Deutsche Post AG's forwarding operation said it will cover extra costs for customers who wish to specify that less-than-container load, or LCL, cargo be carried on vessels using biofuels or other reduced emissions technology, Shipping Watch reports. The shipping industry is starting to invest in greenhouse-gas-reducing technology, which will incur higher costs, as outlined in Panjiva's research of Feb. 18.
Customer willingness to pay is of course a challenge, but many companies are already set to make such commitments. DP-DHL's exposure to the extra costs is not known yet, but limiting the offer to LCL shipments only will reduce its exposure. Panjiva's data shows that 28.7% of DP-DHL's U.S. seaborne import handling in 2020 were LCL by the number of shipments, although that equated to just 3.2% by volume of containerized freight.
At the industry level, the LCL segment has grown more quickly than the full container load, or FCL, space during the coronavirus pandemic. Total U.S. LCL imports rose 53.1% year over year in the fourth quarter of 2020 while FCL rose 15.8%. In DP-DHL's case that has not occurred. U.S. imports of LCL traffic grew 14.6% year over year in the fourth quarter of 2020, while the number of FCL shipments improved 17.0%. That gap has widened further in January, with DP-DHL's LCL shipments up by just 6.7% while FCL rose 27.4%.
While the emissions cost offer is clearly designed to attract new customers, DP-DHL's existing LCL customers will also likely want to take advantage. Customers that have cut back their shipments with DP-DHL would be the most logical early candidates for the product.
In the capital goods sector, Panjiva's data shows imports handled for Caterpillar Inc. and Honeywell International Inc. declined 47.9% and 40.7%, respectively, in the three months to Jan. 31. Those shipped for Metso Outotec Oyj declined 17.8%. In the technology sector, shipments handled for CommScope Holding Co. Inc. fell 61.0%, and while shipments for Cisco Systems Inc. rose 40.5%, they have reversed 36.1% in the month of January alone.
Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.