other operators is translates into extra costs, loss of trade, and disruption of transport agreements.
We can’t say long transit delays also significantly lower the probability that a country will successfully export its goods. I select the most challenging aspect of global trade is a port congestion, my answer was A because if there’s a port congestion or port closure, at that moment, there is no point to discuss rising sea freight or rising costs of goods or rising customer demand, etc., since you have no place to deliver your goods at the right time.
If from port is congested, it delays other vessels services, including its sea routes, some of them have berthing windows, some of them not. So it causes a domino effect, let’s say. As you know, you can imagine different factors can trigger congestion imports. So like typical causes of congestion can be bad weather, which stops ships or cargo operations, work stoppage at the port like labor strikes, sudden increase or peak in trade demand between certain countries or regions. I don’t know, condition on port entry or access to a particular terminal, condition of tracks with port or terminal, or the reason may be internal mobility import due to small storage capacity.
Even public holidays can lead to port congestion. And due to these kinds of reasons we are facing with port congestion very often, so we should try to reduce its effects since port congestion leave a big trouble for liners, timing operators, customers, traders. Actually, it’s an economic threat, which concerns everybody.
Adil: Thank you. Yeah, absolutely it does. And you know, one thing I want to ask you a little later down the road is, when we talk about congestion, the factors that can contribute to it, you know, the Ever Given took place. And I’m sure you have a really good perspective on that. And maritime analytics, you know, probably has a role in your field. So we’ll definitely discuss that question a little further down.
Richard, do you have any comments on the results from this poll?
Richard: I feel a little bit like the odd one out here because, you know, we’re mainly talking about containers, but I work primarily in tankers. And there is no port congestion in tankers and freight rates are not really rising.
You know, mostly in our market, we as brokers facilitate the movement of cargo. So that’s our role in the global trade puzzle. And at the moment, we’re in a situation where we still have levels of demand for the tanker markets lower than what it was in 2019. And of course, the fleet is going through that period. We have very little congestion, maybe a little bit off China, but you know, that’s driven by different factors. You guys are talking about not having space to store containers on land.
When we look at the oil market, we’ve got all the space in the world to store as much oil as we need, but there’s just not as much oil being shipped. So we wish we had port congestion that you guys have. We really want that.
We need something to help lift the freight rates to higher levels. But for us, I think at the moment, you know, probably looking at the short-term biggest factors is probably more geopolitical now. So we’re looking very much at what may or may not happen between the U.S. and Iran in the next few weeks when talks resume. And we’re also looking at what might happen following the Venezuelan election. So our perspective is certainly very different at the moment.
But we could be in a situation in a year’s time when demand has continued to recover in the oil market that we do start seeing perhaps more congestion, more delays, and certainly we hope rising freight rates. But the container market may be printing money at the moment, but the tanker market is burning money, I think, is the way to put it.
Adil: You know, that’s interesting that, you know, you point towards more geopolitics being a factor. But what about rising consumer demand? You know, at least here in the U.S. there’s a big holiday season, there’s a lot of people going to be traveling, etc., and gas prices here have been rising significantly. But do you believe rising consumer demand can have some type of impact with the tanker trade?
Richard: Yes, certainly. I mean, we are seeing demand recovering. But, you know, the big issues we have at the moment is there’s a big lack of aviation demand still. So anyone who goes through an airport can see there’s not as many people there as they had been. And that’s one of the last pieces of the puzzle in terms of bringing the oil market back to where it was pre-pandemic. Of course, longer term, we could talk about decarbonisation but if we’re talking about right now in the next 12 months that’s not really going to be a factor for our market. But we just need to see international travel returning to normal. And of course, we’ve still got parts of the world that have a zero COVID policy.
So China is a big part of that but other Asian countries as well are being more cautious. So you look at the U.S. and you look at U.S. gasoline demand, for example, it’s exceeded pre-pandemic levels, but the U.S. has a very different picture to other parts of the world, particularly in the East.
