The multimodal network news digest - issue #20

US and China have been tied with international trade connections for years, and now the US imports from China are falling faster than the ones from any other country. They have already dropped by 5.5%. The decrease also concerns exports and bookings. Experts admit that looking for alternative sources for the US importers is an unavoidable strategy in the coming weeks. 

Looking for alternatives is a go-to move for other industry players in light of the falling freight rates too. Increasing blank sailings is not the only strategy to tackle this situation. Such companies as Zim are planning to focus on profitable niche markets for container services and expanding their car-carrier business. Softening demand and sliding rates will most probably become the “new normal”, so there is not much room for maneuvering. 

The bigger number of blanked sailings from Asia has put Northen European feeders under pressure. It is reported that even when the ships come, the volumes are low. When it comes to charter rates, they have fallen to around $14,000 from $60,000 (in April) for a handy 1,600 teu ship. Daily hire rates have been inflated by the two-year contracts that got introduced during the tonnage crunch in the past 18 months, This is a big change from the regular 6 moths contracts with possible extensions. 

Large orders of the new vessels will soon backfire for the market players, experts predict. Now with low volumes, there is a risk of overcapacity becoming the next trend for the coming year. Large boxships are likely to be cascaded onto trades that call for smaller ones, adding to overcapacity dynamics. 

LTL carriers are preparing for a challenging road ahead as well. FedEx Freight has started laying its staff off despite the peak season. 

There is a lot of uncertainty about the year 2023. If in the post-COVID era, companies believed in the rebound, now with the dropped demand and its effect on supply chains and operations, they are not so hopeful. Retailers across Europe raise inventories to have stock available and contract negotiations remain unpredictable. 

Routes & services

• Russia aims to increase capacity on the way to India, on the International North-South Transport Corridor. The corridor's development was slow, so now the parties want to catch up on the potential by developing new routes. The full potential of the corridor is estimated at 14 million tonnes. 
• In a potential response to Russia's plan, the EU is getting interested in Central Asia. EBRD embarked on a study to look for the best connections between Central Asian countries and the European TEN-T network as an alternative to the northern rail route via Russia. 
• The Nizhneleninskoye-Tongjiang railway bridge between Russia and China is now open making the traditional route 700 km shorter. 
• The extension of the normal gauge railway track between China and Vietnam is in the talks as a project that may actually take place. The countries have agreed to speed up this process. 
• On 28 November, Hupac will launch a new direct container service between Italy and China connecting Milan with Suzhou. 

Other

• OJ Commerce has reported Maersk to FMC. The complaint concerns alleged price gouging and collusion and contract breaches committed by Maersk. The debate regarding Maersk’s dominance in the industry is getting more and more intense. 
• Two freight trains collided near Giifhorn in Germany causing the closure of the Berlin-Hanover railway line for the weekend. 
• Representatives of french rail freight have asked for more investment from the government to make rail transport more competitive following the increase in the modal share of rail freight from 9.6 to 10.7% between 2020 and 2021. The association asks the government to help navigate through high energy prices, improve rail infrastructure, and bring back state aid to the rail industry. 
• During the European Silk Road Summit, it has been stated that over 2022 the number of trains has been halved on the Silk Road. The role of Duisport has increased thanks to its favorable location. Although COSCO divested from it, Duisport’s representative claimed that it would not affect the relationship between them. 

These are only several changes that occurred in more than 250 bn freight rates across 25 million routes with more than 1 million market players. Want to share some news about your company, services, and routes? Just post them on MAXMODAL, a multimodal network that digitally connects routes and rates worldwide to automate sales and operations across container transportation & logistics industry. Join to innovate.