Continuous slide of the freight rates is expected to bring them to the pre-COVID level. Shanghai-North Europe freight rates dropped to $2,350/TEU. Shanghai-US East Coast rate is at $3,900/FEU. There are also declines in rates from Shanghai to the Persian Gulf, South America, and Australia.

China, one of the most important countries for shipping demand, has significantly slowed down its industrial growth because of its zero-COVID policy which will have consequences for businesses worldwide. China’s dry bulk commodity import demand has declined by 4.7% year-on-year to 1.6bn tonnes. Moreover, the country’s container volumes have reportedly fallen by -22% year over year. 

Trying to halter the drop in rates on trade lanes, companies are scheduling more blank sailings to reduce capacity (for example on the eastbound trans-Pacific trade lane.)  However, these steps may not be enough. Liners will idle. In fact, experts predict that idling will reach approximately 1.5m TEU in 2023, or roughly 6% of the end-2022 cellular fleet.

When it comes to carriers, contracts no longer seem to be important anymore, some experts admit. The problem is that they were set high when the carriers tried to lock in shippers on extended deals, but now when the market pivots so unexpectedly, shipping on contracts becomes unsustainable. 

Truckers’ strike in South Korea has caused disruptions, in particular, interrupting deliveries of raw and semi-finished materials. 

In Austria, a strike is looming over the horizon. All trains will be stopped on Monday unless another decision is made during the negotiations. 

Routes and services 

• Maersk has added a weekly rail service, the ‘Pratigya Express’, from Sonipat Inland Container Depot to APM Terminals Pipavav Port. 
• Ukrainian Railways will add 6 additional border crossings for rail freight to Europe: 3 facilities will be added on the border with Poland (Rawa-Ruska, Grebenne, and Starzhava – Krostsenko), 2 - on the border with Romania (the Delovo-Valea Visheului section), and 1 on the border with Moldova (at Berezino – Basarabeasca). 
• Ningbo-Zhoushan Port has opened a new sea-rail transport service to export new energy vehicles. 
• The terminals Malaszewicze and Biała Podlaska near the border with Belarus will have more capacity thanks to 13 new additional tracks. It will help to handle longer and heavier trains. 

Other 

• South Carolina Ports have completed the rail expansion at Inland Port Greer by adding 8,000 feet of new rail to meet cargo demands through 2040. The next phase will be about the expansion of the container yard. The completion of the project is scheduled for 2024. 
• After two years, the boxship backlog at Port of Long Beach, Port of Los Angeles has come to an end. No vessels are queuing anymore. 
• MSC withdrew from the plan to acquire ITA Airways.
• Rail Cargo Group will expand with a new branch and a new carrier in Serbia and China in 2023. By doing it in Serbia, the company will be able to offer connections towards Turkey and Greece via two alternative routes. 

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Access to South Korea’s two busiest container ports, Busan and Gwangyang, has been blocked, causing box traffic to fall to 40% of normal levels.

The blockades are due to 25,000 truckers, members of the Cargo Truckers Solidarity Union, going on strike again today, demanding a minimum wage system to manage the relentless increase in fuel prices.

The Ministry of Land, Infrastructure and Transport (MoLIT) said container movement at major ports today totalled just 14,695 teu, compared with the usual 36,655 teu.

In Pohang, a major industrial area, incoming and outgoing shipments were delayed, including an 8,000-tonne shipment from Hyundai Steel.

The government said it was preparing military trucks for emergency transport if major manufacturers were unable to receive supplies.

Tanker trailer drivers are also involved in the latest industrial action and the Korea Oil Station Association has asked fuel station operators to prepare sufficient inventory so vehicles can still be fuelled.

The latest industrial action comes nearly six months after truckers ended an eight-day sit-in that was resolved after MoLIT extended the Safe Trucking Freight Rates System by three years. It was introduced in 2020, during the first wave of Covid, to ensure minimum wages and prevent overwork and dangerous driving.

And as well as a minimum wage, the truckers want the Safe Trucking Freight Rates System to be permanent.

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India’s government is looking to sell some 30% of its shares in rail operator Container Corp of India (Concor) by the end of this financial year.

