The multimodal network news digest - issue #43

Back to the West

The downward trend in container shipping rates continues. Overall, rates have dropped by 42% compared to the previous year, with May marking the ninth consecutive month of declining rates. Long-term rates also fell by 27.5% in the last month alone. The drop in rates is attributed to the conclusion of 12-month contracts in the US and the introduction of new agreements reflecting the subdued market conditions. The impact of these lower rates is seen throughout the industry. Liners, including Maersk, have reported a significantly changed business environment with limited growth prospects. Demand for containerized exports from the Far East has decreased, and there is a lack of appetite for imports into the US, which are two key drivers of global trade growth. With the current market state, the US import demand in 2023 is expected to reach a new low. 

Nevertheless, despite the persisting challenges, the rent for the warehouses is increasing. The ongoing disruptions in global supply chains have contributed to the tightness of the warehouse market making the rent go up. 

Hot topic

Beneficial cargo owners are shifting their traffic back to ports on the US west coast from the east coast. Previously, there was a loss of volumes to ports on the East and Gulf coasts due to concerns about potential lockdowns or congestion. The return of cargo is driven by a growing confidence that significant disruptions will not occur and the pressure to reduce costs. Since the beginning of the year, the west coast ports have processed 40% of US container imports.

However, the disruptions are not at all mitigated. In reality, despite the cargo owners’ hopes, the US west coast is experiencing a wave of strike action due to stalled contract talks between employers and staff. Dockworkers, represented by the International Longshore and Warehouse Union have been engaging in disruptive work actions, severely impacting operations at major ports like Los Angeles, Long Beach, Seattle, and Oakland.

The possibility of another labor strike is looming over Germany as the negotiations with labor union EVG have hit a major setback. EVG has rejected the offer presented by Deutsche Bahn. 

Routes, rates & services

• Geodis has acquired a Swiss freight forwarder, ITS - International Transport & Shipping Ltd to enhance its network and expertise in Switzerland. 
• Maersk has joined the India-US General Rate Increase push. The GRI initiative aims to increase freight rates on the India-US trade route to address the rising costs and capacity constraints. From 25 June, there will be a GRI levy of $800 per 20-foot box, $1,000 per 40-foot box, and $1,250 per 45-foot box for all types of shipments from India to the US East Coast and Gulf coasts.
• DHL and Etihad Rail have formed a 20-year partnership in the UAE. DHL will utilize Etihad Rail's rail network to enhance its logistics services and promote sustainable freight transportation by shifting cargo from road to rail.
• Construction is underway for a fresh railway connection between Mongolia and China. This railway line will establish a link between the Mongolian border point, Shivee Khuren, and the Chinese border point, Ceke.
• Freight train operations in Italy following severe floods have been resumed since May 30. Previously the floods had disrupted rail traffic, causing significant damage to infrastructure and tracks.
• The Poland-Belarus border has been closed for trucks originating from Russia or Belarus due to ongoing tensions. However, rail freight trains are still allowed to operate and cross the border. 
• Victoria International Container Terminal welcomed COSCO's new Asia-North Europe (ANE) service. The rotation will be Melbourne – Bell Bay – Sydney – Auckland – Melbourne.

Other

• Hellmann Worldwide Logistics has partnered with PKZ Group as its new sea freight partner. The collaboration aims to enhance Hellmann's sea freight capabilities and expand its network in the Asia-Pacific region.
• Maersk has lifted the booking suspension on its Kenya-Zanzibar service. The suspension was initially imposed due to operational challenges and disruptions caused by congestion at the port of Mombasa. By lifting the suspension, Maersk aims to restore regular shipping services and improve trade connectivity in the region.

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.