In this blog, we’ll talk about container truck transport to and from ports. Various upheavals have occurred in this market in recent years. While during the peak of the pandemic, shipping companies could easily “force” their clients to entrust them with this part of the job (carrier haulage), the rebalancing of supply and demand for shipping capacity, which came to the fore especially in 2023, changed the power dynamics. Thus, clients found themselves back in a position to decide whom to entrust with these tasks (merchant haulage).
Goods are increasingly being packed into containers.
Container transportation is one of the most sought-after forms of transport today. Containers are a convenient solution for almost any type of cargo, from raw materials to finished products – they transport food, beverages, plastics, rubber, textiles, wood, paper, metal, machinery, chemicals, furniture, electronics, and even automobiles. Most analysts agree that containerized cargo transport has bright prospects and is considered a future trend. These standardized transport boxes can easily move through different modes of transport (ship, rail, or truck) without the need for loading and unloading cargo, reducing handling costs and transit times. For example, even in markets where such transportation is gaining momentum, like Serbia, the popularity of container transport is increasing. In Serbia, its volume has doubled in the last ten years.
According to Eurostat data, across the European Union, the share of container transport in total road traffic varied from 6.5% to 5.8% from 2012 to 2022. However, trends in individual markets naturally differ. For example, the share of container transport in total road transport over these 10 years decreased in seven EU member states, as well as in the EFTA countries Norway and Switzerland. On the other hand, some countries recorded staggering growth – in Lithuania, it amounted to an incredible 300%. According to Eurostat, the main reason for this is the significant increase in container volumes in Lithuanian ports, necessary for short sea services. Thus, more work at sea equals more work on the road. In absolute terms, Germany was the undisputed leader in terms of the volume of road container transport, with over 44 billion tonne-kilometers in 2022.
Merchant Haulage: Back on the Scene
Containers need to be transported to the port before loading onto the vessel and then from the port to the final destination. Both can be organized by either the shipper or the shipping company, and these operations are known as “merchant haulage” or “carrier haulage.”
Merchant haulage involves the shipper, also known as the cargo owner, organizing container transport through their appointed transport company, while carrier haulage means that container transport is organized by the ocean carrier. Carrier haulage essentially expands the scope of work for the ocean carrier – instead of port-to-port service, it involves door-to-port, port-to-door, or even comprehensive door-to-door approaches. Of course, both forms entail responsibilities for the cargo and come with certain advantages and disadvantages.
During the peak of the coronavirus pandemic, shipping companies were in a position of power, as they controlled access to scarce goods, or capacities on the ship. This allowed them to offer their services to clients on a “take it or leave it” basis, which included jobs before and after container shipment from ports. Of course, this service was mostly charged at very high prices and involved the transport of both full and empty containers.
However, most market participants were aware that this was a market anomaly that would not last. The golden age for shippers had to come to an end. The rebalancing of supply and demand for maritime transport in 2023, caused primarily by geopolitical events and their economic consequences (war in Ukraine, issues in the Red Sea, inflation, reduced consumption, etc.), changed the course. The container transport market before and after port equipment returned to its basic principles, such as price negotiation or contracting individual transports, and merchant haulage re-entered the game.
Significant investments by shipping companies are sure to pay off
What awaits us in the future? Analysts are cautious in giving grand assessments, considering that volatility is increasingly pronounced. Although in this “power game” road carriers and freight forwarders have regained their positions, they too face problems – labor shortages, strict environmental regulations, low margins, etc. Shipping companies that have used their increased financial resources to move towards greater vertical integration and take direct control of their land transport resources could have a competitive advantage in the future.
What is certainly expected by 2030 is continuous growth in the maritime container transport market (one consulting firm expects growth at a rate of 2.1% annually across Europe). This means there will be work for companies that perform operations to and from port hubs. There is an old saying that “battles at sea are won on land.” In this case, practice has shown that this is a market worth fighting for.
