The growing demand for sustainable services encourages logistics companies to expand their green initiatives that can provide significant competitive advantage in the future.
The new week starts with an announcement of the new rates from the Mediterranean and North Europe directions to several destinations worldwide that will come in force starting from 1 July. Living up to the expectations of the experts, the figures have demonstrated a significant increase in prices. To illustrate: the rates from Mediterranean base ports to US East Cost have gone up from $3,550 for 20’ to $4,050 and a similar situation occurred with 40’ – the price increased by $2,400 from $4,050 to $6,450. North Europe followed suit with the prices ranging from $3,125 for 20’ to $8,350 for 20’RF and from $5,500 to $15, 700 for 40’RH containers depending on the destination point.
The “green initiative” to reduce CO2 emissions keeps unfolding in Europe and these days, finds its continuation in the question of whether there is should be one predominant technology or it is the variety that will be a key to success. It seems like the answer is the latter. Although there is a clear consensus that electrification will become the dominant technology for light-duty vehicles, and that strong policy measures are required to encourage their uptake, it is admitted that electrified vehicles are not the only way to meet sustainable transportation goals. It is not evident why electrified vehicles should have a technology monopoly. A new European policy framework is aimed at creating a fair completion between technologies. In this case, the primary step for the EU Commission's common view of 2030 sustainable targets should be the review of the nature of the current vehicle CO2 methodology concerning the net-zero 2050 objectives. In the light of the aforementioned objective, the logistics companies are also advocating for additional measures, bringing up the necessity of a carbon tax. During the World Economic Forum, it was revealed that the world’s largest liner has now contracted a yard to build a ship running on green fuel. Since it is becoming possible to impose regulations that will create a global level sustainable field, a carbon tax is starting to make sense. The “green” development is also backed by the customers. To address the future energy demands of stakeholders the Port of London Authority (PLA) will conduct a study on the Themes River to estimate which technology will be better to implement - Liquefied Natural Gas (LNG), hydrogen, biofuels, or electricity-powered operations. French company Nestle is bringing more trains to the rails for the transport of reusable water bottles to and from the production site as a part of its “Glass Train” project. The objective is to reach carbon neutrality and reduce its transport emissions by 13% by 2022 in alignment with the EU sustainable targets. The initiative is getting two more destinations: Arles in Southern France and Merrey in the country’s East.
There is a growing demand for container services that have been launched recently between Dublin and Amsterdam facing North European shipping companies. In response to it, Samskip has introduced a larger, faster ship with the capacity of the 750TEU and added a call at Port of Waterford. The service is expected to become a game-changer.
Austrian company Rail Cargo Group teams up with Pasifik Eurasia in the joint efforts to start a new collaboration focused on rail transport along the New Silk Road. There is already a developed network connecting the Halkali terminal in Istanbul with Budapest and Köseköy. From now on, with Pasifik Eurasia’s help, all trains will reach the Asian side of Turkey, where the Köseköy terminal is positioned. The priority of both companies is to optimize their supply chains and explore new opportunities by connecting their networks in Europe and Asia.
Another expansion concerns the new railway line of the East-West Gate in Hungary. It connects the intermodal terminal on the border of Hungary and Ukraine with the standard gauge network of Europe. The site is planned to become the largest in Europe (1 mil TEUs capacity), operate with 5G, and be empowered by green technology.
The Slovenian government will invest €4.4 million (US$5.4 million) to construct a new gate for trucks at the port of Koper, which will be the third entrance to it. The initiative is partly funded by the EU project called Napa4Core and is accompanied by another investment in the major Slovenian port – a new garage and a petrol station. However, not all Balkan countries are doing successfully in terms of the development of their infrastructure. Montenegro’s first motorway should have been completed in 2020 but corruption allegations, construction delays, and environmental tragedies have slowed the process down. Chinese financial participation is also contributing to instability: since Montenegro chose Chinese loan for construction, Chinese managers have been accused of ignoring basic EU standards of environmental protection, rule of law, and transparency.