Adil: Thank you. Very insightful. Jasper, do you have anything to add?
Jasper: Yeah. I mean, a lot has been said already. But just to like pick up on like three short comments, I think the first one we’re seeing sort of the trade-off between efficiency and resilience in your network. And, I mean, the difficulty with this is that efficiency, you directly see on your balance sheet because you make things efficient, your profits will increase, etc.
The issue with resilience, you will only experience this when something happens. So it’s always hard to, sort of, quantify what are the benefits I see on a daily basis by, you know, changing to a system that can be more expensive? So it’s like dealing with this low probability event, which I think, you know, we’ve seen with the Suez blockage, with COVID that maybe the companies that have embedded this resilience in their supply chains, you know, they’ve been better able to cope with it.
Second one I think has, sort of, already been mentioned, the interconnectivity of the system.
And as Judah sort of outlined, you know, if something happens in the Port of Los Angeles, it just doesn’t stay there. It’s different actors in different parts of the world that will react to this. And we need to have the information available to make quick and fast responses to these things. And I think we’ll talk about those in a second. And I think the third aspect that we touched upon is, sort of, the uncertainties in the system as well that ports have to deal with if they’re planning for capacity.
It’s often, you know, something you kind of want to plan on a 20, 30-year basis because planning takes a lot of time. But as we see now, in the last year, things can change very rapidly. And these uncertainties are very hard to, sort of, embed in your traditional long-term planning cycles, which means that, yeah, naturally, you’re not able to respond to it very quickly. So, yeah, these are my takeaways from, sort of, what has been said.
Adil: Thank you. You know, like you mentioned, more real-time data seems to be what’s needed because things change rapidly. And so this takes us into, you know, of course, AIS, AIS data from vessels as a component of maritime analytics.
And we’ll be talking about that now in terms of digitalisation. But AIS has been and is utilised these days to really help understand trade movements, understand and plan for, you know, inbound, outbound, see how the markets react, and make a little bit more actionable decision-making.
So on to our first core topic from maritime analytics, talk about digitalisation.
So, maritime,iIt’s been this out of sight, out of mind type of industry for some time. But because of COVID, COVID really made a huge disruption in how we were consuming, being able to get things moving across borders. And one positive outcome was that it brought forth rapid digitisation, right, and it pretty much changed how economies, how companies do business, individuals, they ended up working from home.
So consumer behaviour changed in general as well. And with that, there’s been a lot of data and now more data is being consumed and it is being sought after to help understand, predict trade flows, end-to-end container tracking with port congestion, of course, on Richard’s spectrum for vessel availability made for commodities, Judah for freight rates.
So this idea of maritime analytics helping to answer, predict other risks from occurring, you deal with automation at a port level. So there’s been this digital shift. So if you could walk us through the role maritime analytics is playing in terms of an authority like a port becoming better prepared to handle these imports and exports.
Richard: I think Oscar did briefly drop off so he may not have heard the first part of the question. He’s back now though.
Adil: Oscar, can you hear me?
Oscar: Yeah, sorry. I had a little interruption with the internet so I didn’t hear the question. Can you repeat briefly and I will slip in?
Adil: Yeah, absolutely. My question to you was about your work in terms of maritime analytics from a port level. You’re dealing with port automation and digitalisation. So if you could walk us through this digital shift that’s occurring, right, and then how the maritime analytics component plays in terms of being better prepared for inbound, outbound optimisations, etc.
Oscar: Okay. Yeah, I think that I mentioned before, right, the ports and terminals are seen as black boxes. And then normally, the conversation on automation, in particular, is about getting robotised, and then jobs are gone. That’s the simplification that we normally do, but the dimension of automation is going far beyond that. And clearly, digitalisation and that analytic is going to be implemented hand in hand with automation reports.
We see countries like China where initially automation was not expected. They are investing heavily in automation as a way to ensure consistency on productivity, improving availability, and increasing capacity as it was mentioned before. But in general, more operational control, at the end, a better customer service.
