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Despite generally weak cargo demand, spot rates on the Asia-Europe trades continued to show gains this week, as carrier capacity management combined with port congestion left space at a premium.
Following a series of general rate increases on 1 November and a new round of freight all kinds (FAK) levels due on 15 November, carriers are adopting a bullish tone in what is traditionally one of the weaker periods of the calendar.
“In the wake of the Golden Week national holiday period in China, demand out of Asia traditionally weakens, with seasonal stock already approaching European shores. However, we are seeing demand bounce back a lot stronger, with higher call for ocean capacity,” Maersk said in a trade analysis yesterday.
This week’s spot rates, sourced from Drewry’s World Container Index (WCI) and Xeneta’s short-term XSI, would appear to show recent pricing supporting this.
The WCI’s Shanghai-Rotterdam leg grew 16% week on week, to finish at $3,954 per 40ft, while the Shanghai-Genoa leg jumped 21%, to $4,399 per 40ft.
“Spot rates on the Asia-Europe tradelane increased for the second consecutive week and Drewry expects this uptrend to continue next week” it noted.
Similarly, Xeneta’s Far East-Europe leg of its XSI saw a 25% week-on-week jump, to $4,105 per 40ft.
Meanwhile, North European ports have continued to struggle to clear backlogs – Hamburg’s port modernisation programme at HHLA’s Altenwerder and Burchardkai terminals remains ongoing and has forced the operator to introduce controls on export containers out of the former.
A Hapag-Lloyd operational update this morning noted that Altenwerder’s storage capacity was at 100%, while its yard utilisation remained high, at 85%.
Maersk added that the approach of winter was also causing issues – heavy fog in Rotterdam could lead to lengthening vessel queues, while in Antwerp, it said, “vessel waiting times remain high due to late arrivals from previous ports”.
In addition, maintenance work on the Belgian port’s quays is expected to last until the third week of December, “contributing to an increased yard density at the terminal”.
As a result, 2M partners Maersk and MSC have had to slide their joint week 48 AE55/Griffin Asia-North Europe sailing by a week.
Meanwhile, it was a very quiet week on the transpacific and Asia-US east coast trades, as everyone waited for the results of the US election, and spot rates on the two trades remained flat for a second consecutive week.
As US shippers digest the implications of a second Trump presidency, however, renewed activity can be expected during the remainder of the year.
Forwarders are focusing on building improved relationships with smaller container lines amid deteriorating relationships with the largest operators.
Multiple forwarders said Covid-19 had “permanently” upended the balance of power between the two sides , with increasing digitalisation further eroding the possibility of seeing relationships improved.
“All carriers have moved to some form of online model, which further restricts the possibility for human interaction,” one UK-based SME told.
“And that relationship is never going to return to the pre-Covid status, with carriers having invested in additional ships, leaving them with the whip hand over the container market, especially considering the protections given to them to operate alliances.”
Recognising some benefits of the alliance system, the forwarders spoke to nonetheless said it unfairly disadvantaged them, and compromised the ideals of free trade.
Amid deteriorating relationships, the SME source pointed to an increasing focus on box ship operators with smaller fleets, as they were more receptive to the idea of reaching agreements with forwarders based on the long term.
Echoing the UK-based forwarder, another, operating out of Portugal, said availability, capacity and reliability were undoubtedly important, but “the most critical factor is maintaining a relationship grounded in mutual respect and professionalism”, and added that it was “essential” carriers were not allowed to bypass forwarders and engage directly with their customers.
Asked whether that meant they opposed moves by ocean lines into the airfreight sector, the Portuguese forwarder said it “wasn’t as simple as that”, and explained: “There’s potential for a positive impact if these carriers adhere to IATA standards and uphold established ethical norms. When done correctly, this expansion can bring advantages, such as enhanced multi-modal capabilities that offer comprehensive logistics solutions.
“Success in this new arena will likely depend on collaborating with forwarders to ensure regularity and consistency in service offerings.
“But if ocean carriers adopt aggressive competitive tactics similar to those that they deploy in shipping, directly challenging forwarders by circumventing established client relationships, they may face significant obstacles.”
Even so, the sense among many is liners moving into airfreight is part of a broader push by carriers to use pandemic-induced profits to establish a one-stop shop for shippers.
The forwarders told that while this idea may appeal to the bigger shippers, the bulk of freight moved belonged to smaller shippers that have also expressed fears over the consolidation of the transport sector.
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The Baku-Tbilisi-Kars (BTK) railway marked its seventh anniversary this week, celebrating the transformative role it has played in regional connectivity since its inauguration on 30 October 2017.
This strategic rail corridor connects Azerbaijan, Georgia and Turkey, linking Europe and Asia along the Trans-Caspian International Transport Corridor, also known as the Middle Corridor. The BTK provides a faster and more efficient route for transporting goods across the Eurasian continent.
Over the past seven years, the BTK has helped to strengthen economic ties, facilitate trade and promote sustainable development in the region. As a key component of the Middle Corridor, it has also enhanced Azerbaijan’s position as a strategic transit hub, supporting efforts towards sustainable transport and further integration into global logistics networks.
