The US government passes the new generous infrastructure bill and tightens the grip around big shippers at the same time. The clouds are thickening above European rail as Germany expects more delays.
So far, it is businesses that have been suffering the aftermath of supply-side bottlenecks and increasing transportation costs, but in the future, as the situation does not seem to improve, the customers will take turn and feel the consequences of the increased demand too. Prices are expected to increase well into Black Friday and holiday shopping seasons.
Meanwhile, it is a triumphant week for the US ports as the Senate has passed a historic infrastructure bill, which will send $17 billion to the sector – an incredible investment amid to deal with backlogs, reduce congestion and emissions near ports and airports, and drive electrification and other low-carbon technologies. At the same time, Washington DC is taking additional steps to prepare the battleground against shipping monopoly. According to the Ocean Shipping Reform Act, recently introduced into Congress, there would be new minimum requirements for service contracts and greater powers for the Federal Maritime Commission. The bill is due for further discussion. However, the critics have already voiced their concerns, claiming that the new legislation does not include all parties –a protectionist race to the bottom in the regulation of international ocean transportation is not a winning strategy. Still, supporters prevail as more than 100 signatories have backed the new bill and seconded that carriers have abused the situation to their advantage. This is unacceptable especially since some of the supporters expect spot rates on the Pacific to crash through the $20,000/FEU mark by the middle of the month.
In addition, the capacity shortage is squeezing the last forces from the carriers as they try to find enough container tonnage for their extra loaders from Asia. For example, although Maersk announced two new loops between Asia (where more closures and disruption at the Port of Ningbo-Zhoushan after the chaos in Vietnam are possible) and the US west and east coasts for August, they require too many vessels – a luxury that hardly anyone can get.
According to the recent update, the US major ports will remain constrained in the summer months with the hardest hit Port Hueneme, Los Angeles, Long Beach, and San Diego. In addition, the number of ships at anchor is growing.
The already mentioned Port of Ningbo-Zhoushan is living up to the gloomy forecasts as one of the container terminals has closed due to a positive Covid test. Cargo owners are already having flashbacks to a Yantian-style nightmare. In turn, trying to solve the industry’s extreme container shortage, Shanghai has launched a new empty container transportation center.
India has proposed to include the Iranian port of Chabahar in the International North-South Transport Corridor. The hub already has prospects of becoming a transshipment point connecting India, Iran, and Central Asia. However, the main disadvantage is the lack of a railway connection.
A big part of the congestion occurring at intermodal rail terminals is under uncontrollable factors that is why when STB demanded the Class I railroads, to explain what they were doing to address the congestion occurring at the intermodal terminal, the answer was not that easy. In its defense, the company has assured that it is doing its best to optimize the movement of freight over our railroad and at the terminal, however, it is not responsible for shippers’ strategies and approaches.
The drivers’ shortage that has been the UK’s pain seems to last much longer than anyone has expected. At least, the government has conceded that the queues of lorries looking to cross the Channel are here to stay. As a result, it has expanded emergency powers to handle the queues into a permanent protocol.
Rail, the high hopes of the industry in the context of constant congestions and blockages, has been hit by the train drivers strike in Germany. Currently, 190 freight trains are at a standstill, which is devastating since the country is a European rail freight hub connecting the whole continent and a knot for intercontinental traffic. For this reason, DB Cargo is cooperating with German private rail companies to secure the operation of trains where possible.
Meanwhile, the increase in container rail traffic spills in Europe. The Port of Barcelona has grown 46% in the first half of 2021. The port has moved 161,735 TEU compared to 111,132 TEU moved compared to the same period of 2020. At the same time, the Port Authority of Valencia plans to foster technical assistance for the preparation of the Valenciaport 2030 Strategic Plan.
Amazon’s big hopes for drone delivery have proven to be dystopian. The initiative has failed due to the lack of skilled and advanced employees and overall too many promises that the company has made that could not be kept.
A whirlwind of events takes over the industry. Companies are forced into sailing cancelations, dealing with more restrictions and shut downs but there is always hope. This time for intermodal
If the current times were named the roaring twenties, it surely would have a different meaning. The “roaring” congestion gets in full span and hits the world’s two largest ports – Ningbo and Shanghai. Further supply chain chaos is caused by the unpredictable weather, soaring demand from the US, and the new COVID outbreaks. They are experiencing unprecedented volumes of tankers, bulk carriers, and containerships backing up into the East China Sea. Meanwhile, the situation is not improving in Vietnam. The lockdown has caused a 100,000 TEU pile-up at Ho Chi Minh City’s Cat Lai Port. With the closure of factories due to health restrictions, the containers are piling up with nobody picking them up. When facilities reopen again, the sector will have to deal with severe equipment shortages. To maintain smooth operation of TCCL and TCHP, the Vietnam Maritime Administration has developed several measures, among which he suspension of the movement of import laden containers from ports in Cai Mep area to TCCL as a final destination for customer pick-up, temporary halt on transshipped laden reefer containers, customer support delivery of containers discharged from vessels, etc.