And with that also the process automation and decision automation is coming and it’s getting to the next level. Again, together with the supply chain and port digitisation, we see this growing enormously in the coming years. Every single poll that we are talking to or initial focus is more educational or as relating the introduction of artificial intelligence in those ports is really focused on ports. But then when they start in this map or plan, most of the ports don’t have a clear roadmap to get there. So I think it’s going to be very, very, very important.
I think also, traditionally, automation and the utilisation is identified with employment. But I think we need to be aware that we are recycling traditional jobs, better quality added value employment, but also opening the door of ports to the techies, new generation, right, to water ports. Process mining, data analytics has been discussed, AI, I think all those will be fundamental areas. In general, I think that the ports are really focusing on how to transform themselves. They manage the port, but also the way they operate. And data has a fundamental role in that, in general. I think that it will be the main vehicle to transform the way a facility the port authorities are managing, in general, how they connect the ports and the passes to the supply chain.
Adil: Thank you. So, you know, talking about AI, and the other data as a whole, Richard, in your line of work, dealing with the tankers and the commodity of oil, how does maritime analytics play in your field? You know, how are you able to gain insights to understand, identify disruptions? Can you talk to us about that?
Richard: Yeah, sure. I mean, like we’ve used AI as data for a starting point for, you know, over a decade now. But I think what’s really changed in the last five years or so is how we use that to understand, firstly, historic trade patterns and that’s how we, sort of, started to use it initially. But now more bringing that forward into the real-time analysis. So you go back 10 years ago, if we wanted to look at how, you know, supply and demand is changing, we’d look at government, which maybe two, three months after the event, maybe good in some countries and terrible in others. And that had a use fine for historical modeling, but it didn’t really help us understand almost like real-time changes.
And I’ll give you guys an example of this. So if we go back to March and April 2020, in March, the world was going into lockdown, the oil market was going into complete turmoil, perhaps a bit more like the container market is right now. And we were seeing a huge collapse in demand but we were seeing a big increase in supply for geopolitical reasons.
And using maritime analytics primarily as trade days, we were very quickly able to understand on a day-by-day basis how trade was changing, and where these cargoes were being diverted to, where they were being stored. We were able to look at fleet capacity in a near real-time basis, you know, how many vessels are laid in and sitting there with nowhere to place that cargo.
And then we were able to bring in our own proprietary data as well in terms of knowing what’s going on the chartering contract side to really have a very real-time understanding of, firstly, cargo flows, trade, then take the impact, corresponding impact on overall vessel demand but also build a real-time picture of vessel supply and see, you know, is the market tight?
And if the market is tight or there’s not enough vessels, we could see a very sharp increase in freight rates. But then we were able to very quickly use that data to understand when the dynamics were changing again, and then use that to advise our clients on where we saw freight rates going and what they should do in terms of the chartering strategies around that. So it’s really kind of made the analysis we do much more real-time rather than retrospective, you know, know what’s happened. We will know what’s happened, you know, what’s happening. And that’s how things have changed for maritime analytics. Certainly, in my time, you know, being with Gibson for seven years, the amount of data we’ve consumed and how we’ve consumed that data has changed exponentially in just that time period.
Adil: Great point. So that is a very good transition to Tugce. As Richard pointed, it helps understand the idea of what is happening, right, that real-time perspective of trade. You know, we were talking about congestion earlier too. And in the terms of the container world, of course, the Ever Given, right, how did that play out in your world in terms of maritime analytics using AIS to really understand what the impact will eventually be given a blocked-out choke point?
Tugce: Yeah. Yeah, major disruptions took place in the global supply chain and impacted global trade. And you know, it was a rough start to the year for shippers and carriers around the world. As you know, in March, the Suez Canal was blocked for 6 days after the grounding of Ever Given, which is a 20,200 container ship, and the canal that separates Africa from the Middle East and Asia is one of the busiest trade routes in the world with about 12 percentage of the total global trade moving through it. So, yeah, it is really important that it’s really big…I mean, like terrible days, terrible six days for us.
