Dr. Ivan Petrov, President of the International Federation of Freight Forwarders Associations (FIATA), discussed pressing issues facing the freight forwarding community during an interview with Antonis Karamalegkos from Container News. The conversation centered around the vertical integration of ocean carriers and the industry’s ongoing challenges such as high freight rates, global port congestion, and the need for digitalization and decarbonization.
Petrov highlighted the astronomical rise in freight rates over the past two years, indicating that while some price stability is anticipated in 2023 due to increased carrier capacity and regulatory efforts like the US Ocean Shipping Reform Act 2022, rates may not revert to pre-pandemic levels. A report from OECD-ITF and MDS Transmodal noted that contract-based rates have surged by 2.9 times and spot rates by 6 times since before the pandemic. This spike in freight costs has significant implications for consumers, contributing to inflation.
He also addressed the trend of shipping lines taking on roles traditionally filled by freight forwarders, such as offering door-to-door services and cargo insurance. While vertical integration may be legally permissible, Petrov warned that it creates competitive imbalances; carriers often benefit from regulatory exemptions, which could harm the freight forwarding sector.
The conversation turned towards digitalization, where FIATA is actively developing measures like the digital document library and the eFBL (electronic FIATA Bill of Lading) using blockchain for enhanced traceability. As the shipping industry faces digital transformation, these innovations aim to facilitate interoperability and better data sharing.
Regarding service reliability, Petrov noted that container carriers are historically underperforming, resulting in unpredictability that hampers global trade. He emphasized the need for regulatory oversight to address the inequitable distribution of carrier capacity, and referred to FIATA’s collaborative efforts with competition regulators worldwide to advocate for fair practices.
Petrov also highlighted the issue of port congestion, especially in the US West Coast and China, which disrupts supply chains. He detailed FIATA’s engagement with its members to improve practices and noted recent developments nurturing rail connectivity in China as a promising avenue for alleviating some maritime pressures.
Lastly, Petrov addressed the industry’s decarbonization efforts, underscoring FIATA’s role in advocating for sustainable practices. While some shipping companies explore low-sulfur and biofuels, Petrov emphasized the necessity for transparency in costs associated with greener alternatives, suggesting that the responsibility for sustainability should be shared rather than monetized.
In summary, Dr. Petrov conveyed that while challenges abound in the freight forwarding sector, especially regarding cost and competition, FIATA is committed to advocating for fair practices, promoting digital advancements, and supporting decarbonization efforts in the industry.
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