The COVID-19 pandemic has resulted not only in the productivity drop, but most importantly, it took away the lives of millions of people. In the case of the Chittagong port, 48 employees and their dependents died of coronavirus since the virus hit the country. The shipping ministry started providing vaccines to the port employees, but the labor shortage is still inevitable.
The delays have not omitted the US either. The number of vessels at anchorage in Southern California has doubled in the past several weeks. The data reports that the average dwell times in the US have increased by 35%, meaning there is 35% less capacity overall. On top of that, there are rail car shortages and rail yard capacity limitations that have forced companies to reduce the number of services from the west coast. They also have to cancel their sailings – across the major trades, Transpacific, Transatlantic, and Asia-North Europe & Med, a total of 496 scheduled sailings.
In such a challenging context, freight rates continue to rise. The VCFI index for July has grown by 9.19% with the highest increase represented in Latin America Pacific (24.87%), followed by Central America and the Caribbean (14.54%) and the United States and Canada (7.48%). However, some expect rates to increase at a slower rate in the near future. The new reports state that spot rates on Los Angeles to Shanghai and Shanghai to Rotterdam gained 5% and 2% to US$1,479 and US$13,628 for a 40ft box, while Shanghai to New York and New York to Rotterdam rates remain stable.
A glimpse of stability might be expected from dry freight shipping containers. Although the prices have doubled over the past year to reach historic highs, some predict that they will moderate over the next few years. The dry box per diems are forecast to rally 65% in 2021, which means that lease rates will stay higher for longer, but afterward, some softening of returns is totally possible.
In the race for alternative routes, OOCL has become the first one to have launched a rail-sea service from China to the US east coast operated by an ocean carrier. Extra loaders deployed between Asia and the US aim at high demand since the number of ships waiting for berths at Los Angeles and Long Beach has reached above 30.
Although, when switching to other means of transportation, much of the shipping activity is going to trucking services, the high prices do not make the latter very attractive. This is when intermodal comes in handy – its volumes increased 20.4% YoY in Q2 since 2010. Without a doubt, the challenges with capacity on intermodal are going to be an issue, but it seems like the trucking challenges are even higher. The reality is somewhat more balanced toward rail freight, at least for the US where almost a quarter of intermodal traffic is moved by rail.
Evergreen is back in the game as it plans to buy containers from Dong Fang International Container in Hong Kong. It has also acquired eight containerships in a deal worth around $94.1m. In addition, it has announced a shake-up in the registered ownership. The measures are meant to improve its competitiveness, market share and efficiency.
The transpacific marker has gotten brighter shades with the Port of Oakland’s launch of the new services from Asia. With the worsening congestion at Los Angeles and Long Beach, the port seems in a better position to hold on to the new operations.
The GL Terminal and Ezyhaul have announced a strategic partnership in Indonesia amid combine container handling and inland container depot knowledge of GL Terminal with Eyzhaul’s digital road freight platform. The initiative is expected to allow customers to make bookings for domestic short-haul, long-haul, and cross-border shipments.
Мы боремся за создание и воплощение решения в жизнь с максимальной отдачей делу. Мы готовы и можем реализовать перевозки различных грузов, независимо от длины маршрута. Честные взаимоотношения. Мы — игроки одной команды. Открыты и прозрачны. Берем ответственность!
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Одеса, Украина
Ирина, добрый день! Рад приветствовать Вас. В корпоративном профиле Duke Active не нашел сервисов по морским контейнерным перевозкам из Китая. Можно ли ознакомиться с опубликованными тарифами?
The first rule about improper surcharges is you do not talk about improper surcharges or at least, reject the accusations. Soaring prices, rates, and anti-monopolistic drama.
The peak season is driving ocean freight spot rates beyond the US $20,000 per FEU. The new data demonstrates that prices from Asia to the US West Coast, including premium surcharges, increased by 5% to more than $19,000/FEU, with East Coast rates hitting an outstanding $20,804/FEU. Australia is also in the club of struggling shippers – it is facing the highest increase in rates since the beginning of the pandemic. The latest update on China-Australia FAK rates has shown that they have been pushed up to US $8,500 per 40ft container. Alongside the skyrocketing indicators, there are congestion and consequent capacity shortages.
