“After the storm always comes a rainbow”, although Europe might not be the case yet. It is busy times – apart from dealing with usual challenges, companies have to add some more exquisite tasks to their agendas. 

As soon as Northern Europe survives the flood and heavy rain and takes a gulp of air, new forecasts predict that the region is about to be hit by new storms and more traffic delays could be expected. Previously the two vessels near the Liege container terminal sank and cargo-carrying barges have been forced to reduce speed near the site. In turn, Dutch authorities have already announced that they were extending their storm warnings.  

The shortage of workers has not been the issue of the UK hauliers solely but also of the warehouses. During the COVID restrictions, the workers had to self-isolate which caused significant delays. Initially, those who were fully vaccinated were supposed to be exempted from self-quarantine; however, with many employees having to stay home, the situation has gotten worse. In this context, the CEO of the UK Warehousing has written to the Department for Transportto address this issue and seek clarification from the government on the process for individuals and businesses to apply for the exemption.

Meanwhile, the search for rail getaways continues and the next participant in the competition of becoming “the one” is Greece with the Rail Cargo Group that aims to be the leading provider. Some experts advocate for this option, while others see important obstacles. One of them is a need for better infrastructure – even the full electrification in the country’s main routes is still not in place. However, upgraded facilities would facilitate rail freight transport through Greece, reduce CO2 footprint, and increase the tonnage of trains.

Although green initiatives do advocate for “clean” consumption, responsible consumerism, and eco-friendly technologies, it seems like members of the International Plant Protection Convention have decided to impose their understanding of “clean”. In a quite literal meaning. They are now pushing for the industry to clean every container transported by ship, with certification that it is pristine, to prevent the spread of invasive species. The companies must be delighted to deal with another challenge that has landed on their “to-do” list.

The attempt of Volga-Dnepr Group to become the possible launch customer for the MC-21 freighter version has failed and been claimed as political posturing. After the discussion of the prospects of the production of a freighter version amid the capacity constraints, Manufacturer Irkut has not supported the plan. 

As for ports’ throughput increases worldwide, many facilities are undergoing expansions. Thus, DCT Gdańsk S.A has been awarded the lease to a new container hub in the Port of Gdańsk. The new terminal will increase the handling capacity of DCT Gdańsk by 1.5 million TEU with the overall investment worth $480 mil. In turn, GB Railfreight finishes the upgrade of Eastleigh and Bescot Local Distribution Centers backed by major engineering associations. At the same time, the company commemorated the closure of the London King’s Cross Power Signal Box, the rail icon of the 70s. 

The capacity shortage that has not omitted the automotive sector either, pushes Abu Dhabi Ports to complete its new big commercial and retail areas at Rahayel Automotive and Mobility City. A centralized hub will enable more effective cost-efficiencies and streamlined value chains for automotive enterprises.

The goal to achieve zero-carbon emission keeps taking one of the leading positions in the list of companies’ agendas. Hence, the global marine fuel and lubricants supplier bp together with Mærsk Mc-Kinney Møller Center has announced the beginning of their collaboration in the shipping industry. It is not a secret that achieving the long-term target of decarburization requires new fuel types and deep changes within the industry, however, both sides have something to bring to the table with their extensive expertise.

As pandemic slightly eases the grip, such agreement as to the one between pilots and Lufthansa Cargo, according to which during the pandemic, they would operate for longer than the periods designated in their contracts, has come to an end. As the result, the company had to cut between 3% and 5% of its freighter flights mostly concerning Asian destinations. 

Earlier CMA CGM announced the suspension of the Le Havre call in its North Europe - East Coast South America service, and according to the recent update, it has extended it. The rotation remains as it has started before. 

Hyperloop transportation may need to move for its potential competitor, a high-speed flatcar introduced by Sinara Transport Machines Holding. It promises to allow Russian Railways to transport containers from China to Europe in seven days.

Due to the closure of ports, China is no longer a piece of cake, so companies start favoring other options. Do the alternatives really work or is it equal to trading bad for worse?  

Closures of ports all over the world continue to take place this time with the shutdown of Shanghai’s container port and airport that happened over the weekend due to a typhoon. Although things are slowly returning to normal, customs processing of imports into CGO is delayed as well as some flights.   Floods have also affected other regions in China including Ningbo, one of the largest ports. As the result, transportation disruptions have moderately concerned local export.  

