What is behind the noble intention of partnerships extension? Faster reach of the green future, stronger assets or… both? 

No sooner did Chinese ports started to reopen than experts rushed to evaluate the potential financial losses that could have been carried out by the companies. It has been stated that if the situation had not started to gradually improve, the closure of Ningbo and Shanghai could have disrupted more than $14 billion of trade flows. No wonder – the ports are one of the main hubs for companies from all over the world and those relying on just-in-time supply chain methods usually worry the most when ports shut down. That is why the relief in the Asian part cannot calm the racing heartbeat of the industry players when it is still dark and gloomy above the West Coast, where 40% of ships are being required to anchor. In the big picture, container call sizes are currently up between 10% and 70% across all major US, Northern European, and Asian ports, which continue to cause delays.

Following Maersk’s active calls for net-zero carbon emissions, the second member of the 2M alliance, MSC, has backed its partner’s initiative, claiming that the need for green technologies is stronger than ever. Success will be possible thanks to a scalable fuel, which requires… partnerships. Is there something between the lines that we cannot grasp? The persistent reminders about joint efforts have become a part of the giants’ agenda, so the question is whether there is something more to it than a noble strive for decarbonization? Further expansion of assets? The trend for partnerships has been in the air for a while now, (not only regarding sustainability) and recently the market has welcomed some new ones – CMA CGM has agreed to form a €25mil commercial partnership with Brittany Ferries. In turn, in order to further develop and strengthen its logistics services In Europe, DFDS has fully acquired the Danish freight forwarder ICT Logistics. We can only guess what the real intentions of the joint efforts are, especially when it seems like in the near future big companies will lean to more subtle moves. Although COSCO has settled the case with MCS Industries regarding market manipulations and its failure to stick to its contractual commitments with MCS, its conflict with MSC remains yet to be resolved. The situation is heating up in the wake of a complaint filed by North America Inc. with FMC, claiming CMA CGM and FMS charged exorbitant detention and demurrage (D&D) fees for more than a dozen containers. FMS assessed the D&D charges for consignment one at $58,220, which Eucatex was forced to pay before it could collect the cargo. Did someone say a “fair game”?

Perhaps, maybe this is why the main players have started to decrease their appetite for spot rates growth? One can only hope. At least Hapag-Lloyd has become the second container carrier that announces the suspension in rate increases after CMA CGM. There is no deadline for such a move; the company just hopes the market will eventually calm down and then it will be able to redesign its approaches. Whether it will bring the desired result is uncertain, the disruptions depend on other factors driving the current chaos. For example, what is not contributing to stability is the behavior of carriers that blank nearly half of all Asia – Middle East sailings.  The thing is that alliances and consortia continuously shift capacities between tradelanes to adapt to changes in demand even if there are no real changes in demand, and who are those unable to keep up with the insane pace? Secondary services.  The gold rush makes big ocean carriers continue to redeploy tonnage onto more lucrative east-west tradelanes, leaving shippers on lower-paying routes without a regular liner service. This situation? Paired with the congested ports? A disaster.  Retailers are howling for the government’s’ help in unison with smaller companies. In the US, a coalition of 152 companies and trade associations has submitted a letter of support to Congress regarding lines’ supremacy that has to be stopped. Otherwise, American producers will keep paying the price.

Meanwhile, Europe is getting ready for the rail breakthrough after the series of misfortunate strikes and an overall decrease in the number of significant rail freight developments. Belgium comes into the spotlight by presenting the Rail Roadmap 2030, a new conceptamid to identify the steps needed to enable a doubling of rail transport in the next ten years. Longer trains, digitization, and electrification of the track in the port of Antwerp are part of the plan. The UK hops on the train of advances with DP World commitments to investing $415 million to add a fourth Berth at London’s Gateway Logistics Hub in order to help strengthen the UK’s supply chain resilience. Additionally, Britain also has the potential to make the headlines as the country with some leading sustainable construction materials business.

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Shipping stocks are rising but is it worth trusting the trend when the sector is so unstable? Masks have fallen off and big players are coming into full force by trying to establish control over blank sailings and artificially influence the spot rates. 

As logistics and transportation markets plunge deeper into the abyss of excruciatingly high shipping rates, clogged ports, and further breakdowns of supply chains, ocean shipping stocks are undergoing significant growth. Good news in the meantime of chaos? Indeed, some of the dry bulk shipping stocks have attained 52-week highs, surging 15%, while others are near annual tops. Overall, their shares have risen by around 200%-400% over the past year, in several cases outpacing container stocks that, in turn, are expected to hit September peaks.    