These six days closure prevented an estimate for, I mean the world, estimated $9.6 billion worth of trades. And, you know, it is actually 369 ships were stuck and waiting to pass through the 193 kilometers. So, some vessels have been rerouted to avoid Suez Canal that was adding around eight days to their total journeys.
And as we can see that international trade is influenced by many events, such as economic financial crisis, politics, natural disaster, even pandemic, and also technological change. Among this, one of the things that we are able to improve, which is the technological change, the digitalisation site, for instance, using some platforms that can enhance efficiency in optimising operational and transactional and storage systems in the port.
And I think the ports should adopt a current programming of ships arrival anchorage and departure from the ports to avoid bunching of ships waiting around, or they’ll average arrival and departure statistics of ship calls in all the ports need to be maintained to enhance programming of ship arrival and departure in line with the port capacity. Or like, how can I say, but specialisation should be upgraded to enhance operational efficiency of terminals and to optimise port occupancy.
So, yeah, I’m reading a lot and experience shows that digitalisation can make a significant difference by planning, like, for instance, tug and polluted services in a way that helps increase liability of vessel departure or arrival times. For example, when AI-based software was implemented by the Indonesian port of Taichung, average waiting times for nautical services shrunk from 2.4 hours to around 30 minutes. And, yeah, algorithms powered by artificial intelligence can optimise planning and ensure people and assets are available when and where they are needed.
Most importantly, digital tools can swiftly reallocate resources, like if a vessel’s ETA change. So, yeah, I mean, what can I say? I have lots of things to say about it but, yeah, we should focus on digitalisation.
Adil: So there’s clearly a lot of value, even in terms of data. And it looks like you have a lot of good insight too. I feel like you and Oscar should connect after this too and discuss more about optimising ports. Judah, for maritime analytics and in your trade, you’re monitoring, you’re researching the market, you’re gaining market intelligence, you’re understanding how freight rates are evolving, changing on a day-to-day basis.
Where’s the value in maritime analytics in your field?
Judah: Yeah. So, you know, from my particular perspective, we try and use the insights and data that we have access to, to give kind of visibility on what’s going on in the market and that data is using or those insights are used in a lot of different ways by a lot of different players.
One of our main contributions is through the Freightos Baltic Index, which is an index of spot rates for 40-foot containers on a lot of different lanes. But the Freightos Baltic Index, the FBX itself is kind of a byproduct of digitalisation in logistics. So the index came about because through one of the products of the Freightos group that is freight rate management. So it was very difficult for carriers and forwarders to share pricing information in an effective way and, you know, for it to be accessible.
And, you know, through that kind of digitisation we had access to a lot of freight rate data. So that’s the one thing that kind of was a byproduct. And it was something that there wasn’t a lot of visibility, so pricing had traditionally been opaque and the development of different indices has really helped that situation.
So from our perspective, for the FBX, for example, it gives us visibility into freight rates.
And on the one hand, it reflects the reality, so it can kind of…the freight rates have done a very good job of telling the story of what’s happened since the start of the pandemic. So, early on, you know, rates were dropped or were level when, kind of, the world was shutting down, especially in the initial outbreak in China, and then things kind of started to recover, and then there was a lull, and the anticipation was that, you know, the world is going into recession, global trade is gonna suffer.
And then all of a sudden, in June of 2020, we saw freight rates start to increase, and they doubled between June and September, which now seems like a pretty quaint kind of increase, the increased from $1,500 to, like, $3,000 $4,000 per container from Asia to the U.S. But that was kind of the first indication that, oh, there’s been some kind of real shift in demand.
And, you know, at each of these crises, then there was a container shortage in Asia and there was competition between U.S. and European importers. And there was a huge spike in rates from Asia to Europe over the end of 2020, beginning of 2021. And then each, you know, each kind of crisis along the way has also been reflected.