Consequently, some companies start avoiding tariff risk in China and one of the brightest examples of such strategy is Guess. In the light of the new economic challenges, which also include the tension between the US and China, it starts leaning towards its suppliers in India and Bangladesh. However, taking the new health restrictions, the latter can be a challenging option as the lockdown in Bangladesh has started taking a toll on the shipping sector. Now importers are hardly taking delivery of containers. Among other valuable criteria is CSR that has become important for other industries.  

The choice of the next step is such shaky ground that shippers all over the world are simply about to give up on trying to look for the perfect strategy. Especially when every time they look, the rates go higher – there are now indicators that the current situation will extend beyond Chinese New Year. What is more certain is that more and more experts agree that regardless of when things settle, the industry is not going to witness a return to pre-Covid pricing levels for ocean freight. 

Meanwhile, the discussion of demurrage fees escalates as STB sends its letter to Class I railroads calling to explain their demurrage policies. According to the notice, demurrage does not provide any constructive incentives and consistently results in massive charges that can exceed the commercial value of the shipments. With the recent congestions at ports and railroads, it has only added another log to the fire. 

Despite the challenges, there is always room for innovation. At least in rail. It is unclear whether Laude Smart Intermodal S.A’s new container is going to be a game-changer for the New Silk Road or it is a clickbait-like initiative amid to improve the company’s communication strategy.  The highly developed container for transportation between China and Europe is expected to increase capacity by 25-30% compared to standard 40’ high-cube containers. In addition to the new technology, Laude Smart Intermodal is expanding its terminal in Zamość on the Polish-Ukrainian border.

To paraphrase a famous guessing game “Hot’n’Cold”, DP World and Rosatom seem to have decided to choose the “coldest” take and develop the Northern Transit Corridor in the Arctic as a sustainable sea route between Asia and Europe.  DP World has already committed to invest $2 bn and is planning to tap further into the partnership. This is not the only sustainable initiative among the recent projects. The HyperPort project between Hyperloop Transportation Technologies  and Hamburger Hafen und Logistik can offer a greener and more efficient inland supply chain for containerized goods. 

Whether it will be technologies or new regulations that bring a much-needed change, the cargo throughput keeps increasing at the US ports. To address the issue, the Port of Oakland has identified areas of upgrades for its seaport focusing not only on the improvement of the facility but professional training of the employees. Experts back up this strategy outlining that cargo demand is outpacing capacity investment and improving cargo flow should be one of the main priorities. The skyrocketing throughput is also common for Chinese ports that has totaled 138.2 million TEU in the first half of 2021, a year-on-year (YoY) increase of 15%.

In addition, newbuild prices are also expected to go north after two Korean conglomerates have announced sharply contrasting fortunes.Underinvestment in shipping can drive prices further, although the final situation will depend on the sentiment in the direction of steel prices. 

Maersk keeps expanding its capacity. This time Chinese CMB Financial Leasing has ordered two TEU ships from Guangzhou Shipyard International for a long-term lease to the industry’s giant. So far, MSC has been the most active in buying second-hand ships, with at least 60 bought since last September.

GL Terminal has declared that one of the world’s largest shipping lines (the name has not been revealed) has appointed the company to provide container depot and trucking services in Jakarta. The company will offer the following services, including empty container handling and storage, container inspection, cleaning and repair, and empty truck repositioning.

https://youtu.be/GABLJbNvTIc

Despite the tough times the flood has caused to rail, the industry welcomes new advances  

The recent floods have a truly disastrous character as, apart from causing severe damage on the local level in Belgium, they have paralyzed a major North Sea-Mediterranean Corridor. For the time being, even alternative routes are blocked so the repair is needed as soon as possible. Besides, long diversion routes and certainly not a feasible alternative. One of the options that are currently in the talks is a diversion via Paris.

France has drawn attention also thanks to the opening of the Calais-Perpignan route by CargoBeamer. The latest intermodal service is suitable for cranable and non-cranable semi-trailers. The company has ambitious plans for its new facility. It wants to transform it into an international logistics platform linking different European terminals and promoting multimodal traffic between Britain and southern or eastern Europe. 

There is a tendency of ports experiencing the rise in TEU throughput worldwide, and the Port of Rotterdam is not an exception. The recent data has shown an 8.7% increase in H1 that has broken its six-month traffic record. The number is driven mainly by empty containers and a rebound from the COVID-19 pandemic. Experts consider the result satisfactory and claim that it allows continuing investing in the port, the transition to cleaner energy, and good accessibility. 

