The crisis is forcing companies into transformation. Supplier relations, agility, volume capacity and other factors that used to matter less are now coming to the spotlight.
The problem of growing volumes and lack of reliable suppliers Maersk is vigorously trying to solve moving forward like a bull this time enhancing the new opportunities in Russia thanks to its first inland container at the Port of Novorossiysk, the largest Black Sea hub that is planning to handle up to 25,000 boxes annually. The main goal is to convert much of the bulk cargo in the region to container traffic.
If lately, it has been ports dealing with significant delays, airfreight did not manage to avoid the same disruption. Mandatory Covid-testing in Shanghai has revealed a positive case, which caused a number of cancelations at Shanghai Pudong Airport (PVG). The fact that PVG plays an important role means that disruptions in other airports can be expected as the consequences. There are rumors that cargo terminals PACTL and Eastern Air Logistics will stop accepting cargo, too.
Overall, local outbreaks of Covid-19 continue affecting all major trades with no transport modes succeeding in getting away. Experts observe that the pressure on capacity and the subsequently inflated rate levels will not be subsiding in the immediate future. The transatlantic trade will be somewhat more stable albeit with rate levels remaining high from a historical perspective. The only region where slight ease in capacity and rates can appear is the US.
Although it might seem like everyone is bearing major financial losses, which is mostly true, shipping lines are once again proving to be profiting from the ocean freight chaos. The fresh data shows that profit margins for carriers have risen from 5% in Q1, 2020 to 30% in Q2, 2021. Moreover, tonnage providers are making most of a hot market asking for 24-month contracts rather than the normal six or 12-month charter hire, knowing that the clients who want lower rates have no other choice but to comply. The sensitive state of the market makes it difficult for the shippers to frontload cargo so that their inventories do not run short. Instead of pushing the volumes up, it only increases the rates.
What are the alternatives for development? Well, the US sees potential in Marine Highway Program and announces the designation of six new Marine Highway Projects and a new Marine Highway Route. They are supposed to improve the movement of freight by water on inland waterways and to Guam and the Northern Mariana Islands. In general, nearly US$11 mil will be awarded to advance marine highway projects.
The disruptions have surely served the mission of a wake-up call for the supply chains worldwide. Companies are forced to reconsider their relationships with suppliers and their sourcing strategies in particular due to the current shortages in raw materials. This comes at the same time with an outrageous demand – in the era of endless choices customers do not want to wait for their products, thus the main prerogative for the industry players is to look for ways to become more efficient and agile. A more responsible business approachis definitely on its way.
Without a doubt, Asia is having a lot on its plate; however, the difficulties do not prevent Thailand from snapping up its largest ship. RCL has bought two 12,000 TEU ships under construction for $115m each from a Japanese provider. Another country, Bangladesh, has set a target to complete the construction work of Bay Terminal that will improve the Chittagong port’s capacity, the port that suffered severe congestion not so long ago.
German two days strike was not a piece of cake to handle, bringing significant disruptions: trains unable to cross Germany and reach the Netherlands, Poland, and the Czech Republic. This has brought experts to the debate of the strikes are even an effective tool in modern business. So far, it has been nothing but harmful – the resolution can only be achieved through negotiations.
The UK drivers do not seem to support the statement above as more of them have voted in favor of the new strike regarding shortages.Meanwhile, it is clear that the retailers will be the ones bearing the burdens of the financial incentives, which might force them into passing them onto the customers. The battle is expected to intensify as drivers keep abandoning container loads for the more lucrative delivery sector.
Among the steps amid to address supply chain congestion in the US, Norfolk Southern will reopen its intermodal facility in Pennsylvania to bring its Greencastle facility back online.
The Korean small shippers are again raising concerns about their abilities to handle the peak season. In response, the government has promised supportive measures such as securing ships and subsidizing freight rates through the emergency.
Kazakhstan’s rail continues to benefit from its new terminal at Dostyk on the border with China. Cargo to EU countries is a priority for China. Therefore, the terminal plays a crucial role.
The Network Rail will be disrupted on the Ely to Peterborough line because of the recent farm tractor and freight train collision. Most luckily, the freight will be re-routed, further exacerbating the disruption caused by the recent arrival of the Ever Given container ship.
The delays are taking more time than initially expected bringing some ports almost to the verge of collapse while others are still trying to cope. Will the ease at Ningbo bring the change or is it too late?
West Coast ports are barely coping – no sooner than summer peak season approached, shippers are already bracing up for Christmas. If before the Port of LA had only expected to max out, it seems like it is already reaching its peak. Although experts predict volumes to fall back to 880,000 TEUs in September, the collapse of exports from Los Angeles continues. The community is alarmed that if the trans-Pacific shipping system maxes out soon, some Christmas retail sales could be at risk. Moreover, it is the empty containers that remain the port’s highest export commodity. As a result, with exports from China and the rest of Asia rising substantially, it has led to allegations of carriers breaking contracts with US exporters.