The blockage of the Suez also the pressure on rates, and then the most extreme example has been this year’s peak season, especially from Asia to the U.S., you know, rates were already very high at about $13,000 per container, where they’re normally at $1,500 for the Trans-Pacific, and with the addition of peak season demand that started towards the end of July, with the growing port congestion, which then made that port congestion worse, there was a 70% spike.
So each of these things that were happening are reflected in freight rates, and kind of do a good job of telling the story and, you know, letting people in industry know what’s the going market rate and make sure they’re getting value there.
But it also can be used as a leading indicator. So there’s a lot of interest from people in finance and what’s going on in these as it’s kind of a leading indicator of where demand is right now. Because demand for goods to be shipped overseas, that’s going to take some time. And so that’s an indication of, you know, what retailers are expecting in terms of consumer demand and things like that.
So, it definitely is also contributed as a kind of near-term leading indicator as well. And, yeah, so that’s kind of one of the main things that I look at in terms of data analytics or maritime analytics and how they’re contributing to, kind of, insights that we might not have had before.
We also have visibility into how importers and exporters are behaving.
As I mentioned earlier, we have a marketplace that connects shippers and freight forwarders. And we can kind of see, you know, how are importers behaving? What modes are they preferring? Things like that. And we also have visibility into, you know, shipment duration, how long is it taking things to get across the ocean or in different modes as well? So, that’s also been kind of reflective of what’s going on.
Typically, or let’s say November of 2019, it took something around 40 to 43 days for an end-to-end ocean shipment from Asia to the U.S. And we saw that number rising throughout the summer. And now in the last couple months, it’s been 73 or 76 days. So that means that, you know, orders that are arriving now have taken 76 days to get there. And that also has been kind of reflective of people’s reality as, you know, retailers are trying to receive goods in the time for sales events.
Like, we have the holidays coming up. But it’s also kind of let people determine, well, if I know the ocean is going to take that long…and it’s not just ocean segment it shows how congested the inland portions have been as well. That’s pushed some people who would normally use ocean to air. And we could see that as well in terms of, you know, we would normally have about 85% of shipments on the platform being booked by ocean and 15% by air.
And as congestion grew, and again, I’m talking on the focus on Trans-Pacific, as congestion grew, we saw those numbers, you know, moving in opposite directions up to the point that it was closer to 60/40, 60% ocean and 40% air, as we get closer to the holiday. So I think both it gives a lot of visibility, and a lot of reflects the reality and lets people know, you know, what is the overall experience in the market, is that what I’m experiencing as well? And also helps people in the industry make decisions. But again, depending on what the data is, it can also be used for larger, kind of, economic purposes and understanding where demand is and where it’s heading.
Adil: Oh, very, very great points, especially with that visibility of what’s happening between ocean cargo and then air cargo and that shift there. I’ve been seeing some questions coming in from the audience. And I’ve been seeing a lot of comments. Are there leading indicators pointing towards when freight rates might be coming back down to a more “normal” state? You know, are you seeing something happening, it’s still too early to tell?
Richard: Yes. No, so in the last couple of weeks, there’s been a big drop off, again, talking about the Trans-Pacific, there’s been a big drop off in rates that we had, you know, a peak of $19,000 or more per container from Asia to the U.S. In September, as I mentioned, July, there was a big spike up towards September, and rates more or less stayed at that level for a couple months. And then just in the last couple weeks, we’ve seen a significant drop at about $13,000.
So about a 25% drop, which is significant. And on the one hand, you know, that’s a positive sign that rates are easing. On the other hand, this is just an exaggerated example of what happens every year around peak season. There’s an increase as orders are made in time for the holidays and then as the holidays are arriving, and it’s the goods that you need, either there or they aren’t yet and there’s a drop-off in demand.
