News digest. 25 Aug
Transpacific has always been a battleground for influence but this time competition is stronger than before since the world has never seen the situation that the industry is experiencing now. It is time to buckle up – the stakes are much higher.
The three major players of the shipping sector 2M, The Ocean Alliance, and THE Alliance are in for a wild ride. Companies are vigorously competing for market shares despite the ongoing battles against the coalition of anti-monopolistic forces. It is on the transpacific where the greatest changes in market shares have taken place recently. As all three-carrier alliances have lost capacity market share to non-alliance services, they are now set to do whatever it takes to regain the positions and the recent analysis proves it. However, the power struggles are perceived as manipulative and unfair by other representatives of the industry, thus the FMC is not going to ease up its grip around the shipping sorority’s throat.
Although the global congestion scene is changing rapidly, the situation in Ningbo has mostly remained the same. There are now 48 boxships waiting at Ningbo-Zhoushan and a percentage of 65% of vessels waiting versus in port. It is similar to what is going on in Shanghai, Yantian, and Hong Kong. The glimpse of hope for improvement still appears with the partial reinstatement of the Meishan terminal. It is still early to talk about major improvement as only boxships have left the facility and no official statement about the reopening has been made. The longer it takes, the more devastating the consequences will be as Ningbo has already proved to be the world-class terminal with 23.2% year-on-year in its sea-rail container transport in H1 2021. Outside of East Asia, there has yet to be a major congestion spill since new COVID cases have been detected. The latest targets are the Chittagong port that has already been having a hard time, and the YM TRAVEL container ship.
Airfreight is also struggling with the same outbreaks. Freighter suspensions that began earlier remain in effect at Shanghai Pudong International Airport after new COVID-19 cases were reported among cargo workers. It is still unknown when flights will operate again, so more delays are expected. Airfreight rates from China were at $8.10/kg according to the recent update, an almost 6% increase from a month ago.
Home Depot and Walmart have already set the example of the tendency when big corporations take matters in their hands and start chattering ships, so it is no wonder that Taiwan Semiconductor Manufacturing Co is said to be in discussions with Wan Hai to charter a containership to move components from Kaohsiung to the US. The situation is yet to unfold; however, experts predict more such cases to appear in the future.
American exports are booming but not as fast as imports since the major ports have been reporting records in handling TEU. As a result, the divergence between the two keeps widening (last month it was registered at an unbelievable indicator of a new record ratio of 2.75x) setting the scenario for an even wider trade gap. The largest export commodity continues to be air as companies reposition empty containers back to Asia.
For the European shippers with the first German strike calming down, the situation will not improve as another rail strikeis about to come like a wrecking ball. The union demands a 3.2% increase in income on the model of the public service and protection of occupational pension. Meanwhile, DB Cargo is cooperating with other rail operators to ensure trains transporting essential goods.
The drivers are another vulnerable group that has been hit with major shortages. If before it was mostly the UK dealing with the challenge, now it is going global. DHL eCommerce has mounted an aggressive recruitment drive in the US in anticipation of heavy traffic in the peak season. Amazon follows suit, and in Europe, Logistics UK sees an overall need for logistics firms to get better guidance on how to tap into government programs to finance recruitment. It is also actively urging the British government to grant 10,000 temporary work visas to EU drivers.
New freight services are on the way despite the current context as the logistics arm of Alibaba is setting up a direct sea freight route between China and South Korea with a 30% reduction in costs.
Hupac stays true to its expansive approach and acquires a stake in WienCont, the trimodal terminal in Vienna. It is a strategically wise move as the terminal is an important hub to serve Southeast Europe and Turkey. Another great expansion is due to the agreement between the Port of Houston Authority and USACE – The Houston Ship Channel will be widened and deepened to benefit alongside facilities. At the same time, the Port of Long Beach has opened its Long Beach Container Terminal at Middle Harbor.
Further initiatives are looming over in the green light with South Carolina Ports receiving a $1.3 million grant to support project partners as they deploy all-electric, energy-efficient trucks in place of diesel-run vehicles. In addition, Hamburger Hafen und Logistik AG will get additional $2.6 mil to test new transportation technologies for green hydrogen, under the TransHyDE project.