Overall, the container market impresses experts and industry players not only with exceptionally high rates but also with orders, sales, and values. The ordering market for containers is at historic highs with an incredible 790% in H1 2021. There is a significant increase in activity in the secondhand Panamax container ship market. The number of sales is up 780% for the year to date 2021. In addition, the market sees a surge in values. Because of the increased S&P market, the Panamaxes tonnage has more than doubled in value in just three months. However, the soaring spot rates continue to cause pain to shippers regarding multiple trades, especially in the North Atlantic westbound route, where they have seen spot rates soar by 175% in just four months.

A new sustainable initiative is looming over the horizon involving Tarmac’s collaboration with electrical engineering specialists Furrer+Frey to develop a retractable overhead electrical supply system suitable for freight terminals. The new approach will bring significant changes if trials prove to be successful. The trial is part of the UK government First of a Kind competition that supports talents from companies to fund existing innovations that may be in use outside the rail industry but could also benefit operations.

Rhenus takes over Log Adria on its way to building its presence in the Balkans. Now it will become directly involved in freight forwarding and related services over the ports of Rijeka and Ploče. The cooperation started a while ago, but the new step is Rhenus’ first advancement in Croatia.

Meanwhile, working on development of a facility in the tropical jungles of Stoke on Trent, DB Cargo UK brings back covered steel wagons that have not been used for ages. The “pre-historic” wagons will be re-designed. The ability to utilize the same wagons on either open coil or slab traffic would benefit from increased utilization of the asset while reducing the reliance on older, life-expired steel wagons.

The usual horsemen of the current crises (rates, congestion etc.) cannot be solely blamed for the challenging environment. In fact, they have only revealed the issues that used to be ignored for ages.

Union Pacific has announced the end of a temporary halt to rail shipments of international containers from the US west coast. The company hopes the new adjustments will allow the transportation supply chain to begin working off the backlog of Chicago destined trains while freeing up railcar assets to support import loading needs. 

Determined to tackle the monopoly in the shipping industry and focused on the investigation of detention and demurrage, US Federal Maritime Commission is now requesting an increased budget to enable carrier audits. The checkups are supposed to inform additional rulemaking or enforcement, and more money is needed for specific specialists.

After Panamax boxship, prices for sought have doubled, commemorating one of the sharpest vessel appreciations recorded in the history of shipping. For instance, a small TEU that used to be evaluated for $20m, by the end of March was already $48m. The number of secondhand containership sales is up 780% for the year to date. The usual fellows of the crisis – congestion, shortages, and high rates – have also contributed to the splurge in values. 

Hauiliers’ crisis is no only the pain point of the UK, but the US too. The current challenging context has revealed the problems that have been present for decades. Apparently, deregulation in the 1980s paved the way for a worsening driver shortage in America now, as hauliers struggling to recruit as a once “essentially American” industry lose their appeal. Drivers are also not satisfied with the pay, hours, and conditions overall. The situation has to be resolved urgently since the country needs to hire some 1.1m drivers over the next decade to stave off calamity in its supply chains. 

The dynamic of constantly increasing customer demand and the rates not planning to decrease any time in the future have demonstrated the signs that this year’s peak season can be expected earlier. Moreover, it will most likely extend. There are now two main challenges: shippers are unable to get equipment or space to get their cargo out in time; and congestion. Therefore, forwarders urge shippers to book now for Christmas peak goods. Understanding where the wind is blowing, shippers, especially small and medium ones, start seeking collaboration and ways to improve practices, especially for SMEs, which are sensitive when they face huge alliances of major industry players. Another example of what companies are doing to become more agile is adjustments the fashion sector. Pandemic has made everyone reconsider their supplier relationships. In particular, fashion brands are consolidating their source base and focus on key suppliers.   

The crisis has clearly shown that when there is disruption of one cogwheel, it is going to affect the rest of the mechanism. Shipping delays in Hong Kong are causing significant problems for local manufacturers, tying up millions of dollars in cash flow. Outbound shipments are currently delayed by three to five days, and carriers are skipping calls at the port. For intra-Asia shipments, carriers have implemented $100 port congestion surcharges for all inbound and outbound containers, excluding transhipment cargo. 