The completion of Azerbaijan Railways’ $250 million modernisation project on the Georgian section of the BTK in May this year has increased the railway’s overall throughput capacity from 1 million to 5 million tonnes, with plans to increase this to 17 million tonnes in the future.
The 826-kilometre BTK line, which connects Azerbaijan’s rail network with Turkey’s rail network, provides a faster and more accessible rail link between China, Central Asia and Europe. Running from Baku through Georgia’s capital, Tbilisi, to Kars in northeastern Turkey, it significantly reduces the overland journey between China and Europe to just 15 days, compared to the previous 25-45 days.
In September, ADY signed an agreement with Chinese companies to facilitate freight deliveries via the BTK line on the Middle Corridor. Since the beginning of 2024, more than 210 container block trains carrying 420,000 tonnes of import and transit goods from China have arrived in Azerbaijan. By the end of the year, more than 300 block trains are expected to travel west from China to Azerbaijan and European markets. The ultimate goal is to send 1,000 trains a year.
President Ilham Aliyev recently stated that the sharp increase in freight traffic through Azerbaijan’s territory encourages additional investment in projects to increase the capacity of the international corridors that cross the country.
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ILA union members at the port of Montreal have called another strike, starting tomorrow, which is expected to impact operations, says the Maritime Employers’ Association (MEA).
The MEA said yesterday: “Discussions over the past few hours have failed to bring the union back to the table in a constructive manner.
“The longshoremen’s union is therefore preparing to launch an unlimited general strike at the Viau and Maisonneuve terminals operated by TerMont, starting at 11am on Thursday.
“This pressure tactic will quickly lead to major operational upheavals, jeopardising the operations of several companies, as well as the financial health of the MEA, which is already coping with declining volumes.”
The association has gone back to the minister of labour, Steven MacKinnon, and again asked him to appoint a special mediator – a proposal previously rejected. The MEA said a special mediator could be tasked to help the parties reach an agreement by 3 December.
“It is clear that the parties are currently at an impasse. The MEA is appealing for the government to appoint a special mediator to break the deadlock in negotiations as soon as possible.”
In his recent diagnosis of the state of the US trucking industry, American Trucking Associations (ATA) chief economist Bob Costello brought up a factor rarely mentioned in the discussion over the plight of truckload operators: loss of traffic to private truck fleets.
“One of the reasons why freight hasn’t recovered as much is because private fleets have taken some of the share, which by the way, has not happened in a very long time,” he told the ATA Management Conference and Exhibition this month.
To boost network utilisation, some shippers have been courting others to give them their traffic. Arguably the most aggressive has been Walmart, which launched several initiatives to draw in shipments from other sellers. Having established its fulfilment service in 2020, the retailing giant has increasingly opened its logistics infrastructure to online merchants.
In August, Walmart announced it was inviting e-commerce firms to use its ocean shipping infrastructure to move merchandise from China to the US. Walmart Cross Border is a port-to-door service, where shipments are fed into Walmart’s US fulfilment network at the port.
Notwithstanding misgivings about handing freight and data to large competitors, such offerings have resonated with shippers and private fleets have been growing. According to a survey last year by the National Private Truck Council (NPTC), outbound shipments handled by private fleets rose to 75%, the highest in the survey’s history.
On the basis of Federal Motor Carrier Safety Administration Numbers, the NPTC counted 940,280 registered private fleets last year, compared with 1.08 million for-hire carriers, about 90% of which operate fleets of 20 trucks or fewer.
Walmart’s operation probably puts it in the top five of US trucking firms, said Satish Jindel, founder and president of ShipMatrix and SJ Consulting Group.
The challenges of the pandemic convinced many cargo owners of the need to secure access to capacity at affordable cost. Apart from a rise in private fleets, this led to the emergence of collaborative schemes for shippers to pool traffic.
A total of 14,689 China-Europe freight trains operated from January to September this year, up 13 per cent year-on-year, China State Railway Group Co announced on Monday.
During the period, the trains carried a total of 1.57 million twenty-foot equivalent units (TEUs) of cargo, up 11 per cent year on year, the state railway operator said.
In September alone, the trains made 1,633 trips and carried 171,000 TEUs of cargo. Since January, the number of China-Europe rail freight trips has exceeded 1,600 for seven consecutive months.
The railway operator said that it has intensified efforts to increase throughput at ports and transportation channels and improve clearance efficiency, and it has also actively participated in the construction of the cross-Caspian Sea international transport corridor.
At present, China-Europe freight trains serve 226 cities in 25 European countries.
According to customs data, as of September 16, the China-Laos railway has handled 10 million tonnes of cross-border freight since it started operations in December 2021. As an example of tapping the international trade artery and boosting regional trade, the first batch of fresh bananas from Laos arrived in Beijing via cold chain logistics on Sunday.
Also on Sunday, the first “Jinbo” China-Europe freight train for 2024 arrived in Shanghai, carrying exhibits for the 7th China International Import Expo (CIIE), one of the country’s largest trade fairs, to be held in early November, according to local media.