Moreover, prices of dry freight shipping containers have also doubled over the past year to reach historic highs. Experts have tracked that the dry box newbuild prices rallied strongly in 2020 with a year-on-year gain of 75%. Then by Q2 this year 40ft containers breached the $6,500 threshold, more than doubling over the year since the last peak that occurred in 1998.
China is still turbulent which affects major shipping lines and forces them to skip sailings to meet their schedules. In addition to the recent Typhoon In-fa that hit Shanghai port, the country has to impose new sanitary measures in the wake of the new COVID cases. Vietnam mirrors the situation – container terminals at Tan Cang Cat Lai Port in Ho Chi Minh City have suspended container imports to clear the backlog that has been caused by the pandemic outbreak. Hapag-Lloyd is planning to launch a transshipment service, transporting goods from Vung Tau to Cat Lai. Companies sourcing in Vietnam are also destined to experience significant delays that could lead to additional cancelations. They are now forced to reconsider their strategies and start sourcing from different areas around the globe.
Taiwanese feeder boxship operator TS Lines expands its assets, as it has added to its newbuilding orderbook. The new order at Fujian Mawei Shipbuilding includes the construction of six 1,100 TEU containerships.
The situation in Asia has a domino effect on the US Ports. The Port of Long Beach continues to see through-the-roof volumes of cargo, handling a record number of containers for the month – 784,845 TEU in July. Terminals will be in a full-court press to meet the demand for the holidays. The new port forecasts predict that it will break its 2020 TEU levels of 8.11 million TEU. The same port also has to deal with unbearable heat and as a result, it will take a pause on shore power facilitiesfor vessels to free up energy supply.
The Federal Maritime Commission is undertaking further steps regarding the expedited inquiry into the timing and legal sufficiency of ocean carrier practices. It concerns certain surcharges as part of its investigation into the US maritime sector. The step is necessary, as recently the FMC has been receiving communications from multiple parties reporting that ocean carriers are improperly implementing surcharges. As for a $600,000 lawsuit by MCS Industries against Cosco and MSC Mediterranean Shipping Company, MSC has finally reacted. It rejects the accusation of collusion between carriers put forward in the complaint.
Although, Asia is dealing with major challenges, not everything is in gloomy tones. Recently, Hong Kong liner OOCL has reached a milestone by launching a new rail-sea service connecting China to the US east coast. In fact, it is a combination of the Chang An China-Europe block train service from Xian to Kaliningrad with the onward feeder to Bremerhaven, and then with OOCL ocean services from Bremerhaven to various ports on the US east coast.
The uneven recovery of the air market is raising concerns about its capacity. Lately, a significant number of preighters have returned to passenger mode to meet the demand. Capacity is still down significantly: the Far East-Europe and Europe Far East trade lanes show reductions of 21% and 20% whereas, the deficit is -36% from Europe to North America and -34% in the opposite direction.
To develop its air cargo services, the Port Authority of New York and New Jersey has announced a lease with Amazon Global Air to re-develop and expand air cargo facilities at Newark Liberty International Airport. Why Amazon? The booming e-commerce is the answer. The new facilities will upgrade utilization for e-commerce package sortation and incremental cargo activity.
In Canada, union workers at the Canada Border Services Agency began labor actions amid contract negotiations, which may result in delays in commercial traffic at local ports. Maersk is already expecting a slowdown or withdrawal of non-essential services.
Korean companies will get assistance from the Busan Port Authority to obtain Authorised Economic Operator certificates as part of efforts to strengthen the global competitiveness of small and medium enterprises. Moreover, these measures include legal compliance, safety management level, and financial health.
Diving deeper into unknown waters – the unchartered territory.
Although everyone understood (and then witnessed) what impact the combination of high demand, under-capacity, and supply chain disruption would have on the shipping industry, nobody could have expected that long-term contracted rates would jump to 28.1%(compared with June) and blow the previous record of 11.3% in May 2019. The hike of this magnitude is a clear indicator of how constrained the industry is now. Experts are anticipating companies’ next move – big changes are looming over and it is a matter of time when we all see how significant they will be from the global perspective.
Average hire rates have jumped by almost 47% just in one month. While chartering fraternity is looking for the right words to describe the astonishing situation, it is crystal clear that the market is deep into an uncharted zone. S&P deals are now fully controlled by liner operators as they buy ships and then flip them around to a tramp owner along with their charter-back at a corresponding rate.
The capacity turmoil in terms of equipment also adds logs in the fire. Despite the developing volumes, the obstacles regarding it can hold an explanation of the current shortages. In comparison to the historical average, these days the factor indicating TEU of equipment in circulation has dropped. Companies are wishing to become asset-light but this intention is strongly affecting the delivery time, as equipment shortage is the bottleneck of the industry. Moreover, the issues will take significant time to resolve since the annual production output is capped at 4.5 mil. to 5 mil. TEU, so none of the important factors is in favor.
