News digest. 12 Oct
The market finally experiences a drop in congestions and spot rates, but is it really a moment to lay down arms?
Everyone’s hearts must have skipped a beat when the notorious congestion in China has finally shown a sign of…relief? Indeed, the latest data has demonstrated a decline of 47% in just two-and-a-half weeks. What does it mean for the market? Are we in to screw the recent forecasts about postponed recovery or is it a mere exception? Rates have reacted almost immediately, dropping to $13,025 per 40’ FEU on Asia-US direction, however, it does not concern all indexes reporting the updates. With the confusion of surcharges and fees, the situation remains foggy – some shippers are currently able to ship without paying guarantee surcharges, while others are not. Having taken into account such factors as the time needed to solve backlogs, the rates for containerized freight, and the price for sustainable fuel that the industry is planning to switch to, experts assume that the rates will remain elevated and are less luckily to drop below pre-pandemic levels ever again. In addition, nobody can control the weather as a massive disruptor. There is already a red alert in the ports around China’s Pearl River Delta where they have been forced to stop operations because of Typhoon Kompasu, so delays continue.
Paired with inefficient management, port’s bottlenecks can become a real nightmare, and the case with Rotterdam serves as a perfect example. Due to poor yard management, barges with containers on board are being left to stand idle for a week as ECT Rotterdam first approves berthing windows, and then cancels them. Chaotic play board expands as far as India where its largest operator has suspended all containers to and from Iran, Pakistan, and Afghanistan. The radical decision has been announced after Indian officials seized nearly three tons of heroin worth $2.65bn originating from Afghanistan. Meanwhile, Canada is having a rough time too as the on-time arrivals have slumped to 16%. The surging traffic at the port of Vancouver causes major shortages and difficulties to transloading activities.
Bottlenecks in the air logistics supply chains spark vigorous discussions on the future of the sector. It is clear that in order to move on, the industry has to get used to the “new normal” when the traffic is soaring. This realization should lead directly to the rethinking of the recruiting policy because more manpower is needed ASAP. Among other issues to be solved is better communication of the terminals and the question preighters that has proven to be not that effective.
The unbothered players are still shipping lines as more profits increases are on the way – it has been estimated that if the situation remains the same, the figure will reach a massive high of US$150 billion for 2021. Sustainability should not be understated as one of the drivers of future market changes especially when big companies continue to undertake major steps. MSC is strengthening its partnership with China in collaboration with China Waterborne Transport Research Institute amid to find the best ways for energy transformation for shipping. In addition, the Port of Rotterdam has become the choice of Norwegian clean energy company Horisont Energi and Koole Terminals for the development of an ammonia terminal, so the new technology could reach all clients thanks to Rotterdam’s favorable location.
Although it is impossible to predict what can possibly disrupt rail next, there are some points that companies may consider and measures they can undertake to eliminate some of them. For instance, to improve the safety measures to minimize the number of accidents. The Sheffield station learns from mistakes. A long assessment has revealed the changes that need to be made to the implementation of processes for identifying high derailment risk locations; the implementation of safety-critical changes to its processes; standards governing fitment of check rails; and track geometry data formats. This will require significant infrastructure changes. Another country that taps into them is Moldova where FM-Moldova Railways agreed on a 23,5 mil. euros loan for rail development, especially in safer locomotives. Rhenus Logistics is also embracing the building momentum of the rail market and launching a landbridge service between South Korea and Europe. In addition, it makes an ambitious 80% acquisition of Belgium-based Wijnands Bulk Care to increase its range of services in the Benelux proving that intermodal solutions hold the prospects for the future.
It is no secret that even such giant e-retailers as Amazon have been experiencing pressure on their supply chains, however it does not prevent the same Amazon from baring its teeth at outside deliveries. So far, it has not been its primary focus, but now the company is seriously considering diving into competitors’ shares and providing much cheaper delivery services. Hopefully, the e-retailer will not bit more than it can swallow.
