Who will drive the market in the long-run?
Important metamorphoses are taking place in the freight industry with DVS Panalpina proposing the takeover of Agility GIL. There is now a clear tendency of the rigorous consolidation in the light of such giants as Maersk, DP World, PSA, COSCO and other “traditional” providers coming back into the spotlight. This is just the beginning. While the ocean carriers hit another record in the schedule failures with additional delays of arrival that amount to 20 or more days in some cases, and seem to be hoping to ride a wave of the high rates with the newly commissioned vessels that will come in the upcoming years (perhaps, saving up for the blank sailings?), the new arguments in favor of developing alternative routes emerge. MSC sets new charges to Antwerp and Valencia from India, Pakistan, and Sri Lanka that will come into effect from July 1. The prices vary from $3250 to$ 3150 for 20 DV and $4800 and $5000 for 40 HR.
Meanwhile, Maerks sets its first block train intermodal service between Europe and China, using Malaszewicze, Poland, as an EU exit point. The Netherlands is vigorously advocating for the launch of the NL Express: a dedicated train between the Netherlands and China with all players onboard. It will allow them to consolidate against the crisis. Meanwhile, the city of Graz in Austria has received its first train from Suzho. RailWatch has secured a new shareholder in the face of Agartha Fund LP from Abu Dhabi. This investment of 3.5 mil. euros opens up the export of its Wayside Monitoring System to countries such as Russia, Kazakhstan, Ukraine, and China. So who is going to be a winner in the long-run?
Not only the alternative routes are being considered, but the ways of transporting containers as well. Elon Musk's Boring Company has developed a 6.4 m wide tunnel concept capable of transporting two lanes of containers.
Experts on sustainability have come to the conclusion that only the joint efforts will bring the world closer to a zero-carbon future. As an example, at the Port of Duqm in Oman, Antwerp has partnered to create a green hydrogen plant as part of an end-to-end pipeline for zero carbon fuels. It is clear that only a collaborative approach will work, otherwise, the green agenda will remain the utopian reality.
Post-Brexit regulations and severe pressure on supply have been keeping the Port of Liverpool in a tight grip for a couple of weeks, however, it is hoping to make a significant breakthrough towards recovery. UK container ports have been struggling at some level with congestion and disruption since the second half of last year, initially at Felixstowe but with some of the issues then spreading to other container ports – including Southampton and London Gateway. Brexit has hit other local industries too — regular rail freight services between Dublin Port and the intermodal terminal at Ballina in the north-west of Ireland have been suspended.
Britain is still struggling with driver shortages. The idea of using the military has been in the talks for a while. The Federation of Wholesale Distributors urged the government to consider putting army trucks on standby to ensure food distribution. However, the question of staff training remains the stumbling rock.
The falling volume is the phenomenon that has spread all over Europe. The ports in Bremen and Bremerhaven have achieved a total of 4.771 million TEU during the Covid-19 hit 2020, which represents a decrease compared with 2019 figures, with the year-on-year downward trend since 2016 to continue.
Europe becomes the target of the U.S. based Lineage Logistics. It has announced its intention to buy the cold storage division of Claus Sørensen Group and expand in Nordic region. Previously the company made some other notable acquisitions. Other companies are also on the rise. COSCO boosts connectivity between its Spanish rail terminals with a new rail freight line between the port of Valencia and the Zaragoza rail terminal. The whole project required investments exceeding 100 million euros by the port authority of Valencia. A new railway between Tilburg in the Netherlands and Kaunas in Lithuania is set to open in July offering a new node for the Silk Road. Additionally, DB Cargo reactivated a 300-metre long siding in the town of Tübingen, Germany. A specific transport route from Egypt to Kazakhstan via the Middle Corridor has been used for the first time. The service included a sea leg between the two ports and then switched to rail using the Trans-Caspian International Transport Route. Hupac keeps adding connections from Rotterdam and Duisburg to Vienna. The service runs with five roundtrips per week starting from 21 June.
Those guys should get 1st place at August Race, I admit !
Молодцы!!! Поздравляем!!! Мы за вас болели!
Shrinking ocean capacity is forcing companies to switch their attention to different sectors for development. It is the matter of time before we see who is adjusting or who is only focused on keeping face.
With the epicenter in Yantian, the ship congesting keeps shaking up the ports around the world bringing a 300% increase in blank sailings just in one month. The numbers spill trouble across the maritime shipping world, and particularly for companies that rely on Asian routes, although even shipments not directly impacted by the Yantian situation could feel the disruption, as carriers adjust their networks to avoid congestion at YICT. As the result, the increased demand and worsening conditions are making the east-west alliance carriers to temporarily adjust their liner service networks. 2M Alliance has decided to change the sailing programs of its network to manage severe port congestions globally. In addition, Hapag-Lloyd has announced a new peak season surcharge from East Asia ports to North American destinations. The new splurge will amount to $1,000 per all 20' container types and 2,000 per all 40'.
Consequently, the perplexed context of the current reality is attracting new players – previously not even associated with trade – as opportunities for development and launches of new serviced emerge. BAL Container Line is set to launch a regular service between China and Los Angeles. Matson has announced the launch of a new seasonal China-US west coast "China-California Express" service for the peak season. The transpacific box shipping market is destined to become more crowded. Overall, the global containership orderbook continues to expand. Recently, Ever Given and SITC ordered more newbuildings. A similar type to the one of Ever Given is now valued at $180m. The global containership orderbook is now over 18% of the active fleet.