A tragic event occurred at Port of Castellon in Spain on Friday, May 28. The 1986-built 1,600 dwt general cargo ship Nazmiye Ana owned by Turkey’s Sinop Shipping capsized during cargo loading operations. Local media is reporting that one of the ship’s crew has been found dead and another two injuries that were sustained in the incident, with one of the injured in a serious condition and currently in ICU.
Green New World: EU logistics on the way to sustainability
Big bets and high risk double down the rate ahead of the game change
As port congestion in the ports worsens throughout China, last Friday, Yantian International Container Terminal (YICT) extended its export suspension until Monday, May 31, 2021, reducing container gate-in times from four to three days of a vessel’s ETA. Norman Global Logistics said on Friday there were 27 vessels waiting for a berth at Yantian. According to UK-based Metro Shipping data, transit times to the UK from Yantai and Shanghai jumped from 26 and 31 days respectively in 2018, to 36 and 42 days this year. Disruption in the terminal’s operations forced ocean carriers divert their routes to adjacent ports. Thus, last week, German operator Hapag-Lloyd decided to temporarily change a few sailings for the Far East Loop 2/3/4 from calling Yantian to Nansha Container Terminal.
While transpacific and transatlantic container rates remained relatively stable last week, European shippers and forwarders experienced more rate hikes on ex-Asia trades, with the FBX spot rate for Asia-North Europe climbing 9.1% to reach $9,871 per 40ft, while Asia-Mediterranean climbed 6.1%, to $10,214 per 40ft. Meanwhile, WCI reading of the Shanghai-Rotterdam leg stood at $10,174 per 40ft, - a 3% gain on last week.
An 11- day fire aboard the Singapore-flagged 2,700-teu feeder ship X-Press Pearl that caused some of its worst-ever marine pollution, was finally reported to have been “contained considerably” last Friday. Today Sri Lanka’s Marine Environment Protection Authority (MEPA) announced that they are planning to take legal action against the owners of the vessel, its crew, and insurers.
On Saturday a court hearing on the damages to be compensated by Ever Given20,388- teu vessel under arrest in Egypt was adjourned until June 20.
Trade war under the Trump administration pushed American companies to consider diversifying more production away from China. Tariff wars between the U.S. and China have caused driver shortages to increase the logjams, as well as have impacted supply chain disruptions during and after the pandemic. Meanwhile China’s focus on technologies of the future such as value-added manufacturing, robotics, and artificial intelligence is making a significant breakthrough. Thus, last Friday, shares of JD Logistics, the logistics arm of Chinese e-commerce giant JD.com, surged more than 18%, as the company debuted on the Hong Kong Stock Exchange, raising $3.2 billion in its initial public offering. The company plans to use the funds raised to invest in its logistics network and infrastructure.
With import shipping to North America indicating an all-time high, the ratio of loaded imports to exports at North America’s leading seaport, the Port of Los Angeles has reached 4:1 — the highest levels ever recorded. North America’s leading seaport, the Port of Los Angeles has seen a record breaking 47% increase in number of processed container units from February 2020 to February 2021, amounting to 799,315 twenty-foot equivalent units (TEUs).
On May 28, the Port of Savannah, Georgia served the largest vessel to ever call the US East Coast , - the 16,000TEU container ship CMA CGM Marco Polo is deployed on the AWE3/Columbus service connecting the US East Coast and Asia via the Suez Canal, with cross-Pacific links to the US West Coast. Georgia Port Authorities also have started construction to expand the port’s capacity to allow it simultaneously serve four 16,000TEU vessels, as well as three additional ships.
Carriers are determined to take advantage of the increased consumer demand with new strategic moves. In the wake of increased cargo volumes and FedEx is going to implement another set surcharges in June.
Chinese boxship operators brace up to make their fleets meet the increased demand for boxship services. Thus, striving to expand its self-owned fleet of container vessels, Chinese operator has placed an order at South Korean yard Dae Sun Shipbuilding for eight new 1,023 teu container vessels.
Yang Ming Marine Transport Corp. is set to enhance its competitiveness with on Far East - South America routes with significant fleet upgrades. Thus, the company has received of another new 11,000TEU container vessel, as part of an order of 14 same-size newbuildings.
