Asia | US news digest. 6 July
Is a win-win solution possible when the crises does not seem to back off? The search continues.
The crisis that does not seem to unclench its tight fist around the shippers, pushes them to decide to operate direct services from Chittagong port to the ports in the US and Europe. The challenges have created a capacity crunch of feeder vessels, and congestion at regional transhipment ports has become a reason for a stockpile of over 14,000 export laden containers at the inland container depots. Bangladesh Garment Manufacturers and Exporters Association believes launching the Chittagong to US and Europe direct services is the only way out.
Meanwhile, the government becomes a sufficient means of facilitating recovery in South Korea. Officials have launched a major support package for the domestic container shipping industry to make it a win-win solution for both liner operators and shippers. According to the plan, shippers would receive shipping services at subsidized rates for a significant period, with carriers assured of stable revenue. The U.S. Department of Transportation follows suit with its initiative to invest $905.25 million into the Port of Dubuque and Northeast Georgia Inland Port’s infrastructure.
A need for more cargo gateways in the US finds its reflection in the launch of a new Maersk line in a new Asian container service through Southeast Asia/Vietnam and China at the Port of Baltimore, an important site from the perspective of e-commerce combined with the number of local distribution, fulfillment and sorting centers.
Despite the leaps of support and slight improvements, shippers worldwide are hesitant when it comes to ordering new ships for fear of proven green propulsion technologies, which has sparked secondhand tonnage buys to hit all-time high volumes so far this year. Meanwhile, according to the forecasts, about 8% of the global fleet will change hands this year in which signifies another record year for brokers.
The Ever Given saga has come to its end – the ship will leave the Suez Canal after three months of ongoing disputes in the light of the agreement between the Suez Canal Authority and the vessel owners and insurers. The initial demand of SCA was more than $900m in compensation, but it was cut to around $600m.
The green vector of development continues its presence in the agendas of the companies, rail in particular. According to Kuehne + Nagel, a road-to-rail program in China with Honda involving the inbound-to-manufacturing transport shifting from road to rail had led to CO2 emissions being reduced by 70%. The IKEA project for Maersk has also demonstrated impressive results –the IKEA Supply Chain Operations footprint on this transport flow has been cut by 75%.
While looking for alternatives to switch to air freight due to the ocean constraints, shippers will have to study load factors, which reveal a tipping point of 80% for rate changes, as experts predict. In the current context, the market can easily shift from a buyers’ to a sellers’ market, or vice versa if utilization is falling. It also influences the tradelanes since this tipping point determines whether a customer wants a long or short contract. It changes the rules of the game, and it changes the conversation between airlines, forwarders, and shippers.
Overall, when assessing the situation, it is crucial to remember that despite record import volumes in the first half of the year, retail inventory-to-sales ratios are still historically low. Although people are starting to spend more on services, goods consumption remains elevated. The traditional peak season looms and importers face a rising risk of not getting goods on shelves on time. Experts universally agree that there is no indication that spot rates or charter rates will fall materially before next year.