AP Møller-Maersk (APMM) is being seen as a potential suitor, the Danish conglomerate pursuing an aggressive drive into integrated logistics offerings.

Concor, an offshoot of Indian Railways, is the largest container rail operator in the country, with a nationwide inland container depot (ICD) network.

According to industry sources, APMM has participated in a series of pre-bidding sessions held by the government officials leading the divestment.

Sources at Maersk (India) would not comment on any bidding interest, but a spokesperson told The Loadstar: “AP Møller-Maersk is in the process of transforming itself into an integrated container logistics and shipping company, and this means we are continuously looking at how we can effectively connect and simplify our customers’ supply chains.”

The privatisation of Concor was laid out in November 2019, with the New Delhi government intending to dilute its holding to 24% from its 54.8% majority ownership.

But a lack of clarity, and concerns around land licence fees to be settled with Indian Railways, became thorny issues for potential investors.

To allay those issues, the government announced a new land-leasing policy in September, hoping to drive investor sentiment and accelerate the long-delayed divestment.

Other serious contenders are believed to be Adani Group, DP World and PSA, all have a growing container-handling presence in India on the back of terminal networks and remain increasingly keen on end-to-end supply chains.

Ocean carriers are said to be in “panic mode” as bookings from China to North Europe and the US west coast tank, causing FAK rates to plunge to new depths.

Despite aggressive blanking that has reduced weekly capacity on the tradelanes by more than a third, the lines have failed to slow the precipitous fall in short-term rates and, are arguably fuelling the fire by offering sub-economic spot rates via their digital platforms.

For example, rates from Shanghai, Tianjin and Shenzhen to the Le Havre-Hamburg range of container hubs in North Europe, of $1,000 per 20ft and $1,800 per 40ft are now widely available for prompt shipment.

And some carriers are said to be prepared to reduce rates further for volume, and relax or even waive demurrage and detention conditions.

The speed of the rate erosion on the Asia-North Europe tradelane is making a mockery of the spot market indices, which have been unable to keep pace; for instance, the lowest reading this week is Drewry’s WCI, which recorded a 14% decline, to $2,687 per 40ft, for its North Europe component.

“The westbound market seems like it’s in panic,” a UK-based forwarding executive told The Loadstar this week.

“I am getting approximately 10 emails a day from random agents offering very low rates. Today, I had $1,800 into Southampton, which is crazy; it seems to be panic,” he said. “There hasn’t been a Christmas rush on westbound and I put that down to the recession. As a country, we are not buying like we used to during the pandemic.”

He said he was hearing that carriers were blanking sailings right up to Chinese New Year, which falls on 21 January, to drive up rates, but, he added, “personally, I don’t think that the volume is there”.

He continued: “This is all reflected in the number of hauliers contacting us asking for work – again, emails every day saying they have capacity from all ports.”

Meanwhile, on the transpacific, short-term rates from China to the US west coast are sinking to sub-economic levels, dragging down long-term rates as carriers are forced to offer customers temporary reductions on contract rates.

Indeed, Israeli carrier Zim told The Loadstar this week it had been obliged to agree pricing reductions with transpacific contracted customers to protect its business.

“The demand and volume was not there, so we had to deal with a new reality and engage with our customers,” said CFO Xavier Destriau.

According to the latest reading of Xeneta’s XSI spot index, its US west coast component was flat this week, at $1,941 per 40ft, having declined by 20% so far this month, while east coast rates were down 6% on the week, according to Drewry’s WCI, at $5,045 per 40ft.

The one bright spot for carriers remains the transatlantic, where lines continue to enjoy short-term rates of between $6,500 and $7,600 per 40ft from North Europe to the US east coast, according to the spot rate indices.

However, the outlier tradelane is showing signs of succumbing to the general rate demise, as port congestion unwinds on the US east coast, the port of Liverpool resumes normal working after industrial action and, not least, that carriers are deploying more capacity.

For more on shipper/ carrier relations, check out this clip from The Loadstar Podcast of Tia Mohan, ocean and air transportation planning director, Electrolux.

https://youtu.be/xzt_Y-zkSCY