In anticipation of enhanced competition operators of two container terminals in Busan New Port have secured volumes from the container shipping alliances for handling 6.4 million teu for at least next five years.
Despite the soaring rates, European logistics companies are on the rails of expending their capacities. From Ireland to Norway, the new facilities aim for growth acceleration
For a brief moment, it might have seemed that the situation regarding the container freight rates had started to improve since some routes began to see pricing tail off, however, the numbers continued at elevated levels this week with no signs of decrease. According to data provided by FBX, the spot rate for Asia-North Europe climbed 9.1%, to reach $9,871 per 40ft, while another indicator, Drewry World’s Container Index (WCI) showcasing the Shanghai-Rotterdam leg stood at $10,174 per 40ft, a 3% gain on last week. Numerous shippers started to cancel their orders because the freight rates cancel out their margin; it equally affects the ones seeking long-term contacts. The forecast about the coming weeks is also worrying: transatlantic shippers are preparing a new set of GRIs and/or peak season surcharges, ranging from $500-$2,500 per TEU. The WCI has also shown that the composite index of eight major routes worldwide went up by 2% 6,257 from a week earlier. This is a historical record: the numbers are 12 times higher than the amount of TEU ordered in the first five months of 2020 and more than 60% higher than the last record that occurred in 2005.
While the shippers are unable to adjust to all the uncertainties shuttering the market, the industry is experiencing a soaring splurge in volumes (they are currently 300% above what they already were) combined with an alarming shortage of drivers. It is time to operate at a higher speed and make the supply chains more agile. Many haulage operators see the government as the main driver of change and demand practical actions; otherwise, the situation will escalate to a threatening state. Logistics UK has backed this request and, in addition, strongly criticized the government’s New Plan for Immigration, closed on the 6 May 2021, which would introduce changes to the penalties imposed on logistics businesses and their drivers regarding vehicle security and migrant incursions. People-smuggling gangs are indeed a big problem in the UK, however, the business group states that the new measures may critically affect the haulers and drivers who may become the unwitting victims. In the framework of spikes in demand and the growth rates, it is not strategically wise to deprive the vehicle operators of any defense and put them at risk. Not only the British government is advised to reconsider its agenda, but also this week the BVRLA has addressed the launch of the CAZ (clear air zone) in Birmingham planned on June 1. With the expected rates (daily £50 charge to enter the zone, £8/day for non-compliant cars), the BVRLA suggests that around 60% of the 200,000 vehicles that enter the city center each day could be affected.
In times of instability, any glimpse of a positive prognosis becomes particularly crucial. The Port of Hamburg Marketing has predicted that container traffic volumes will stabilize in 2021 and that it expects the hub to handle 8.7 million TEU. China, the port’s biggest commercial partner (16% increase in trade) is the biggest contributor to this improvement. Besides, Mercer Holz is planning to increase its efficiency regarding the transportation of wood. Thanks to the new wagons by TRANSWAGGON, the company wants to acquire a more homogenous fleet without changing rail cars for each different shipment. British DP World Southampton follows suit by receiving the new generation of environmentally friendly HMM ships. They will be deployed on the Asia and North Europe trade lane.
If for some countries Brexit has become a stumbling rock in attempts to overcome the crisis, Ireland seems to be extracting the benefits. A good example is the upgrade of the Amsterdam-Dublin container service by Samskip. The company started moving cargo with a larger, faster ship, which now also calls at Port of Waterford, a hub in the making for UK-Europe trade.
Norwegian terminal Narvik is also planning an expansion of its capacity. The new 30 million euros project is aimed to increase the current number of TEUs (30 000/year) that the terminal is handling to 100,000 TEUs per year. The construction is expected to start this coming fall and conclude by 2023. As for the Port of Oslo, it will receive three electric stacker cranes on 29 May 2021 as part of the plans to improve the sight’s performance.
Some experts believe that success will be determined by the three-dimensional approach that includes hinterland connectivity, investments in intermodal, and the development of the rail sector. The Spanish government is investing €6 billion to connect hinterland facilities with the major urban ports through rail networks in the future. The Mosnov Multimodal Transport Terminal will connect the Moravian-Silesian region in the Czech Republic, as well as neighboring regions in Poland and Slovakia. Mediterranean Shipping Company (MSC) UK has renewed its partnership, which began in 2002, with GB Railfreight (GBRf) with a new five-year deal, so despite the challenging reality, the European companies are focused on strengthening the connections with each other.