Meanwhile, big players neglect their much smaller colleagues and chose their interest over the rules of a fair game. The recent announcement of blank sailings over China’s October holiday period by 2M alliance has left some shippers hanging in this frustrated, abandoned state as they keep struggling to find capacity on brim-full export ships from Asia. MSC is focused on improving its schedule reliability and takes the reigns in its hands – before it had already canceled four scheduled Asia-North Europe loops removing some 70,000 TEU of capacity from the route. Now as this strategy continues, many shippers feel staggered and lost with no real alternatives available. In its defense, the alliance has objected that shippers can keep placing the booking and alternative service will surely be provided. However, this is not the only factor that has been keeping the sector alert in the past several days. After CMA CGM had declared that it would stop all spot rate increases through to the beginning of February, such liners as Hapag-Lloyd also admitted that they had been capping the rates for a while. Other big players have not commented on the arrangements at all. The situation has brought the attention of the global regulators, and as big companies start navigating their conditions, it becomes more obvious that new regulatory regimes are needed. While, the future regarding the timing of these changes is uncertain and the capacity shortage is stronger than ever, the same Hapag-Lloyd is on the way to expand its fleet by adding  33 extra vessels in a new contract with Inmarsat. Will the situation remain the same? Asian direction remains an enigma as Typhoon Chanthu makes landfall, and some of the already congested terminals have to slow down their operations. East China has proven to be one of the most influential epicenters of blockages that tend to spill globally.  

Not only regulation of competition is required, but also of such vital aspect as safety of dangerous goods storage and transport. Hence, ICHCA and IVODGA have signed a Memorandum of Understanding to assist guidance on the correct safety procedures that need to be employed in the future. This is especially important in the context of the green focus that the industry has taken as the basis for development. In fact, Maersk, being the top advocate for green-fueled ships, is calling for a ban of fossil-fuelled ships by 2035 and the implementation of a $450/tonne carbon tax. The UK shipping industry follows suit and agrees that the international shipping community must pursue a net-zero carbon emissions target, but it gives a different from Maersk deadline: by 2050.

Retailers are occupied with more mundane problems than green future because for them continuous lockdowns in Asia, particularly in Vietnam, have resulted in the lost sales and problems with suppliers. Companies are shifting their purchase orders, locations and financial outlooks. The main objective is not only to reduce Asia’s exposure but most importantly to improve flexibility in the supply chain, as the crisis has revealed that dependence on the limited number of suppliers serves no good. Why “now” is the only right time to act? The new data shows that year-over-year growth is slipping, and there is no sector that has not been affected:  lack of warehousing; lack of truck and rail capacity, high shipping costs, etc. Perhaps, rail capacity has potential, especially since the China-Europe route keeps attracting attention – a new terminal will be opened in Mostyska, Ukraine. It is a part of the hub in the making on the Polish-Ukrainian border amid reloading traffic moving between the east and the west. In addition, Kazakhstan is building a new railway line to increase its transit potential on the Middle Corridor. What about Western Europe? Germany has been under the spotlight, and it seems like an agreement between DB and the train drivers’ union DGL is within a reach. The stumbling stone is the pay rise, so the solution will involve the two steps salary increase. The company simply cannot afford another disruption and further damage to its reputation. 

The threat of possible problems that may arise from the steam of unresolved conflicts pushes not only DB to more flexible policies but the UK government too when it comes to drivers’ shortages. Among the recent improvements is the fact that the government is going to streamline the lorry driver testing process, which will speed up recruitment and make the sector more attractive to potential employees. The strategy is fairly justified especially if we

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The first month of fall brings not only cooling of temperature but frozen rates and “chilly” imports worldwide. 

They kept asking and the pleas have been heard. The never-ending rise in spot rates seems to have finally started to slow down. Although none of the current challenges has been resolved, and market-driven rates are expected to grow, CMA CGM has decided to put further increases on hold until February and focus on the improvement of its services and expanding a much-needed capacity. A relief for the forwarders? It is still unluckily as rates will remain sky-high, squeezing the last bids out of the players, while CMA CGM drapes itself in the hero gown and strives for new developments at the same time by signing a concession agreement for a new terminal at the Khalifa Port with AD Ports Group. In addition, shipping lines keep rejecting allegations of unfair competition. Some have recently claimed that they are operating within the conditions dictated by the market. Shippers and forwarders do not buy these tales especially since the situation remains worrying – if things do not change, many smaller shippers could be bankrupt before Christmas and moreover, if the shipping lines tighten their grip on the container supply chain, many independent forwarders can simply disappear. However, the possible adjustments might be coming from Asia to North Europe direction where after Chinese holidays demand has started to drop. As the result, some of the companies have already reduced the October Shanghai to Felixstowe rate offer to $15,000 per 40ft, which is some $2,000 to $3,000 below current prices. At the same time, it is a good moment for China to take a break and switch its focus on more local advances – it is now back at pushing autonomous vessels. Its first one will start service this October.  

This fall also brings a trend of decreasing imports in the US while the pandemic-related disruptions continue all over the world. Despite the fact that experts predict August to be busy and numbers of the TEU handled to be still high, they will fall short of the 2.37 million TEU forecast for August a month ago. September is forecast at 2.21 million TEU, which would be up 5.1% year-over-year. Further cargo delays are anticipated as there are dozens of ships waiting at anchor to unload at the Ports of Los Angeles and Long Beach. The congestion chaos puts the industry at the risk of a collapse in the coming months that are going to be the most crucial for the industry because of the approaching Christmas. Everyone braces up against the challenge. Even the big retailers such as Amazon, Ikea, Walmart, Cargill and Louis Dreyfus have a say at the round table with the FMC on policies relating to the competitiveness, reliability, integrity, and fairness of the system in the current context of the crisis. 

