News digest. 29 Jan
From Germany to Belgium - China is going west, but more activity requires more capacity, which is now equal to gold.
When China announced the major project at the Port of Hamburg, it was only the beginning of its extensive plans to strengthen positions in the EU. Now it is going west towards the Port of Zeebrugge in Belgium, a major asset for maritime logistics, thanks to the freshly extended agreement of COSCO and the aforementioned port. The new strategy will increase port activity which will require additional capacity. Meanwhile, capacity shortage remains a burning issue on intra-Asia routes, which is pushing rates further. Some of the indexes showed an increase from an average of around $500 to $700 per TEU. On the positive side, there are carriers that managed to introduce extra capacity to the Indian Subcontinent and Middle East trades. Indonesia will build a new container port in the Batam Free Trade Zone with a focus on environmental impact. Zim has also reported that it had secured the necessary capacity to meet growing demand and decided to reset its relationship with the 2M alliance.
Overall, the rates’ growth on major Asian indicators had leaped by 780% over the past 26 months; which is forcing industry experts to speak up on the root of it. Liner consolidation remains the top reason. Even the agriculture sector calls for the government to address the unreasonable competition. As for the recent suggestion from the shipping industry to tackle this pressing issue, there was a proposal to introduce a two-year period of notice to allow carriers to use their profits to augment capacity and launch individual services, bringing back more competition. However, the World Shipping Council argues that it should be normalized demand, not regulation, that will solve the supply chain woes. While there are these ongoing debates, the situation will not change and the shipping lines will continue profiting. Although some are against regulations, the congested Port of LA and the Port of Long Beach see the incentives as the means to move empty containers. The new one is supposed to ensure that laden export containers are not deprioritized to make space for empty containers.
Congestion has been a curse for the rail sector too. For example, the one on the Vietnam-China border is causing major disruptions for intra-Asia cargo flows. To address the issue, Alibaba logistics unit Cainiao launched a daily charter flight between Ho Chi Minh City and Nanning, which has provided significant relief and much-needed extra capacity. In addition, land-locked Laos was turned into a land-linked hub that is now serving as a strong alternative to intra-Asia air and ocean freight routes. Besides, Laos railways are cheaper which is a big plus in the current reality of skyrocketing costs. Congestion also disrupted operations of the port of Koper in Slovenia which was devastating especially after it demonstrated spectacular performance a year prior. In 2021, the largest port in the Adriatic region had an annual throughput of 997,477 TEUs.
The Middle corridor is receiving more links too - the new one regards the connection between landlocked Uzbekistan and Azerbaijan to deliver car parts. At the same time, Europe is improving its railweb with Sweden launching a new domestic service as a part of the plan to facilitate further growth above and beyond this in transports on the north-south axis and within Sweden. The initiative aims to switch the old focus on roads to rail as the means to reduce CO2 emissions. There is still a lot to be done to achieve climate targets. Hupac has named three things needed for the European rail to speed up green transition: an energy subsidy for rail, a new bypass on the Rhine-Alpine corridor, and better coordination of construction works. In the coming years, the company is also going to invest 300 million Swiss francs in terminals, rolling stock, and IT systems.
In general, the logistics industry is adopting new technologies to facilitate change. CEVA Logistics offers a wide range of sustainable services that include alternative fuel options, which has caught the attention of Ferrari. Two companies have signed a partnership that serves as an example of how green initiatives are spreading across all sectors.