Major delays are vigorously taking over the sector. Those in North Europe were bad enough, but now the congestion in China has severely affected the overall state pushing it to the verge of disaster worldwide. Recently Philippine Port Authority has warned local importers and exporters to prepare for more challenges. The data confirms that the average voyage delay days had tripled in the first half of this year. China’s Golden Week Holidays adds up to the pressure forcing shippers for the already mentioned struggle of blank sailing. The tactic is to tighten space on vessels by skipping ports or even entire routes owing to lower demand after shut down and thus further push the rates higher. Although it has been announced that the port authority in Ningbo is planning a phased resumption of services, the congestion has spilled beyond China’s port so the aftermaths are still going to cause significant damage.
The peak season that has already brought enough trouble, has encouraged big conglomerates to take matters into their hands. Walmart is planning to charter ships rather than pay sky-high rates to global liners for shipments that tend to arrive late. It is following the example of Home Depot that earlier took a similar move.
Apart from the obvious pressure that the crisis has caused to the ports, without a doubt, it has revealed the pain points of the industry and the urgent need for an infrastructure upgrade. For example, Taiwan has joined the list of countries planning to invest in their ports. Seven ports are to be rejuvenated under a US$1.37bn plan by the Ministry of Transport and Communications.
With the demand for road transport and customized logistics continuing to grow, DHL is on its way to build momentum by constructing a new road transshipment facility near Frankfurt. The previous capacities no longer serve the needs and besides, the road freight is significantly cheaper and generates fewer emissions than airfreight, which makes it a perfect alternative for investments.
When discussing the positive impact of green development, it is important not to omit the question of the cost that in the majority of cases can become the deciding factor of the future strategic steps. The ambition plan to achieve a 55 % reduction in emissions is a good reason to accelerate the leveling of external costs for all modes of transport. Once again, experts second that rail is part of the solution to the current environmental problem. While it all seems promising, it is still a big question whether the maritime industry is ready to make such a drastic shift. Let’s take the UK – yes, the rail network investment has increased significantly in the past three years, but the obviously greater funding for the road network points to a much bigger swing still required.
Meanwhile, the authority of the Port of Valencia is planning to invest $280 million to improve rail access and infrastructure as more than 2,000 trains have passed through it.
However, the development of rail is also subject to political factors. The destiny of China-Lithuania trains has become a mystery as it is unclear if the cooperation will be suspended or not due to Lithuania and Taiwan announcing their intention to strengthen their bonds. No matter the outcome, the volumes between Lithuania and China are so insignificant that the impact will be minor even if they decrease.
To strengthen its ocean freight services DPDHL is fully acquiring Hillebrand. The deal aims to include additional services within the comprehensive range of products.
As France implements an EU directive limiting cross-border load weights to 40 tonnes, hauliers express their concerns.The move can cause the issues of weights and dimensions to come up at the commission.
Australian shippers are in the same boat with other players dealing with the consequence of the capacity squeeze – container detention costs imposed by shipping lines. On top of that, with port congestion rife in Singapore, Australian export cargo has suffered long delays.
The recent opening of its largest container depot in Indonesia has become a real breakthrough for the CMA CGM Group. Given its close proximity to the neighboring industrial warehouses, travel time and distance between the facilities are significantly reduced which makes the facility extremely efficient.
Владимир Корчанов назначен врио руководителя ВМТП
Наблюдательный совет ВМТП 17 августа одобрил досрочное расторжение трудового договора с гендиректором порта Романом Кухаруком
Руководитель морского дивизиона Транспортной группы FESCO Владимир Корчанов с 19 августа 2021 года назначен временным исполняющим обязанности руководителя ПАО «Владивостокский морской торговый порт» (ВМТП, входит в Группу FESCO). Соответствующее решение принял Наблюдательный совет ВМТП. Об этом сообщила пресс-служба Группы.
«17 августа 2021 года Наблюдательный совет ВМТП одобрил досрочное расторжение трудового договора с генеральным директором порта Романом Кухаруком и принял решение назначить временно исполняющим обязанности руководителя ВМТП Владимира Корчанова, который в настоящее время возглавляет морской дивизион Группы. В составе обновленной команды FESCO Роман Кухарук показал себя как профессиональный руководитель и антикризисный менеджер, непосредственно участвующий в формировании и реализации новой стратегии развития предприятия. Он успешно справился с поставленными задачами: ВМТП работает стабильно и продолжает занимать лидирующие позиции на рынке, коллектив сохранен и демонстрирует высокие результаты, более тесная интеграция со структурами FESCO уже благоприятно сказалась на операционных и финансовых показателях. Мы благодарим Романа Виленовича за проделанную работу и желаем удачи в его новых самостоятельных проектах», – отметил председатель совета директоров FESCO Андрей Северилов.
Владимир Корчанов проработал в FESCO более 30 лет, пройдя путь от помощника капитана до первого вице-президента Группы. Окончил Морской государственный университет имени адмирала Г.И. Невельского по специальности «Инженер-судоводитель». Имеет различные ведомственные награды.
