News digest. 9 Dec
It is true that 2021 has not been a piece of cake for many. If there were a competition of the most severe misfortunes that the industry has faced, it would be almost impossible to choose the winner.
COVID-19 has been around for nearly two years and yet, lockdowns remain the primary measures that are being taken against it. A partial lockdown followed the spark of several cases of the virus in Ningbo, the world’s third-largest container port complex, putting more pressure on the already suffering supply chains. The global effect of the ports shut down earlier this year proved how important smooth operations of the international ports are. The same is true for congestion – overall, the three mega alliances have skipped a total of 383 port calls in North Europe over the past five months. Among the victims, the Port of Felixstowe has suffered the most by the temporary schedule changes and ad hoc adjustments with 32.5% fewer calls followed by Rotterdam, Antwerp, and Hamburg.
It seems like if there were a competition of the most severe misfortunes that face the industry, it would be almost impossible to choose the winner. However, experts believe that securing space on containerships will be the biggest challenge for the logistics sector going into 2022. The surveys reveal that the majority believe that the performance of the supply chains will remain low; therefore, they are already rethinking their strategies. To mitigate carrier equipment rationing, half of the respondents said they were resorting to organizing their own supply of boxes, opting for one-way leasing of containers. As for the consequences of the new variants of the COVID, three are yet to be assessed with time. In addition, berthing delays are resulting in a huge piling-up of export containers within port terminals and creating a big spike in container dwell times worldwide. The worst situation is in the US where Long Beach has outperformed Los Angeles, while Asian ports report decreases. Europe is the hybrid: with export, dwell times are not as bad as in the United States but not as good as in South East Asia and China. Not only American exports are experiencing a boom. In the meantime, the US imports are expected to total 26 million TEU, an increase of 18.3% over 2020 which is the highest number since 2002. At least it is somewhat good news, as customers will receive their goods right on time for the holidays. January 2022 is forecast at 2.24 million TEU, up 9% from January 2021 and the trend will most probably continue until the Q1 minimum. The persisting challenges have pushed the US government to revise provisions of the Ocean Shipping Reform Act 2021 taking into account complaints of the shippers that earlier the bill had not been properly debated. The provisions include some of FMC’s responsibilities and require ocean common carriers to adhere to minimum service standards that meet the public interest. Although these are good steps, the bill will do nothing to alleviate the major logjams being experienced in ports and rail. On the contrary, the lack of value in the government’s initiatives encourages big players to consolidate and expand their influence in the US and European markets. CMA CGM Group is planning to form the fourth largest contract logistics group. The acquisition of Ingram Micro’s Commerce & Lifecycle Services including Shipwire will cost $3 bn. Initially, the trend has started in China where the state has announced its intention to form a new state-owned logistics group to improve the nation’s international trade links.
By now everyone knows that the renewal of contracts brings shippers the most headache. While some big lines remain strong on their commitments to stick to long-term contracts and are losing clients as the result, others are more negotiable. Currently, container shipping remains an operator’s market, and the contractual rate for Asia-US west coast shipments is between $5,000 and $6,000 for a 40ft container, while to the east coast, it is around $8,000. The current crisis lifts old restrictions as well. Adani Port will re-start accepting containers from Iran, Afghanistan, and Pakistan.
While some European countries conclude that they do not invest enough in rail, France decides to make Strasbourg its operational leader. It is the country’s second biggest river port and in the coming years it will invest in its rail infrastructure to address increasing rail volumes. On top of the plans to expand rail infrastructure, the port of Strasbourg also aims to become a low emission zone. Ambitious plans also concern the Rhine-Alpine Corridor which the Interregional alliance wants to make a frontrunner in sustainability. The newly published roadmap focuses on alternative fueling stations, the elimination of capacity problems, and the analysis of the needed improvements in technology. However, it is difficult to beat the recent green development that occurred in the marine sector. Maersk keeps its leading positions and introduces the design of new revolutionary boxships that will allow a 20% improved energy efficiency per transported container. This example must have inspired Zéphyr & Borée to advance on the wind-assisted boxship project. An open-top 1,800 teu containership will become the example of using wind-propelled wing-sails on this type of vessel.