The Evergreen deal has not been resolved yet. Egypt has added its say, stating that the sheep moved indeed too fast and the size of the vessel contributed to the accident. The SCA has said that Shoei Kisen is willing to pay $150m in compensation.
Momentum for Growth: What Are the Stakes?
Осуществляем контейнерные перевозки любого тоннажа и размера по маршруту Беларусь - СНГ и обратно
Как называется компания?
US consumers make China great again
Driven by an upsurge in the US E-commerce consumer demand, container volumes from Asia to the US have set a new monthly record and marked the 10th consecutive month of year-over-year growth. According to data from an expert research company Descartes Datamyne, in April alone, imported container volumes into the US skyrocketed by over 30% year-on-year, amounting to a total of 1.57m teu shipped last month. The largest share of exports for 987,834TEU has come from China, which manifested a 46.5% jump compared to April 2020. Slow turnaround of ocean carriers due to port delays caused by congestion has resulted in disruption of shipping schedules in a major gateway in South China - Yantian International Container Terminal (YICT), prompting the port to stop accepting laden export containers earlier this week. According to China ports’ statistics, container volume at eight major Chinese ports indicated 15.8% annual increase in early May.
Amidst spiraling demand surge all major trade, corridors have seen container rates growth, marking 33.5% year-on-year increase, and 9% surge in prices just over the month of May. According to experts, much of this spectacular growth occurred across the first five months of the year with Far East export and European imports leading the way, – both indicating over 50% rise. Box freight rates from Shanghai to Rotterdam have crossed the $10,000 per feu mark for the first time in history, designating 485% jump from a year ago. This week, Swiss-based MSC said it would apply a temporary limitation on reefer container bookings from Europe to Asia because of significant shortage of reefer containers on the Europe-Asia trades.
In an attempt to improve its environmental footprint, LA based port of Long Beach has announced generous financial incentives as part of the Green Ship Incentive Program. The incentives range from US$600 to US$9,000 that can be awarded in credits to sea vessels meeting IMO's Tier III emission standard. Additionally, the port of Long Beach set aside $329.1 million budget in an ongoing capital improvement program to modernize terminals, rail, bridges, waterways, roads and other infrastructure to support the ongoing growth of operations and improve cargo flow, reliability and efficiency.
Yesterday, after a week’s long of pertinacious and concerted efforts by Sri Lankan Navy and Indian coastguards to put out the ravaging blaze aboard Singapore-bound 2,700 teu X-Press Pearl, carrying among other cargo 25 tons of nitric acid, 278 tons of bunker oil and 50 tons of marine gas, some hope has emerged as the smoke from the ship started turning from pitch black to white. Shri Lankan authorities warned that the vessel could sink later today, and alerted population of a possible risk of acid rain falling across the island.
4,900 teu Japanese carrier NYK Delphinus has declared general average this week after the vessel experienced fire in the engine prior to arriving in Oakland two weeks ago. Freight insurance and risk management specialists have alerted shippers and ocean carriers to exercise more vigilance in view of increased cargo crime risks associated with the current supply chain disruptions.
Striving to meet a rapidly growing consumer demand across Asian continent, a new weekly service has been added by Maersk this week to connect the DP World-operated International Container Transshipment Terminal (ICTT) at the Port of Cochin India to ports in the Far East .The service will allow customers to reach global markets directly without transshipping at the Port of Colombo, Sri Lanka, cutting transit time by as much as 10 days. On the other note, Danish-based container has temporarily ceased acceptance of new bookings to Mexico and some destinations in the Caribbean Sea due to the recent disruptions in North Europe and US ports.
South Korean feeder operators and its Thai and Singaporean allies will start new, second direct link services connecting southern China with Thailand, complementing its existing service that covers South China, Thailand and Northern Vietnam. Each carrier will contribute one 1,800TEU ship. Multiple South Korean feeder operators have seen their profits surge from %100-300% over the last year thanks to the intra-Asian trade rates boom and reduced oil prices.
