News digest. 26 Oct
Many experts are testing the waters by voicing out positive prospects about the future as trading and leasing prices in China show a more confident dynamic of decreasing. The recovery still seems distant especially when ports start building “pyramids” of the piled-up containers.
Now when the dynamic of container prices in China for trading and leasing seems to be gradually plunging, it seems like we can start making very cautious statements that the situation is improving. Although it is still a matter of time to see how the market will respond with all the US port congestion and continuous challenges with the rail sector wherethe boom in China-EU rail freight is bringing blockages at key border crossings, there are good signs of the market correction. Average trading prices in China fall by 22% and leasing rates in China went down by 35%. If the prices do not decline further, perhaps, this trend can be considered a response to the upcoming Golden Week in the region. The container throughput has been enormous anyway, having reached 211 million TEU, representing a significant growth of 9.5% in comparison to the last year. The port congestion on the west coast of the northern United States has led to poor liner transportation turnover from the main Chinese ports to the ones in the States. To tackle the problem, the City of Long Beach issued an emergency order allowing businesses to temporarily increase how high they can stack ocean containers. This will apply only to apply to properties that are currently zoned. However, the root of the problem is in the fact that containers have few places to go because warehouses are overwhelmed, so the introduced measure is going to be nothing but a mere Band-Aid.
Meanwhile, on the other side of the world, instead of building “pyramids” of containers, Singapore is using its non-operational Tuas port to ramp part of its capacity while the Port of Singapore is going round the clock. In the big picture, it is obvious that ports are ticking to a more or less similar strategy. What other patterns can we expect in the future? Many experts predict that the government will take a more active role in 2022 because the crisis has reached so far that the private companies will not be able to resolve it on their own. Although the new regulation might involve tightening some areas of liability between parties, they will not govern capacity, equipment, or inventory. It is a pity that it has taken a massive, international disruption for the industry to reset, however, the future is bright according to the majority of the experts as everyone is bracing up to solve such fundamental problems as how we spend consume, and transport goods.
The road freight is in tune with the positive forecasts. At least in Europe. Despite the struggles with labor shortages, Brexit, and supply chain dysfunctions, it is showing signs of recovery. The data shows that it will be back on track by the end of 2021, with an exception of being slightly smaller than it was in 2019, by 1.5%. The latest report also highlights that one of the biggest contributors for improvements should be digitalization including digital forwarders, marketplaces, and TMS providers.
Apart from the big role of digital space, infrastructure improvements will have the back of the railway freight. A recent example is Norway where thanks to continuous development, it has become possible to expand fish industry capabilities by acquiring rail transport options. The new train service launched by OnRail will run along the Nordland railway line, the country’s longest route, starting from Bodø and reaching Trondheim. In addition, the company has ordered a couple of EuroDual locomotives to improve its services.
Are the prospects as promising when it comes to sustainability? The recent fire outbreak on the ZIM Kingston spread over 10 containers and aused serious environmental concerns. Although no damage has been reported, there is fear that the potassium amylxanthate carried in a couple of the overboard containers can form a flammable gas from contact with water. On a positive note, ÖBB Rail Cargo Group has taken another step towards green mobility – it is going to use eco tracking in the Czech Republic. Moreover, the sustainable transport scheme will be implemented on the Brno-Budapest and Melnik-Hamburg intermodal services, which is very vital if we take into account what role rail transportation takes in the nowadays world.
