Škraljsky: The Growth in Demand for Container Traffic is an Opportunity for Adriatic Ports. Such an Opportunity Comes Only Once

And while the rest of the world tries to live with the coronavirus, China continues with restrictive measures and a zero-tolerance strategy towards Covid, as estimates from their scientists suggest that a complete relaxation of pandemic measures could lead to 1.5 million deaths in the next six months. However, although Shanghai is currently recording a dozen new cases of infection, on Wednesday, isolation measures were lifted in this largest Chinese port and commercial center, home to 26 million people. The world’s largest port, with an annual container traffic of 27 million TEUs, has ended a two-month lockdown, which severely harmed the Chinese economy and its residents and affected the economies of many countries around the world.

Marko Škraljsky, director of Dragon Maritime Adrie, the agent for Chinese Cosco Shipping Lines Co., one of the largest shipping companies in the world, commented for Lider on how the latest lockdown in China has affected container traffic and what is expected in the coming period.

Will the reopening of Shanghai facilitate the transport and delivery of goods from sender to recipient?

– The latest reopening certainly represents a positive shift as the delivery of goods will accelerate. However, it should be emphasized that the Shanghai port operated practically normally even during the two-month lockdown. The biggest problem was the dispatch and delivery of containers to and from the port, which burdened the entire port system since strict measures in the wider Shanghai area reduced the availability of truck drivers, and thus the trucks themselves that are necessary for the dispatch or delivery of containers to the port. However, even after the city itself reopens, this will still partially be a problem, as drivers must have a negative PCR test no older than 72 hours. Therefore, it is estimated that there will be a shortage of 20 to 30 percent of truck capacities compared to the situation before the introduction of strict lockdown measures.

Have the lockdown and COVID-related issues affected your business, and how has it, according to your knowledge, impacted the flow of goods?

– The fact that 80 percent of global trade takes place by sea, that is, by ships, has become a constant presence in various discussions, placing additional focus on shipping companies and the entire transport industry, not just maritime. At the beginning of the pandemic, when it came to a standstill for two to three months, almost all manufacturing activity that was not related to existential needs ceased, and there was a huge demand for medical supplies and aids, primarily protective masks, gloves, suits, respirators, etc. The largest manufacturers of this equipment are in China, and almost the entire world sought ways to deliver these goods to their customers as quickly and easily as possible. Despite the fact that a lot of goods were delivered by air and even by rail, ships remained dominant for transporting goods, both due to their capacities and more favorable transport prices. Everything that happened afterward with the demand for consumer goods, raw materials, and commodities worldwide, regardless of the pandemic and sometimes very strict anti-Covid measures, is still a phenomenon that various experts in the fields of economics and psychology are dealing with. The demand for consumer goods, including electronics that are mostly produced in China and the Far East, exceeded all expectations, catching shipping companies unprepared to adequately respond with their capacities. And it is this great demand that enabled business operations that were above all expectations.

Some alternative routes have also been introduced to overcome the problems with the transport of goods.

– The lack of shipping capacity has been attempted to be compensated by other branches of transport, primarily air transport, and rail services from China to Europe, which existed before but saw a drastic increase in demand only during the pandemic. Nevertheless, the vast majority of international, or intercontinental, transport of goods still takes place by ships, at sea.

How has all this affected container transport and shipping as a whole? 

– In the past 18 months, shipping companies have ordered the construction of more than 550 new container ships, with capacities greater than six million TEUs, and such a volume of orders has not been recorded in the last 15 years. Considering that the situation with container turnover after arriving at ports, especially in the USA, will accelerate, it is estimated that an additional two million TEUs will be available, resulting in a total of eight million additional capacity that will appear between 2022 and 2025.

It is the estimate of all stakeholders in the transport of goods that the demand for container transport will not only maintain its current level but will also grow further?

– Exactly. And this is a great opportunity for the Port of Rijeka, as the port with the largest container terminal in Croatia, which will have two container terminals by 2025, but also for other ports in the Adriatic, to plan and develop their capacities and be ready for the increase in cargo. Such an opportunity comes once and must not be missed.