Governments must ease supply chain turbulence, says expedition boss

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The head of one of Asia’s largest shipping companies has warned that governments may have to step in to “restore order” in a global logistics market plagued by chronic delays, supply chain disruptions. supply and record container rates.

In an interview with the Financial Times, Takeshi Hashimoto, chairman of Mitsui OSK Lines, part of Ocean Network Express, one of the world’s largest shipping alliances, said the industry miscalculated how long would last. the disorder of the coronavirus pandemic.

While some shipping companies had predicted normalization early next year after the initial shock of the crisis, Mitsui recently extended its forecast until the end of 2022.

Opinions within the shipping industry vary widely as to whether and what form greater government intervention is warranted. Many leaders are strongly opposed to the idea, but Hashimoto said the gravity of the situation means that some form of assistance or coordination may be needed to end the shipping crisis.

“If left entirely to the market economy, sole proprietorships and individuals who go out of their way to find the best solution for themselves will lead to more and more unrest and an uncontrollable situation,” he said. he declares.

Hashimoto added that while it was essential to respect the spirit of the free market economy and competition, at the same time, global shipping was a kind of infrastructure industry that economies relied on. .

“We have to provide a very stable service to end users and customers and at the end of the day what we do affects people’s daily lives, so something has to be taken into account,” he said.

The process of restoring supply chains to their former reliability and protecting them from future disruptions could, Hashimoto said, require coordination between governments as well as between companies.

In the United States, the Biden administration lobbied the ports of Los Angeles and Long Beach in California, the country’s main gateways for trade with China, to extend truck boarding hours for pick up goods in an attempt to reduce ship congestion.

Last week, the ports announced that following consultations with the U.S. Department of Transportation, the Port of Long Beach would test 24-hour operations, while Los Angeles would extend nightly weekend hours.

Hashimoto added that, in a late break with the historic non-participation of Asian shipping bosses, he plans to attend the World Economic Forum in Davos next year with the aim of understanding the executives that the world’s biggest giants, such as Maersk and Hapag-Lloyd, could be considered.

Hashimoto described a ‘crazy’ succession of ailments plaguing the logistics industry as it struggled to deal first with collapsing global demand during the early stages of the Covid-19 crisis , then to the resurgence of orders as blockages took hold.

Port closures caused by outbreaks of new Covid variants, supply bottlenecks and driver shortages have contributed to a tense operating environment. Container rates hit a record high of $ 11,109 in mid-September, after falling below $ 1,500 at the start of the pandemic, according to data provider Freightos.

The supply chains of many manufactured products, from upholstered chairs to game consoles, have been affected by a variety of factors over the past 18 months. The global semiconductor shortage has been instructive, Hashimoto said, as chip producers shared some of the same characteristics of expanding and slowing shipping, where heavy investment is followed by a sharp period of tightening in the market. belt.

Both sectors needed a new approach to long-term planning, he said, with an emphasis on predictable and stable investments rather than the traditional model of capital inflows during times of crisis. boom.