by Manal Barakat, SeaNewsEditor

Every year in California, the Journal of Commerce organises the TPM event for the Transpacific and global container shipping and logistics community.

This year, high-profile stakeholders, including chief executives of major carriers and shipping experts, discussed the shipping market's current challenges and how they could impact container transport.

Market uncertainty and resilience

Ocean Network Express (ONE) Chief Executive Jeremy Nixon believes that the shipping industry has demonstrated strong resilience despite its many pains in the past decade.

In addition to geopolitical issues with global impact, carriers face challenges such as sailing increasingly larger ships, container losses at sea, and cargo misdeclarations. However, Nixon believes the industry responded with better regulations and preventive measures.

Nevertheless, Lars Jensen, CEO of Vespucci Maritime, foresees months-long disruptions in vessel capacity and consumer demand as the market continues to face risks from the Red Sea crisis and potential trade regulations by the US.

In this context, Jensen advised shippers to proceed cautiously with their supply chain planning as the situation remains highly unpredictable.

“The reality is it is impossible to predict even one or two months from now,” he said. “This period of uncertainty could last for quite a while.”

US-China trade relations

A key topic of concern was the recent regulations the USA plans to implement on Chinese-built vessels and cargo.

The US Trade Representative's Office (USTR) proposed fees on Chinese-built vessels calling US ports that could reach up to USD 1.5 million per port call.

Søren Toft, CEO of MSC, believes the fees will significantly impact the shipping industry if implemented.

“When I look at this and the proposed rules, I see a significant impact if this is pushed through as right now laid out,” said Toft.

Around 11% of MSC’s fleet is built in China. The carrier anticipates significant costs and a need to revise its routes to the US, including drastic capacity withdrawal. Toft believes “all the marginal ports will have to be re-looked at.”

China plus one

On a business level, companies are increasingly considering moving their production away from China to avoid the impacts of trade tensions on their products. MSC’s Toft sees an increase in this trend.

“We are seeing real active steps for diversifying away from China,” he said.

During Donald Trump's first term in office, the so-called "China plus one" plan started to gain traction. In recent months, Trump's warnings of higher tariffs against China brought further attention to the topic.

However, to Toft, customers are not adopting this strategy only in response to tariffs. Customers also seek to diversify their businesses across several locations.

Logistics firms are shifting a greater portion of their operations to the nations where clients are relocating their production.

Toft highlighted that supply chain strategies are causing notable production growth in places like India, Vietnam, Indonesia, Turkey and parts of Africa.

The Gemini Cooperation

During the event, the CEO of Hapag-Lloyd Habben Jansen told the audience that the Gemini Cooperation had already met its target of 90% reliability.

To this date, the new cooperation with Maersk successfully phased in 170 vessels, nearly half of the 340 ships that will operate for Gemini.

The network will need two cycles to be fully phased in. However, Jansen said the alliance is “off to a good start.”

Nevertheless, Habben Jansen said it is still too early to declare with certainty that the new alliance has overcome all challenges to its reliability target.

“I expect, as I have said all along, that in the first two cycles, we will have some teething problems,” he added.

Sustainability challenges

The topic of shipping decarbonisation was also key on the TPM agenda.

The industry raised concerns that the shipping sector fundamentally lacks a clear plan for achieving its green transformation.

“We are desperately missing some real regulations, some real direction, and instead, it’s being left up to us,” he said.

According to Toft, the main issue is not a lack of technology or willingness to invest. Securing the infrastructure required to enable a large-scale shift is more important.

“The real issue is not can we buy a green ship or are the engines there. The real issue is the availability of fuel. We are shipping companies. We’re not fuel providers,” Toft continued.