Транспортная группа FESCO – одна из крупнейших частных транспортно-логистических компаний России с активами в сфере портового, железнодорожного и интегрированного логистического бизнеса. Диверсифицированный портфель активов FESCO позволяет осуществлять доставку грузов «от двери до двери» и контролировать все этапы интермодальной транспортной цепочки. Группе принадлежат «Владивостокский морской торговый порт», железнодорожный оператор «Трансгарант», оператор фитинговых платформ «Русская тройка». FESCO оперирует сухими терминальными комплексами в Новосибирске, Хабаровске и Томске. В управлении Группы находится около 50 тыс. контейнеров, парк фитинговых платформ составляет более 7 тыс. единиц. Флот Группы включает 18 транспортных судов, которые преимущественно осуществляют перевозки на собственных морских линиях.
Наблюдательный совет ВМТП 17 августа одобрил досрочное расторжение трудового договора с гендиректором порта Романом Кухаруком
Фото предоставлено
пресс-службой ПАО «ВМТП»
Руководитель морского дивизиона Транспортной группы FESCO Владимир Корчанов с 19 августа 2021 года назначен временным исполняющим обязанности руководителя ПАО «Владивостокский морской торговый порт» (ВМТП, входит в Группу FESCO). Соответствующее решение принял Наблюдательный совет ВМТП. Об этом сообщила пресс-служба Группы.
It seems like striving to become Jack of all trades will not be a winning strategy. Perhaps, on the road to recovery industry players should remain in their sandboxes and focus on what they do best.
The global nature of the crisis has clearly demonstrated how important each gear, each player is, therefore, it is no wonder that experts call for every actor in the freight industry to focus on their specialized field. However, Maersk has long had a different approach – it tries to do both, being carrier and forwarder under one brand, which raises concerns regarding the efficiency of this strategy of such players as DB Schenker. The latter cut the ties with Maersk in favor of its stable cooperation with CMA CGM. Some experts also believe that freight forwarders should refrain from chartering ships for their own cargoes, as vessels could get much better utilized by the ocean carriers.
Meanwhile, the situation is getting more intense since it has become clear that ocean carriers are considering a new round of blank sailings from Asia around China’s national holidays. Usually during this time carriers cut capacity to mitigate the erosion of rates, but taking into account the current context, there has to be some network adjustments. Moreover, there has been no sign of any easing of the record-high rates and the recent announcement of the new ones only serves as proof. Hapag-Lloyd will apply another tariff rate increase of US$500 from to the Mediterranean. MSC will push up its FAK rates for the trade between European ports in Antwerp, while CMA CGM will raise its FAK rates from North Europe and so on.
The battle against shipping lines monopolies has relocated to another Asian country. This time, it is Indian exporters who are advocating for the Competition Commission of India to investigate possible cartelization. The Philippines mirror the situation where carriers are under the spotlight for their pricing ploys.
As Ningbo-Zhoushan port remains closed for sixth days straight, and overall pressure is not expected to ease up, rising delays continue to undermine global supply chains. The problem is that the time variances are significantly differentbetween the US West Coast vs East Coast ports, which makes it incredibly difficult to adjust.
Capacity shortages have been the leitmotif of different sectors including road where they have driven up European road freight spot prices close to a three-year high, which creates inflationary pressure on the economy. The new updates have shown that road freight capacity in automotive fell by 8.3% in July and was 22.9% below the level of the same period last year.
Another horseman of the crisis, equipment shortages, has forced Yang Ming to follow its liner peers in ordering more containers to tide over the challenge.
The heat rises in North America’s direction and two major Canadian railways eager to acquire Kansas City Southern are in charge of it. Shippers will get the biggest advantage since the initiative connecting more of North America on one line and providing access to the entire Gulf, East and West coasts will enlarge the opportunities for trade.
Cancelations are not only the headache of the Chinese shipping sector, but of the airfreight too. Meanwhile, freight rates from China are already on the rise. Prices to the US had increased by $1.5-$3/kg, while rates to Europe were up $0.7-$1.5/kg.
European intermodal services are still dealing with the aftereffects of the German strikes. The key to a faster solution is a negotiable offer to the GDL that would include an investment of the taxpayers’ money in railway workers. However, not everything is so gloomy above EU rail – The North Sea – Mediterranean rail freight corridor is open again for trains. Moreover, Hupac will add a new terminal to its network. Duisburg Hohenbudberg will be the company’s new stop on the way to Poland.
Although it is difficult to imagine any region that would demonstrate any kind of stability, the New Silk Road comes into the spotlight. Despite the growing traffic, (the operator expects a 20% increase this year), it is aligned with the expansions of the terminals and emergence of the new hubs and additional capabilities.
Challenging times require joint efforts, so US President Joe Biden is planning to bring stakeholders together to alleviate the congestion at West Coast ports. They will look to repair and maintain backlogs, reduce congestion and emissions near ports and airports.
The green agenda remains on the list of priorities for development with Mammut making an ambitious commitment to transit to zero-emissions shipping vessels by 2030. It is a call for other companies to brace up as those with the most efficient strategy will not only improve the environment but most important become more competitive.
DP is about to revolutionize how ports and terminals operate with the BoxBay solution. Operating costs are lower than anticipated, with energy costs better by 29%. It will increase the over-the-quay-wall handling volumes and container storage capacity.
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