"Key transformation in global logistics in the face of inventory shortages"
A growing number of companies are consolidating their logistics space, subleasing unused capacity and looking to upgrade existing sites rather than adding facilities. This change is described as the latest sign that the supply chain They are returning to more normal patterns after dramatic pivots during the pandemic, when product shortages and transportation disruptions in Mexico fueled a boom in demand for distribution centers.
The amount of U.S. warehouse space listed for sublease hit a record high at the end of 2023, more than triple the amount available two years earlier. Although average lease prices continue to rise, increases have slowed dramatically from levels just over a year ago. That suggests lean inventory strategies may extend to warehouse space for some time. Furthermore, collaboration between international logistics and transportation companies in Mexico becomes increasingly crucial in this changing environment.
Transport
In any battle for supremacy on the seas, China has a clear advantage in its shipyards. More than half of the world's commercial shipbuilding output came from China last year, making it the top global shipbuilder by a wide margin.
Companies report that the West's once prolific shipyards have shrunk while most of what China doesn't build comes from South Korea and Japan. This shipbuilding empire is a symbol of China's historic transformation into a maritime power and a pivotal strategic asset as Chinese leader Xi Jinping attempts to reshape the world order.
“The rise of Chinese shipyards and its impact on international logistics”
The giant Chinese shipbuilding firms that produce merchant ships are often the same ones that build warships for the Chinese navy. Those shipyards are thriving, with billion-dollar contracts for container ships, tankers and bulk carriers. With their order books full for years to come, shipyards have built expansive supply chains essential to the international logistics industry in distributing products globally.
Furthermore, the growing importance of collaboration between countries in international logistics highlights the need for closer cooperation in the management of global trade flows.
For all the talk about globalized trade and international logistics being past its peak, maritime volume data in early 2024 looks strong. And if reports from shipbuilding companies are any indication, the sector should continue its growth into the late 2020s and beyond.
“The changing landscape of shipbuilding and its impact on trade”
According to an article published last week, production schedules in most shipyards of the country are booked until 2026. China's shipbuilding production has grown dramatically since the early 2000s, when it accounted for around 10% of global market share which directly affects the global market and international logistics, a more than 50% (more than 43 million deadweight tons) in 2023. Its yards secured more than 65% of all new orders last year.
China has a smaller share in certain high-value segments, such as LNG vessels, where it is responsible for approximately 15% of the order book, with South Korea leading the market and international logistics. But even that could be changing as continued technological improvements bolster orders for specialized vessels such as chemical tankers, automotive roll-on/roll-off transporters and reefer vessels. At the end of 2023, South Korean shipyards appeared to be struggling to meet their annual targets.
“The panorama of shipbuilding and its relationship with global trade, with a focus on the growth of the nearshoring between Mexico and the USA.”
In total, China, South Korea and Japan account for more than 90% of new cargo shipbuilding globally. The increase in new shipbuilding orders is negative for rates, and could also indicate a belief that trade will not be smooth in the coming years. Geopolitical tensions around key trade routes, such as the Black Sea and Red Sea, introduce challenges that could continue to lengthen shipping routes as companies seek to avoid conflict zones. Low water projections in the Panama Canal similarly threaten future transits. These situations help drive the increase in shipbuilding, because longer routes mean more ships are needed to transport the same amount of goods and better development in international logistics.
Interestingly, this vibrant long-distance maritime trade has no problem coexisting with the rise of North American nearshoring, particularly between Mexico and the US. Both were each other's main trading partner in 2023 and which supports Mexico's shipping in general.
Nearshoring and the push towards diversification of trade networks may not mean a reduction in maritime trade. This transition to regional shipping complements broader international routes and distribution logistics.
Shipbuilding by the end of the decade
If current trends continue, the shipbuilding market is projected to experience significant growth by 2030. According to Coherent Market Insights, the global market, valued at approximately $150 billion in 2023, is expected to expand to around $192 billion. million by 2030.
This growth is driven by several factors, including the increase in maritime trade and the need for more environmentally friendly ships with more storage space. store with the environment as the industry moves towards decarbonization.
Asia is expected to maintain its dominance, supported by large production capacities and technological advances.
The emphasis on building more environmentally friendly ships, such as those powered by LNG or equipped with advanced emissions reduction technologies, is also likely to be a significant trend. This change is due in part to regulatory changes aimed at reducing the environmental impact of the maritime industry. Similarly, market growth is influenced by the expansion of trade corridors and the replacement of aging fleets.
The median age of the container ship fleet has increased significantly in recent years. According to a report by the Baltic International Maritime Council in October 2023, the median age of the container ship fleet has increased by approximately 4.3 years since 2010, reaching 14.2 years in 2023.
“The evolution of the maritime fleet and its impact on global logistics, with a view to Mexico”
Now, almost the 21% in the fleet is more than 20 years old, and the recommended service life is generally between 20 and 30 years. The report suggests that the average age of the fleet is expected to decrease in the coming years as more ships are retired and new container ships are delivered.
In summary, inventory depletion in retail supply chains and the boom in global shipbuilding reflect significant dynamics in global trade and make a constant shift in the context of international logistics.
China is emerging as an undisputed leader in the shipping industry, while demand for logistics storage space is undergoing significant changes in the United States. These developments have important implications for the global and regional economy.
In the case of Mexico, the close relationship with the United States and its participation in international supply chains position it to benefit from these changes. Increased nearshoring and regional port activity offer opportunities to further strengthen its role as a manufacturing and logistics hub in North America. However, they also pose challenges, such as the need to adapt to fluctuations in demand and international competition in the manufacturing and logistics sector. Overall, Mexico is strategically positioned to capitalize on emerging trends in maritime trade and global logistics, provided it can effectively manage changes in the international trade environment that would improve Mexico's transportation.