So I think we’re still seeing some seasonality, but we’re also seeing that rates are staying still extremely elevated, they are nine times what they would normally be. And I would say if we’re seeing some of that seasonality of them gone up and come back down with normal patterns albeit, you know, exaggerated in terms of the degree of the rates, I think we could also expect that towards the Lunar New Year, we will see something similar. So there’s also an increase in demand ahead of the Lunar New Year holiday in China when a lot of manufacturing shuts down kind of over a three-week, you know, kind of holiday period before manufacturing comes back online. So I would expect that, you know, since we’ve seen the seasonality in terms of the summer and fall peak season that we can expect that ahead of Lunar New Year as well.
Adil: Very good insight. Thank you. Thank you for explaining more on how that’s impacting a lot for the freight rate sites. So I have a lot more questions, but unfortunately, I don’t have that much time. So I’d like to move us over to some Q&A from the audience. We picked out a couple questions that I believe are really pertinent to the topic here.
So the first question from our Q&A is, “AIS has developed a great deal since its introduction as a safety future. Of course, for collision avoidance was its main core objective, what’s the range and bearing from another target to me as a vessel?” So the question is can you give us some examples on how it’s being used to help analyse the global trade movement? So, anyone feel up to answer that question?
Jasper: Yeah, happy to take that one. Yeah, I think it sort of goes back to, sort of, the comment that Richard made initially where in the beginning everyone is sort of using AIS data to look at the past and say, you know, “Oh, we can do some pretty cool things with this. You can analyse historical trade patterns.” But then I think, you know, with COVID and, sort of, the rapid increase or paradigm shift in getting these, like, real-time indicators, you know, AIS has really been, like, pushed to the forefront of like, can we provide reliable indicators alongside official statistics? So my personal, like, issue, it’s not a substitute for official statistics, but it can really give you insights in global trade.
And as an example, we used to, sort of, analyse global trade in real-time using AIS data by analysing vessel movements all around the world. We just finished a project with the IMF for Pacific Islands because as Richard said, sometimes official statistics only come in after a couple of months and this particular issue with some of the Pacific Islands where it can take up to a year.
So if, you know, the IMF or another organisation tried to help some of these islands, it is good to have some sort of idea of what’s happening at the moment instead of what’s happened, you know, a year or six months ago. And, you know, we’ve showed that actually, like, this AIS data can give you a pretty good insight in what’s actually happened, not just in these very big economies that we’ve talked about, but also in the places that are small, limited statistical capacity but are extremely reliant on maritime transport or global trade, in general, for the economic functioning. So I think, yeah, that’s really what has really been very useful.
Adil: Thanks, Jas. Yeah, I saw this question just popped up. This is a good plug for you. Somebody was inquiring about when this IMF study, this research paper that you conducted the Pacific Islands, how can they get access to it? So we wanna do a quick plug, let them know where to find it.
Jasper: Yeah, it’s online. It’s available. I will put a link in the chat in a second.
Adil: Great, thank you. So the second question. Do you see satellite imagery acting as a key data source for giving a more real-time perspective of port congestion? And there was a follow-up to that. Do you also consider it to be a data source that will help overcome other challenges as well? I know we talked a little bit about port congestion, but anyone want to answer that? Like Oscar?
Oscar: Well, for us, yes, to repeat on the data, AIS data is the fundamental starting point for all this maritime platforms that we are helping developing. Okay, why is that? Because these route data is providing a lot of information regarding the vessel behavior, right? And the vessel movements and how the marine part of the port is being managed, right? It’s not only about the couriers but also the technical services like tugboats, motors, pilots, and so on. So, it’s been very, very helpful because you come back many of the ports we are working with AIS data connected to geo-fencing, and then with that, you can track and trace all the events that are important at the port level.
Then on top of that, and to the second question, we need more data, especially for the port, the ports are almost blind for evaluating the land side, trying to look back and evaluate how the port land side was behaving, but also how the tracking community and the people managing the tracking community as well are behaving. What kind of behavior do you see that?
