EU | UK news digest. 27 May
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.