More factories are shutting their production down due to the new lockdowns in China and Vietnam. Among them are already Toyota, Honda, and Nike. None is left unaffected – many electronic companies are struggling with keeping up their production sights up and running because of the complicated situation. Ships continue queuing in the South China Sea.
Rail is doing moderately better, although the definition of “better” can hardly be identified in the current context. DB Cargo UK is planning to lease its Mossend EuroTerminal rail freight facility near Glasgow to Maritime Intermodal. The latter is extremely important as it allows facilities for changing between diesel and electric traction.
To provide further support for the growth from Intra-European feeder networks, Peel Ports has made an investment in two ship-to-shore cranes for the Port of Liverpool that will significantly enhance the Port’s capabilities for ACL. It also further compliments the Irish Sea hub proposition connecting the world to Liverpool and the largest consuming and exporting region of the UK. The crane development also occurs in Budapest. The repair of one of the two cranes at the BILK terminal has reached its final stage. Reconstruction work is underway.
In airfreight, the shortage of handlers has led to some companies losing about one-third of their capacity. German and Belgian airports are reported to be among the worst affected. As the flights are coming back, there is a lack of skilled workers and this technical unemployment cannot be reversed shortly. The situation is evolving very fast, so the best strategy is to be dynamic and reactive. Some companies have begun to cut or suspend short-time work for ground staff, while their handling arm is currently hiring.
A period can finally be put at the end of the Ever Given’s epos as the ship has arrived in the Port of Felixstowe, in the UK, four months after its initial schedule.
Although it is a universal truth that patience is a virtue, shipping companies would gladly disagree. The lead time is increasing and so does the pressure.
More complaints fire up against carriers as well as overall anger at the failure of shipping lines to meet their contractual obligations spikes up in the industry. Following its formal call for FMC to take matters in their hands, MCS Industries has stated that the problem is that when negotiating the prices, the company accepted that prices would be 70-80% higher than last year, but they didn’t get the containers agreed to them. As a result, the prices surged and now there’s barely any room for negotiations. This is a low blow especially since the market situation continues to remain challenging.
Due to the disruptions, the dwell times for many companies have increased and with the soaring demand they have to add more containers. Although they are being built at a relatively fast rate, it is difficult to get them delivered because of congestion and numerous blockages. This tendency is spreading from intermodal to rail resulting in volume-limiting rail allocations. Moreover, some companies are even planning for up to four weeks of additional lead time to ship their manufacturing supplies from Asia or Europe.
The obstacles are pressuring the manufacturing sector into slow supply deliveries. With high demand, factories are sucking inventory; the shortage of raw materials leads to long lead time for purchases; the lead time for raw materials themselves is also record high. However, the positive news about employment levels going up gives hope that it will also improve deliveries and inventories.
It seems like the alternative routes for shipping are not always a good idea. As more ocean carriers continue to shift tonnage from intra-Asia and north-south trades to east-west routes, it drives the freight rates up in these directions too. In addition, companies have been rigorously expanding their capacities, so now they have the opportunity to demand premium fees from shippers to guarantee equipment and shipment. However, no other routes will be able to fully substitute Asia, so as long as lockdowns remain confined in China, the impact on freight markets is likely to be muted. The recent data has shown that current queues are 76% above the five-year average.
Meanwhile, the anti-monopoly battle in South Korea takes a new span. Regarding the ongoing action to rescind the massive fines imposed by the Korea Fair Trade Commission on several major liner operators, lawmakers are now planning to amend the country’s Monopoly Regulation and Fair Trade Act to exempt the shipping industry from its jurisdiction to prevent a recurrence. They claim that the recently achieved improvements in the industry revitalisation simply cannot be destroyed with larger fines.
Meanwhile, the new surcharges from European ports to several American destinations have been announced. There will be Peak Season Surcharge of US$592 per TEU and US$1,185 per FEU for all cargo types, from Italy to West Coast South America, East Coast Central America and the Caribbean, West Coast Central America. In addition, FAK rates have also been increased from the Mediterranean direction. The forecast still predicts that the current situation will remain the same. More bottlenecks at ports and shortages of equipment in supply chains will be caused. The recent data has reported the increased Ocean volumes of 15%.
The new COVID restrictions in China have caused the rise of the airfreight rates. The latest update has shown that they reached $9.60, $11 and $12 per kg.
As a means of addressing the capacity crisis, Yang Ming has launched extra loader services on the transpacific and Asia-Europe tradelanes. The company is partly owned by the government and its new initiative is the result of cooperation of the officials with the Maritime Port Bureau.
