Civil unrest in different regions has been keeping the railway industry guessing if major disruptions are around the corner. However, the consequences are not as bad as they were painted.
Without a doubt, civil unrest in Kazakhstan has left the world speechless and the logistics and transportation market in an uneasy state. Everyone expected mass disruptions, however, contrary to the popular belief, no harmful consequences have taken place. In addition, following the emergency alert and the unprecedented satiation, Kazakhstan Railways decided to cancel all fees, fines and charges related to rail freight transport in order to compensate companies for the potential disturbances. KTZ also made an announcement that railway traffic runs as usual through Kazakhstan. When it comes to political uneasiness, there are some other players that keep everyone alarmed – Belarus and Poland in the context of refugee crises. In this case, the situation does not seem to escalate as Belarus has claimed that it will not prevent the transit of Chinese trains and will supply China with products previously supplied by Lithuania, so no troubles for the New Silk Road in the coming months. This is a mass relief for the European industry as volumes are not slowing down their growth.
The dynamic is the same for the shipping sector where ports continue handling tons of TEU. The new data has shown that the Port of Singapore remains the busiest, having registered a record high in container traffic of 37.5 million TEU.Singapore has also been ranked the top Leading Maritime City and is gradually becoming a leader in facilitating digitalization across all its facilities. These improvements definitely set the tone for others as the competition stakes keep increasing. Hong Kong is determined to keep up with the race, but the declining ranking does not promise so, thus the government is planning to enhance its status as an international maritime and logistics hub. The freshly created bureau will be in charge of the transformation and accelerate the adoption of technology, smart logistics and supply chains, and diversification of manufacturing bases. The Port of Antwerp has also joined the list of innovators by signing the first two leaseholders for 100 million euros for its NextGen District, its hotspot for a circular economy that facilitates the transition to a carbon-free future. The objective is to unite leading innovative players in the circular process and manufacturing industries who will give end-of-life products a second or third life, explore circular carbon solutions and develop renewable energy technologies.
A major boost is not far away from The Northwest Seaport Alliance either since for the first time in months terminals are back to handling multiple ships a day despite the slowdown in vessel loading due to holidays. Coming back in business, the port will also receive funds – a $15.7m grant – for expansion and to battle congestion. As for the most overcrowded ports – Long Beach and LA – the authorities have equalized the number of days both rail- and truck-bound cargo can stay on docks before being subject to a threatened per-diem fee. The initiative aims to influence shippers’ behavior since the strategy of threatening the application of the fee has proven to be working. However, the positive results will have to wait since the Chinese New Year is around the corner and overall, Asian and European ports (Felixstowe alone reports a record for the largest exchange of containers on a single vessel) alongside India continue to struggle as the volatility of spot rates and contract rates spills over in 2022. Container prices have risen at most of the major ports in India by at least 12% in January. Experts fear that if not controlled, the soaring rates will trickle down to consumers. The situation is topped with a 33% increase in imports and a 25% drop in production due to the implemented curfews. The practice has shown that where others cry from sky-rocketing rates, shipping lines are flourishing. The beginning of 2022 is no different for Maersk as it has reported a further $1.8bn in Q4 earnings. To illustrate the giant’s earnings for the last year, it is better to look in the retrospective of the past five years – 2021 has exceeded all of them combined, so the company keeps strengthening its presence on the market.
The big players aim to kill two birds with one stone: to facilitate their growth and paint the world green.
No matter how big and ambitious collaborative initiatives in terms of sustainability may be, the big giants will never miss the opportunity to facilitate even more ambitious goals and set the tone for the entire sector. Maersk believes that it will be able to achieve net-zero emissions 10 years early, by 2040. The breakthrough can be possible thanks to its close ties with the aviation sector. This is one of the reasons (or excuses?) why the company has been considering the acquisitions of airfreight assets since the earning has been enormous. The company will also reconsider its supplier relations in order to address emissions from inland transport services and vessel building.
While the US government is still only threatening to impose additional charges to speed up container movement, such companies as Zim chose carrots instead of sticks as an incentive. The program implies that the ocean carrier is offering to pay truckers up to $200 for each dry-van or laden container picked up within four days after it is discharged from the ship. The logistics costs remain at cosmic levels, so importers are forced to look for alternative ways and start using containerships as offshore warehouses. However, not everything is necessarily in the dark hues. Thanks to congestion at the east and west ports, the interest rates are lower than ever, so the companies can finance a surplus amount of inventory and essentially store it at sea for two months. In addition, California’s ports will receive $2.3 billion of investment in the coming couple of years that will be spent on a range of initiatives from the improvement of the infrastructure to the development of the zero-emissions policies. The former is especially important as to what extent the ports are improved will determine how successfully they will be able to handle growing volumes. The unprecedented demand will remain a global issue, therefore, European facilities are trying to anticipate the splurge in demand as well, especially when it comes to premium warehousing space. To address the challenge, DP World is going to speed up the delivery of a speculative green warehouse at London Gateway’s port-centric Logistics Park. In Asia, Thailand aims to boost the inland container ports to serve as trucking links to neighboring countries. Experts point out that among other factors that will define 2022 is also a more than 60% increase of freight rates on the major routes. The data is derived from the current state of affairs. This will have consequences for the shippers’ contract. Even if they manage to sign at a relevantly low price, the value of such agreements will be minimal if the carriers can drop them without serious penalty. Shippers will also have to deal with more delays that by now have become the mundane reality due to the omicron sparks worldwide. For a while, Chinese ports have been facing partial lockdowns but as new ports have to go through it, the more disruptions they bring. This time it is the Port of Tianjin, one of the busiest ports in the world, that is seeing a drastic increase of cases. The dynamic is extremely alarming because as 2021 proved, it is the Chinese ports that influenced the state of the majority of international facilities. In the meantime, the challenges are topped with unpredictable incidents such as container collapse. Madrid Bridge has lost around 30 boxes, which will surely add up to the delays while the company is recovering this issue in respect of any cargo lost overboard. The vessel has to make its way to New York to investigate the damage. Container collapse is a common phenomenon for the winter season, and now companies are perplexed with the question of how to make transportation more secure.
For the rail sector, the New Silk Road has, to some extent, become the beacon of development and this week it has seen another update regarding the Xi’an-Valenton link that is now regular. Without a doubt, the improvement will alleviate the difficulties faced by the ocean freight due to the COVID restrictions. However, the famous route has a rising competitor. North Sea-Baltic Rail Freight Corridor is extensively growing – the addition of three connections has expanded it to Poland, the Netherlands, and Belgium. North-Sea ports are crucial rail freight players that will add value and provide new business opportunities, as well as facilitate a further modal shift to rail. Poland continues to strengthen its presence. On the already mentioned the New Silk Road, it is going to build a new multimodal terminalin Karsznice. The target capacity of the depot storage area is 4,500 TEUs, with a capacity of 220,000 TEU per year. All these initiatives demonstrate that the growing demand will not be solely a shipping sector’s problem. Indian railways will also face this issue, according to the updated forecast. Maersk has witnessed a 43% growth in the movement of containerized goods on rail and a 23% growth in rail for import and export combined in the region. The splurge creates more uncertainty in the already disrupted logistics ecosystem.
The political situation in Kazakhstan did not omit the services related to crucial inland logistics ties. Although passenger and cargo flights have resumed, some companies had to arrange charter flights to deliver urgent cargo, which was complicated to do due to the sudden loss of communication.
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