Meanwhile, ocean carriers are requesting the use of their own trucking and customs brokerage services, as part of spot market offers for exports from China. They are also adding conditions to short-term rate offers. The current problems lie with the fact that demand is too hot and the backlog is too big. Due to congestion and closures because of COVID, cargo does not get shipped and thus, there are no payments. 

Wan Hai Lines has authorized a US$1 billion budget for asset acquisition and disposal preparing its fleet expansion. The company is also awaiting the delivery of ships from CSSC Huangpu Wenchong Shipbuilding. However, the situation in Vietnam continues to be challenging due to the new COVID-19 outbreak.

Another log in the fire is a surge in oil prices that affects airfreight costs. The airlines themselves face a dilemma over fuel price hedging. By one estimate, this has reduced their average hedging exposure by 24%. Cathay Pacific was one of the airlines that got hit by hedges in 2020, but the carrier’s management eschews short-term action. Meanwhile, Chinese airfreight is facing flights cancelation due to pandemic lockdowns and poor weather.

US west coast port Los Angeles continues to report the increase in the number of handled containers. The data has shown a 27% year-on-year increase, closing its year at just under 11m TEU.

Hapag-Lloyd has announced rate increases to the East Coast of South America. It will apply a general rate increase of $500 per container for all cargo and container types

Panama Canal celebrates more than 100 years of shipping and commerce. Its latest expansion allows it to accommodate Neopanamax ships, which doubles the canal’s capacity. 

The UK is struggling with driver’s shortages, floods are causing delays, and freight rates are not going to decrease. If there is no perfect strategy to stay afloat, is there one to remain sane?  

The weather in the northern Europe has definitely added up to challenges facing shippers and forwarders. Due to high water levels and flooded rail and road networks, delays are worsening for cargo owners. However, there is a glimpse of improvement – at least most Dutch waterways are expected to reopen in the next few days. 

The UK government makes another attempt to tackle drivers’ shortage but it soon receives a wave of criticism. Authorities have proposed greater support for driver training schemes via apprenticeships and to increase the numbers of new HGV licenses. Although the measures have potential, the government has made an additional statement that has become a stumbling stone in the search of a solution – the prospect of issuing temporary visas to non-UK drivers that surely will take time, thus a possible short-term relief is out of reach for the time being.

Among other initiatives adopted by the UK recently is the decision of the Environment Audit Committee to examine how the shipping sector can best achieve net-zero carbon emissions. It will also look at options that may encourage international action to lower global emissions in shipping; the project will also look at the aviation sector. On the domestic level, it wants the aviation industry to reach net-zero emissions by 2040. 

Foreign buyers have started canceling the shipments boarding from India due to container logjam. In the context of high rates and clogged ports, local small exporters have to fight for their customers. In search for solutions, the export body has requested the shipping lines to bring in more empty containers and has requested the Indian Railways to provide free movement of containers from gateway ports to hinterlands.

The area of the Indian Ocean stays in focus of such companies as CMA CGM that aims to strengthen its presence in the region. It has confirmed the start of the new service connecting Réunion, Madagascar, Comoros, and Mauritius. It will be complementary to the existing services and expand the network. 

It is no doubt that increased freight rates have severely affected every aspect of the industry, thus experts have conducted research identifying whether current record-high sea freight rates are ‘pricing out’ low-value cargo from the market to a  significant level. No increase in the average value of the cargo has been spotted; hence, the premise is based on a false assumption. However, the analysis does not provide any basis to claim that low-value cargo owners are not being squeezed out of the market. It is important to notice that the fact that low rates are unluckily to return has been widely accepted.  

The railway continues to be one of the most flexible sectors with new developments and adjustments. The JadeWeserPort Wilhelmshaven freight village has welcomed its first direct container-laden train from the Chinese city of Hefei as part of its new position on the Belt and Road Initiative. Its main objective is to provide competitive and environmentally friendly transport alternatives between China and Europe. Meanwhile, Rail Baltica sets an ambitious target to integrate the Baltic region with the rest of Europe and opens the Kaunas Intermodal Terminal. Ukraine has completed a major project – the reconstruction of the track between stations, which connects the Chernobyl exclusion zone with the main railway network.

It has previously been mentioned that such players as COSCO have started to use its vessels for various purposes following the rates boom and capacity constraints.  While the wind is blowing in that direction, Wan Hai is reconsidering Asia-Europe trades – it has ordered smaller containerships, and luckily, the economic situation is in favor of such a move. 