OSCO Shipping Ports Chancay Peru has signed a $600 million contract with Chinese construction company CHEC SAC-CCCC4TH to build a new multipurpose terminal that would be intended to process approximately 1.5 million TEU a year, and receive vessels of 18,000 TEU directly from Asia.
The logistics market’s metamorphosis brings the new players into the spotlight. More European countries are considering a different direction for development as further shortages are expected to splurge.
Brexit has surely shaken up the status quo of the logistics market, changing the existing patterns of the established partnerships. With the UK leaving the EU, the potential for new alliances has emerged, bringing China into the spotlight. The country overtook Germany to become the UK’s biggest import market since trade in goods had to plunge due to political changes and the consequences of the COVID-19 pandemic. The premise for this shift was already noticeable in 2019 when German import to the UK as well as business enthusiasm started to decline in the light of the looming uncertainty of whether the country would leave the EU or not.
The shift is not the only change currently occurring in the market: the industry is experiencing significant metamorphosis in the rates of the major carriers. It is uncertain when the situation will get back to “normality” but there are big chances that European exporters that are on the lookout to source shipping containers will face the deterioration of the shortages in the coming weeks. The thing is that most carriers are continuing to favor shipping empties back to Asia as fast as possible to maximize yields in main-haul services. The recently updated trading data indicates that in the period between January and April average prices for used 20ft containers across Europe rose up to 57% from US$1,348 to US$2,119. The situation in the main European fore posts is the following: the prices in Hamburg rose by 16%, in Rotterdam by 12%. At the same time, the Mediterranean Shipping Company (MSC) plans to increase its rates from India, Pakistan, and Sri Lanka to the major European ports. Additionally, the company is going to impose temporary limitations on reefer container bookings from Europe to Asia starting from May 25 due to the shortage of equipment. According to the experts’ prognosis, the industry is also expected to deal with ocean space storages all the way through the summer. The main reason for it is the blockage of the Suez Chanel. The shippers had to reduce the numbers of the transported containers, and this step disproportionally affected lower-paying companies with carriers favoring cargo from higher-paying customers. However, the good news is that forward indicators suggest that their availability for exporters will improve in the coming months.
The state of the UK rail industry seems to be getting better thanks to the initiative to consolidate instead of implementing a fragmented approach. There is now a crucial objective to adjust the sector to the changes regarding the transportation charges. For now, the companies abstain from them for much of the European network but with the new market segmentation and post-Brexit reality, it will not be for long. The UK officials believe that the success of the further steps of the rail restructuration is determined by the consistent, day-to-day management and training of the logistics companies’ employees. The new green agenda and the growing customer demandplace the necessity for more efficient and flexible stuff.
In the bigger picture, CLECAT (European Association for Forwarding…) has identified three areas where the authorities in both the EU and the UK must agree on further discussions and guidance. There is now a lack of sufficient regulation of the EU goods entering the UK, which has to be solved shortly. Priority Freight, the leading English logistics company, in turn, has declared the ‘clearance on wheels’ status from the UK HMRC that is essential for reducing post-Brexit border bottlenecks.
DHL is another example of a company that has caught the wind of change. However, it is mostly regarding administrative and legal procedures following the new Air Services Agreement (ASA) between the UK and the EU. The biggest shake-up concerns the launch of a new European airline in Austria aimed at turning its UK direction into an intercontinental carrier.
Several other European companies have set their objectives for international expansion. Germany’s Vega Reederei is extending its fleet with four 1,868 TEU container vessel new buildings from China’s Yangfan Group by the end of 2022. Chinese intra-regional carrier CU Lines has confirmed the launch of the Asia-Europe service in early June. Turkey sends two more trains to China setting the potential alternative for other companies to use instead of currently popular Eurasian corridors. German CargoBeamer has chosen the Eastern European direction, and it sets up a rail service between Duisburg and the Polish city Poznan. Swiss Hupac announces the use of longer trains in its transalpine routes, claiming a 10% increase in its traffic in the first quarter of 2021. The construction of the Rail Terminal Barneveld is believed to become a reality in the Netherlands; however, the prospects of Barneveld Noord depend on the further investments of private investors since the municipality has announced that it will not invest in it.