Meanwhile, there is hope that the Ever Given deal might move from the deadlock in the near future. UK P&I Club has delivered what it believes will be a satisfactory settlement to its dispute with the Suez Canal Authority – it has offered $150m deal, but experts expect that the level of compensation will likely be higher than that and lower than the $600m demanded by the SCA. The decision is yet to be announced, and again it is going to take a while since the court proceedings have been put on hold.
As ocean capacity keeps shrinking and the ongoing disputes are moving with the speed of a snail, Maersk implements its expansion strategy by launching its first block train intermodal service between Europe and China, using Malaszewicze, Poland, as an EU exit point. Transporting chemical cargo needs extra dedication, as it requires high levels of complexity. In turn, modal shift covers New Zealand’s exporters too, but in a different direction. Since the bottleneck in South China is causing further headaches more of the country’s exporters switch to airfreight to reach crucial overseas markets. Rail Cargo Group in Austria has welcomed its first train from China in the city of Graz.
At the same time, supply chain constraints are pushing up trucking rates. The current picture is worrying – according to recent data, the load-to-truck ratio elevated, increasing almost 220% YoY for vans, 674% YoY for flatbeds, and 324% YoY for reefers. Strong demand resulted in rates continuing to rise MoM and YoY across van, flatbed, and reefer.
Northwest Grains International has opened a new transload operation at Inland Port Dillion to improve the supply chain of containerized agricultural goods through the Port of Charleston.
Despite the splurge in demand, the e-commerce giant, Amazon, is going to launch its megasale, meaning that another mini-peak in sales is inevitable. However, experts argue that most sellers do not have the cash to bring in the inventory the storage of which they have to pay besides working with slim margins.
The green locomotive is rushing forward with the International Maritime Organisation that has adopted a new series of key mandatory measures to cut carbon emissions in container shipping, including a ship rating system to measure carbon intensity. Ships will get a rating of their energy efficiency (A, B, C, D, E – where A is the best). Administrations, port authorities, and other stakeholders are encouraged to provide incentives to ships rated as A or B also sending out a strong signal to the market. The Busan Port Authority has begun a joint study with the Korea Institute of Ocean Science and Technology on the impact of pollutants generated from vessels on air quality. Based on the study, BPA and KOST will be able to identify the impact of operating vessel emissions on the port area.
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Left out and ignored – carriers strike the last nerve of European shippers
It is tough times for both – customers and consumers – as carriers are being accused of welching on newly signed contracts to go after more lucrative premium business. As more pressure adds up, carriers no longer want to respect the MQCs of new contracts with shippers making the latter feel frustrated and abandoned. Overall, customer relations continue to deteriorate. The shippers are forced to send a percentage of their contracted volumes at highly elevated rates, plus premium fees and surcharges. The UK forwarders complain that they are getting a few boxes released under rates only due to long negotiations and “pleading”. Is there more to come? So far, there is no light at the end of the tunnel since the chronic congestion in Asia increases rates on some directions for the 10th consecutive week. Spot freight rates to move a 40ft on the headhaul transatlantic lane from Rotterdam to New York increased by around 16% to $4,607 per FEU, with spot rates on New York to Rotterdam growing 11% to $1,121 per 40ft box. Meanwhile, continuing strong Asia-Europe demand saw rates from Shanghai to Rotterdam a further 6% to reach $11,196 FEU. Major delays at Yantian have seen other carriers, including Hapag-Lloyd, Ocean Network Express, and MSC, shift service calls to Nansha. According to the recent data, there are 304 ships in front of ports around the world waiting for berth space to open up. In total 101 ports have reported congestions.
The impact of the COVID and post-Brexit trade has hit the UK in a particularly severe way. Statistics show that the country’s food and drink exports to the European Union (EU) fell by 47% in the first quarter of the year compared to the corresponding period in 2020. The industry experts set out a plan to mitigate the effect of the disruptors by boosting support for exporters. The initiative has been backed by the Trade and Agriculture Commission. Additionally, they advocate for the government to take a more active role, otherwise, the situation will get even worse. The extreme shortage of HGV drivers in the UK has already reached a crisis of national importance. Suppliers state that if things do not improve, Supermarket shelves and restaurant plates are going to be empty. However, it is not all a one-way decline: the EU exports to the UK were also down across the board, with wine shipments down 20%, for instance.
Maersk pushes forward by organizing another eastbound block train, connecting South-Eastern Europe and China. It is a win-win move since besides strengthening the giant’s presence, it satisfies the needs of the chemical industry. Departing from Madrid in Spain, the train’s final destination in China is Nansha. Rail Cargo Group has made some other advances and launched a new TransFER connection between Verona in northern Italy and Regensburg in southern Germany. It is open for those goods that are currently banned from the road, such as wood, scrap and grain, thus contributing to the modal shift across the Alps.
The green agenda is still up and thriving. Deutsche Bahn will reduce its climate impact faster than initially planned, moving the previous target of being climate neutral forward from 2050 to 2040. The company has announced that will use 100% green electricity for factories, office buildings, and train stations. To reach the target, Deutsche Bahn aims to emit less CO2 in the coming years with significantly younger train fleets in long-distance, regional, and freight traffic and investments in operations.
German speed logistics company Time: Matters has introduced its measures regarding intra-European air cargo capacity by offering additional dedicated air freight capacity between Germany and the UK and Ireland. Its primary objective is to offer the customers flexible solutions for maintaining supply chains. In a separate, recent development, Time: Matters has “significantly” expanded its Sameday Air service between Europe and the US via Paris.
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