So, for that, we are finding EDI messages very rich information, because actually, when you focus on container shipping, EDI is basically the secret sauce of truth where all the information components are up to date, right?
And on top of that, of course, the TOS, the terminal operating system from the technical side providing a lot of information for the estimated completion but also do and so on. So, for us, it’s not only about one source of information, but actually an effective combination of different data sources that can provide the ability to analyse data, but also to learn, okay, from past repetitive patterns, and also very important capability that the ports are looking, and the timeliness as well, is how to look forward, how to look ahead and not only seven days, but one month ahead and so on so they can much better plan.
Adil: You know, you talked about the ports being blind and one question that comes into my mind is do you believe that…and the need for more data, of course, but is it a data-sharing problem? Is it the lack of proper partnerships? What could be contributing to the blindfold?
Oscar: Well, I think that, in general, we have a standardisation problem in the industry, right? So the different ports are using different data semantics and nomenclature and so on. So, that’s a basic problem we have.
ETA is being debated in the different ports that we are working for what ETA means, right? But also, again, when you are moving into the land side as the supply chain in the land side is so fragmented, it’s very difficult to find data, okay? So, only the ports that are investing in RFID or geolocation system…GIS data, by the way, is being also very helpful on that because you see companies like in general, any GIS provider that is getting into putting data in value in terms of how the position or the different assets are helping and coordinating the overall supply chain.
So, yeah, in general, standardisation is a problem, then the lack of, let’s say, precise data in real-time. And in general how to connect not only the data but also the different decision domains because, at the end of the day, the different stakeholders in the port to force the coordination that is necessary. They have different application and those applications are not interconnected.
Adil: Great. Thank you. We got one more here. The question is, “Apart from AIS as a data point, what other factors or other data points can be used to carry out an analysis in maritime analytics?”
Richard: I think just to sort of start from our side is the AIS data on its own is useful, but it’s only part of the puzzle, right? It will tell us where a ship is, where a ship’s going, where it’s been. What we have to do is combine that with our proprietary information and some other open-source data as well to build…well, what we try and build is a unique view. We don’t want to have the same view as everyone else or else we’re all looking at the same thing and there’s no arbitrage on that. So for us, a lot of the information we combine is our proprietary data on chartering contracts. So we know what the vessels have been booked to take cargo from A to B. We can overlay that with AIS data to see if they actually do that, track diversions. We see fleet data as well. Again, our own information.
I think, going forward, the data will be used increasingly to look at carbon emissions. But of course, how do you know what a ship is emitting if you don’t know what its fuel consumption is, right? And, you know, the speed from AIS but you need to know what its consumption curve is like. So I think that information on vessel consumptions, or at least modeling it accurately, is going to be very key going forward for the carbon side, which we haven’t discussed today but I guess that could be a webinar in itself, right?
Adil: Absolutely. Yeah, I definitely wanted to talk about the carbon part but time permitting cannot allow it.
Richard: Yeah, I’ve dropped it in with three minutes to go.
Adil: Yeah. No, we’ll definitely plan for that for the future and I know exactly who I’d have to bring back. And, Jasper, I’ll definitely have you on that as well. But since we have a few minutes remaining, I don’t think we really have time to answer another question, but let’s just go off the closing remarks and say thank you to Tugce, Richard, Jasper, Judah, Oscar for being here to discuss in brief and in short what global trade is and how maritime analytics plays a significant role as we’ve heard from your perspectives to determine, you know, what is going on in the world. So we really, really appreciate your time and insights.
And to the audience, we appreciate you being here. Just a quick plug for my side, marinetraffic.com, we’re a maritime intelligence platform. So give us a look. And I hope everyone has a great day.
Judah: Thank you. Thanks for having us.
Adil: Thank you.
Tugce: Thank you so much.
Jasper: Thank you, everybody.
Oscar: Thank you. Bye.