Hot growth blasts the cargo market
According to recently issued Intermodal Quarterly Report by IANA, total first quarter intermodal volumes amounted to 4,616,262 units, marking 10.5% annual growth. All domestic equipment category, which is comprised of trailer and domestic containers, saw a 6.3% increase, and international containers, rose by 14.8%.
In the US demand for trucking capacity increased during 2021, and the biggest shortage is seen in the supply of truck drivers. According to experts, from April 2020 to April 2021 shippers’ requests for moving loads increased by 577%, while postings of trucks available to move loads were down 17 percent.
Georgia Ports Authority (GPA) has reported a 38% year-on-year increase in container trade for April, with the Port of Savannah handling 466,633TEU in what turned out to be the second-busiest month in the year.
In an attempt to reduce port congestion and cut emission, this week the US Department of Transportation’s Maritime Administration (MARAD) has allocated $10.8 million for America’s Marine Highway Program (AMHP) designed to further integrate coastal and inland waterways into a unified transportation system that would provide container on barge services on commercially navigable waterways.
Increased demand and supply are not the only factors wreaking havoc in global shipping networks. Cyclone Tauktae has recently forced the Indian port of Pipavav to shut its 1.35m teu capacity facility, causing containerships to re-route and discharge containers at other ports such as Nhava Sheva, Mumbai. This morning X-Press Pearl, 2,700-teu ship, carrying 25 tons of nitric acid, suffered an explosion in Colombo port of Shri Lanka. .Shri Lanka is deploying aircraft and navy vessels to assist in combating the fire.
In this time when availability of containers is of the utmost importance to shippers, China’s lead in container manufacturing cost per unit, cheap labor and low repositioning costs make China’s competitive advantage on the global scale unbeatable. According to experts, three Chinese factories nowadays build more than 96% of the world’s dry cargo containers, and 100% of the world’s refrigerated containers.
Amidst escalated growth of ocean shipments, European freight forwarders Maersk and Hapag-Lloyd have increased their lease rates for 20’ and 40’ feet containers on routes from North America to Australia and New Zealand, and from Indian Subcontinent (ISC) and Middle East to North America. The rate increase is expected to take effect in mid-June and July.
China-Europe rail freight is also benefitting from the overstretched container shipping market. As reported by CNDRF, the number of Silk Road train trips grew by 24% year-on-year in April to 1,218, marking a 33% increase in volumes to 117,000 teu. The demand for rail freight is also on the rise across South East Asia. For example, Shanghai-based Crane Worldwide Logistics is now moving cargo via rail from Japan, Korea and Vietnam.
Turkey’s role in New Silk Road hub is also growing. Thus, on 24 May, two trains with 41 containers carrying 250 tons of melamine-coated chipboard departed from Izmir, Turkey to China. They are expected to travel through the Middle Corridor and the Baku-Tbilisi-Kars rail freight route and reach Xi’an in 12 days.
Development of the Laos-China Economic Corridor is picking up the pace, as the Kunming-Vientiane rail link is getting closer to completion. A new 414 km railway line is intended reconnect China and Southeast Asia, stretching from Boten, on Laos’ northern border with China, to Vientiane, the Laotian capital.
According to experts, as the apparel sector is set to grow by 8.2% globally in 2021, Asia’s current 38% share of the global spend in this market is expected to increase to 41% by 2025, boosting demand for ocean and rail freight across regions and countries.
Building a premier railway connecting Mexico-US-Canada freight network has inspired the recent US$30 billion merger deal that was reached last month between US-based KCS and Canadian CN late last month. Kansas City, Missouri-based KCS’ network connects the US Midwest to ports along the Gulf of Mexico. Its system also reaches deep into Mexico.
High airfreight rates are making freight forwarders come up with new freight business ideas. Thus, Panama-based carrier Cargo Threehopes to launch cargo charter services delivering 40 tons per week to the US aboard a 38-year old converted A300-B4.