Joint efforts are great but it is not what DB Cargo can show off. In addition to the heavily its loss-making rail freight division, the company is on the setback due to the damaged reputation after the union strikes. What also does not help is the fall in the market share of rail freight on the German transport market from 19% to 17.5%. As a part of a rescue plan, the company is pushing forward the alternative transport but shippers will now think twice before entrusting their cargo to a company whose employees are at war with management. However, when one empire falls, there is always another candidate that could potentially replace it. For instance, Kombiverkehr is offering a new intermodal route between Germany and Austria. It is not only environmentally friendly but also creates access to new facilities for Austrian shipments.

Airfreight is on the defense of agility in the wake of mounting customer demand as the logistics giant DSV is expanding its long-term own-controlled freighter capacity thanks to its service for customers who need consistent and scheduled uplift in a turbulent market. Finally, Shanghai’s Pudong airport is slowly coming back on-line after a Covid lockdown and the company expects things to get better, however, it is still too early to predict any major improvements.

What does the future hold? The puissance of the shipping lines in the wake of the skyrocketed boxship charter rates or, if we speak about rail, the sunset of the New Silk Road? 

Fame and glory have been the inseparable characteristics of the New Silk Road while the rates were soaring and more customers were favoring this route as more ports were experiencing congestion, but what will be the future of it?Without a doubt, the New Silk Road will not be forgotten but to what extent its use will drop when things eventually get back to normal? Experts distinguish two possible scenarios: the first one is when China keeps investing in rail with the same rates and the same demand for freight, so rail remains more affordable in comparison to ocean freight. The second variant is when the China-EU direction is more stable and the New Silk road is used for the transportation of goods that are truly suitable for it. 

Not only has the future of rail perplexed the minds of industry experts these days. The question of lines’ competition is no longer the topic of local governments but everyone’s concern. It is going to be a long way until there is consensus on the future regulations because so far the industry players are mostly concentrated on how to stay afloat in the wake of bottlenecks in the ocean-linked supply chain and the causes of service disruptions; actions undertaken so far by relevant jurisdictions and authorities in response and their results. Let’s be honest, the far-reaching strategies on increasing resilience and smooth operations in the sector are important but it is the highest sector of the industry’s needs pyramid which is difficult to achieve when on the basic level there are still unresolved congestion and shortages. Besides, navigating the competition issues can be more difficult in the future, because new members are entering the tradelane and shipping lines continue the trend of enormous growth in times of the COVID, gaining more influence. Take COSCO – it can soon overtake CMA CGM as the third-biggest container line if the latter does not acquire more ships. Are the lines going to reign or there still be room for regulations? It makes sense for the players to ask themselves this question especially since container lines are bypassing barge operators to operate their own inland routes to service their demand for empties. The recent shake-up of the European waterways was driven by the notoriously famous capacity shortage. 

 Apart from keeping an eye on the competition like a hawk, the FMC is advocating for broadening the scope of the current audit program to include any discrimination against dangerous goods due to the recent acquisitions of the US carriers in refusing hazardous goods. This is due to the surging imports that are stretching the carriers’ abilities. The consequences may be devastating as the inability to bring these commodities can harm local factories and put the ports under more pressure. The latter has been struggling the most: the data has shown that  traffic has doubledglobally in 2021. Moreover, the recent hurricane has added more difficulties to the US ports where at least the Port of New Orleans has resumed its operations.  

All the mentioned factors are causing significant shifts across the industry and charter market, where boxship charter rates have recently hit unprecedented $200,000 a day, is no exception. We have already witnessed the big players starting to charter their own vessels, and now the smaller ones are following suit. No wonder since the transpacific market is heavily congested and Asia to Europe direction is less clogged.  

What does not kill you makes you stronger they say, and Evergreen services a great example. Having dusted off the past, it is striving for the expansion of its asset by ordering the construction of 24 feeder containerships in a deal worth up to $1.1bn. It is an extraordinary number that shows that the carrier has more trump cards up its sleeve. 

Where the health crisis has not interfered, Brexit has. The talks about how difficult it would be to adjust to the new trade agreements have been on for what it seems like forever. It is just now the issue faces the lack of knowledgeable and skilled employees that would be able to work in the new environment. Paired with the drivers’ shortage it brings the UK into a challenging state. If in the beginning, companies were exploiting drivers from Eastern Europe, now when the problem of severe underpayment has been exposed, they can no longer get away with it and ignore the current state of things. 

European rail disrupted by the floods and recent strikes welcomes a new departure Rotterdam and Milan. Taking into account that due to the strike in Germany and floods not long ago severely affected traffic in the Netherlands, the new train is a great initiative. Hannibal European Gaterail, the company behind the launch, expects more services in the coming years. Germany has also seen a new development by MSC – a new direct rail service connecting Trieste, Italy, and German Ludwigshafen.

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