Among ambitious companies is also 3PL Global Reach Logistics that has expanded into Europe with today’s announcement of two new warehouses, in The Netherlands and Poland. Additionally, there are plans to expand the company’s warehouse in California and the development of its online presence.  DHL is not planning to lose its positions and is building a logistics center close to Frankfurt to support growth in demand for pharma logistics capacity and facilitate its influence in the industry as well as develop sustainable agenda. Lufthansa follows suit with the refurbishment of its main hub facilities at Frankfurt Airport amid to provide flexible and tailored solutions to the current situation.

https://youtu.be/Qzo52XFhZcI

To paraphrase the classic: COVID eats globalization for breakfast. 

The port congestion pandemic has truly become global, as it has spread out across five continents with 116 ports reporting disruption. The current situation differs from the time of Yantian: there is now the doubling of ships waiting outside Asian transhipment giant Singapore as well as the new pain points at twin ports of Los Angeles and Long Beach. Schedule reliability is still way down on pre-pandemic levels. In the light of these events, experts warn that even after Yantian goes back to normal fully, the aftershocks will be felt far and wide. 

While trying to stay afloat skyrocketing rates and survive the pressure on the supply chain, the majority of the companies do not make customer service its main concern. The recent feedbacks have highlighted the lack of transparency. In turn, industry players blame blank sailings despite the high demand, which raises many questions and ignores the needs of long-standing shippers. Experts also note that the growing freight rates will push companies to switch to local sources than to transport, especially in the case of raw materials. 

The situation gets more challenging as Bangladesh closes factories for 19 days due to the main reasons: Eid ul Azha festival, weekly holidays, and pandemic restrictions. Among the shutdown sectors is the top foreign currency earner apparel industry, which is directly affecting shipment of cargoes. Huge tolls are expected to take place as the peak season approaches, stores in western nations open, and demand is on the rise.

Vietnam is struggling – there is a challenging situation in the southern part of it due to congestion at previous ports. Cargo is often delayed due to congestion at transhipment ports like Singapore, or Chinese hubs. In the aftermath, there is also a lack of space and equipment. It is reported that shippers are waiting for lower rates, which is also a cause of delays. 

The context is so hectic that Cosco has retrofitted an open-hatch cargo ship belonging to affiliate Cosco Shipping Specialised Carriers. The move will offer a temporary solution to the limited supply of containerships. Originally, the vessel was built to carry paper pulp cargo, but for the time being, it will be deployed to carry containers between Ningbo-Zhoushan and Brazil’s Santos port. This is not the only case. In general, experts comment that companies are starting to deploy any ship that can float. 

Meanwhile, FMC is fighting its own battle. The US Federal Maritime Commission has established an audit program to assess carrier compliance with the agency’s rule on detention and demurrage. The top nine carriers will be taken for analysis. It may also review practices related to billing, appeals procedures, penalties assessed by the lines, and other restrictive practices. One thing is obvious – the government is determined to take action to cool down the nation’s overheated logistics sector.  Among further changes, there potentially may be adjustments in FMC regulations and industry guidance. 

Not only European railways have been suffering severe floods. China has been hit as well. The flood in Zhengzhou, one of the major consolidation centers for China-Europe trains, is putting the city under a red alert. However, the loss of goods accumulated in the warehouses is not significant thanks to the precautions taken before the rain. 

The already mentioned constraints at US major ports are not the only challenges. Rail follows suit. MSC has reported that U.S. freight railroads have started to reduce import rail traffic at the ports of Los Angeles and Long Beach as well as New York due to the record import volumes. Consequently, the delivery of onboard or discharged cargoes to Chicago will be impacted since cargo will be held at marine terminals until the restriction is lifted. 

Following the European Green Deal, many companies have realized the need to find greener ways to transport their goods. This is where New Silk Way Logistics can come in handy, as it can ship temperature-controlled goods from Europe to China with zero carbon emissions. The company’s main project – a reefer container, the Coolbox – provides a more economical and ecological approach. 

The Northwest Seaport Alliance continues to face a huge growth in TEU volume. The new data shows that the volume has improved 18.9% to 1,860,174 TEU, with full imports growing 31.1% and full exports declining 11.2%. As the situation escalates, many call for the Federal Government to do more to alleviate pressure.