The multimodal network news digest - issue #43

Falling market rotations

Box lines' attempts to implement a General Rate Increase (GRI) have failed three times. Despite their efforts, GRIs of about $1,000 per TEU on major trade routes have not been successful, resulting in a lack of consensus among carriers. This highlights the intense market competition and resistance from shippers to accept substantial rate hikes. Drewry’s composite World Container Index (WCI) decreased by 2% to $1,685.32 per 40ft container this week. The decline in US-Asia imports is adding challenges to the global container industry's recovery. According to the most recent analysis they have been consistently decreasing at a fluctuating rate of around -20% year-on-year. Experts note that the prospects of the traditional peak season to restore the situation are nothing more than wishful thinking at this point. 

Some Taiwanese companies are already adopting a pessimistic scenario by shifting their focus towards third-party logistics, terminals, and yards to adapt to the changing dynamics of the shipping industry and diversify their revenue streams beyond traditional container shipping.

The same uncertainty also makes shippers refrain from long-term contracts. Instead, they are opting for shorter-term contracts and spot market bookings to maintain flexibility and take advantage of competitive rates in a market with ample shipping capacity.

Following supply chain disruptions, global container production is expected to reach a 14-year low in 2023. This decline will impact container availability and potentially lead to higher costs and delays for shippers worldwide. However, not everything is in gloomy colors. Despite the existing challenges, inland ports in the United States continue to make progress and expand their capabilities. Inland ports are investing in infrastructure, including rail connections and warehouses, to support the growing demand for logistics services

Hot topic 

Amidst the challenges posed by the current market state and geopolitical uncertainties, companies are turning to near-shoring strategies as they seek to bring production closer to consumer markets and explore new business opportunities. For example, Apple and Amazon are looking into investments in India, and Tesla follows suit by starting its pitches to better understand pro-industry policy guidelines.

Routes, rates & services 

• Quanzhou has initiated its maiden container shipping connection to the Persian Gulf. The service, operated by the newly established liner Global Field Line (GFL), follows a route from Qingdao to Busan, Ningbo, Quanzhou (Shihu), Nansha, and finally Jebel Ali. 
• ONE has announced the upgrade of its IBESCO (IBC) service, adding a direct call to/from the port of Gdynia in Poland from June 16, 2023. 
• MSC has announced that its Santana service will call at Port Everglades in Florida, US instead of Port of Miami. The revised rotation will be: Haiphong (Vietnam) – Shanghai (China) – Ningbo (China) – Busan (South Korea) – Rodman (Panama) – Caucedo (Dominican Republic) – Port Everglades (US) – Charleston (US) – Baltimore (US) – New York (US) – Boston (US) – Singapore
• MSC is reintroducing its Swan service, now operated as an independent MSC service, which connects major ports in China with North European ports including Benelux, Gdynia, Gdansk, and Klaipeda. The service will start on June 9th. 
• Hupac has announced an extension of the suspension for its Pordenone-Duisburg rail service, affecting cargo transportation between Italy and Germany.
• The Italian government's unity in opposing China's Belt and Road Initiative (BRI) may be less strong than previously believed, as there are indications of potential divisions within the government regarding their stance on the BRI. While some ministers express concerns about strategic issues and national security risks, others see opportunities for economic development and investment through participation in the BRI.
• Freight volumes along the Silk Road via Russia keep declining. Companies still remain optimistic about the long-term potential of the New Silk Road and continue to work on improving the service by introducing new routes and enhancing collaboration with partners.
• Nevertheless, it is reported that in the first four months of the year, approximately 609,000 TEUs of freight were transported via China-Europe rail freight, with the majority of the business (90%) attributed to trade with Russia.
• PSA International and Kazakhstan Railways have signed an agreement to form a joint venture aimed at promoting the development of the Trans-Caspian route. 
• The Saudi Ports Authority has announced the inclusion of the Dammam Port to South Africa freight route run by MSC.
• PSA International has expanded its logistics arm in Vietnam through an investment in Sotrans, a Vietnamese transportation and logistics company. 
• Hapag-Lloyd has updated its Middle East India Africa Express (MIAX) service by adding the port of Hazira. 

Other

• US shippers are being warned about the rising threat of double-brokering fraud, where freight is fraudulently brokered multiple times, leading to payment issues and potential cargo theft.
• German railway workers have received a new offer from Deutsche Bahn (DB) in ongoing labor negotiations. The threat of new strikes is now lower. 
• The International Federation of Freight Forwarders Associations has released comprehensive guidelines for the transportation of dangerous goods. 

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.