In the race for solutions in the rapidly changing market, it is particularly difficult to make decisions that will not make resonance and controversy. At least, the UK knows all about it. The pressure is increasing across all modes – even the promising one, rail.
To address the long-lasting drivers’ shortages, the UK government has decided to temporarily extend working hours for drivers and smaller hauliers. The move has faced a mixed reaction with some claiming it gives flexibility and others arguing that the initiative puts even more pressure on the already exhausted drivers. The authorities are also being involved in the discussion with Rail Delivery Group on the support for shifting freight from road to rail for a greener economic recovery. The post-crisis era will bring new congestion to roads, so the supporters of the shift believe that transition to rail will be the winning strategy.
However, the European modal shift is facing some challenges. In the light of recent sanctions imposed on Belarus by the EU, the country has announced it will not wait for long to pay back. The looming threat of Belarus potentially banning the transit of EU products heading to China will hit such companies as Lithuanian Railways the most. Additionally, the missing part on the railway corridor from Russia to India risks remaining unchanged for longer as the Iranian government is hoping for other infrastructure through Armenia and Azerbaijan to take the reign in development.
As for ocean freight, the reduced services will lead to the decreased revenues with experts predicting that the container volumes over the coming month would be around 20% lower. Demand is declining in large consumption regions such as Europe alongside a considerable scale of void sailings; however, overall, the maritime industry is doing whatever it takes to stay afloat.
Moreover, it does not neglect sustainable development. Having joined the Hydrogen Europe, the Baltic Ports Organization has become a part of the group of almost 300 companies and national associations working towards decarbonizing the maritime sector. Hydrogen and hydrogen-based fuels have been recognized as one of the main means for achieving this objective.
DP World’s Jebel Ali terminal in the United Arab Emirates was struck by an explosion and subsequent fire on July 7. The source of the blast was a small containership preparing to dock at the Jebel Ali container terminal. The satiation is still being assessed, but operations are running at 100%.
Freight markets continue to be severely pressured across the ocean, air, and rail modes. For the ocean, the Q4 of 2021 has been announced the earliest potential period for slight improvements. In turn, air freight will soon have to deal with increased passenger flow that will affect capacity availability and rates. Despite its rigorous development, the situation on the rail frontier is still worrying due to the congestion along the Silk Road railway affecting schedule reliability and wagon shortages at crucial border points on the route between Belarus-Poland-Germany.
A long-standing collaboration between Global freight forwarder body FIATA and the International Union of Railways has been facilitated by a Memorandum of Understanding regarding safety and security-related topics, digitalization, sustainability, and Eurasian corridor developments. It commemorates the joint effort of freight forwarders, rail transport domain around the world, including manufacturers, etc.
DP World enhances its capabilities in Africa by making an offer to the African-focused logistics solutions provider, Imperial Logistics, to acquire all outstanding shares of the company for $ 890 million. In case of success, it will give DP World a strong, attractive footprint.
Expansions in the air market are also on the roll – Lufthansa Cargo is significantly growing its network with new opportunities. Amid to capture more of the e-commerce market, it is in the process of converting two A321s to freighters for intra-European operations. In addition, the company’s interest to drive its market capacity is guided by the decision to widen its business with a new carrier, Eurowings Discover.
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As soon as the Ever Given’s saga has come to an end and Yantian seems to have sighed with relief, Europe-China rail freight traffic is under a threat of being cut. Misfortunes never come singly?
Keeping a sense of perspective when it comes to contract rates is almost impossible as they keep rising due to the strong demand in the U.S. Recent data demonstrates that the index for the State’s imports rose 9.3 and resulted in the benchmark being 36.9% higher than in June 2020. Experts state that no relief should be expected all the way into 2023-2024. This is extremely alarming especially when dwell times at the major ports in and around Shenzhen remain disruptively high. With Yantian no longer blocked, things do not seem to be improving – the sanitary measures could extend into the year, impacting seasonal shipments as far out as Christmas. However, such companies as Maersk cautiously resume the main lane’s services.
In addition, ocean carriers have left the S&P containership market dry by outbidding one another to acquire tonnage to insulate themselves from increasing daily charter rates. Data reports that there are around 301 containerships, changed hands in the first six months of the year, as carriers and non-operating owners tried to take advantage of the disconnect between ship values and charter rates.
Chronic supply chain delays have been a burden for the U.S. ports lately, but not everything about them was negative – California law enforcement authorities have announced that a recent influx of illegal fireworks could have been worse. However, the ports are still struggling with a massive backlog and upstream capacity.
Shortages are the recent plague of almost every industry. For instance, Ford is limiting or even stopping production at its multiple manufacturing facilities, affected with weeks of downtime, because of the global shortage of semiconductors.
Another log in the fire is Belarus that wants to ban the transit of EU products going to China. Rail freight is going to be hit the hardest due to the imposed sanctions by the EU. Belarus promises to fire back with the same measures, although it is still uncertain whether the announced plans are going to be implemented or not.
Meanwhile, rail does see further development with the latest UK service from Xi’an to the port of Immingham that will become available for eastbound services, increasing capacity. The uniqueness of the route is also justified by the fact that it reloads the cargo onto vessels from the port of Kaliningrad, rather than a western European port.
Despite the continuous challenges, the market’s speed keeps going with the new deals. Samudera Shipping Line sells its feeder boxship Sinar Bima to an undisclosed third party for $12.5m as part of its fleet renewal plan. The company has made a strategic decision since due to its size and specifications, Sinar Bima is not the most efficient vessel for the sea routes that the group operates. Others follow suit and expand the assets – Seaspan Corporation has entered into long-term charters worth more than $1.5bn with ZIM for the LNG-powered containership newbuilds. TS Lines has become the latest carrier to sign for four ships with Shanghai Waigaoqiao Shipbuilding. NBOSCO gets in for a trio of 3,300 TEU newbuilds at Yangzijiang Shipbuilding. The fastest-growing container line in geographic terms this year, China United Lines, is planning to take its bow on the transpacific. It has ordered six new ships at Chinese yards to go alongside its existing 19 vessels.
In contrast with ocean freight, average global air freight rates went down by 10% in June compared with the year-to-date high seen in May due to a drop in average dynamic load factors that was reflected in price declines. If rates continue to decrease, they are expected to take capacity out of the market, although load factors and rates will stay elevated.
Vietnam, being an exception to the current rather negative context of the countries’ supply chains, is experiencing a boom in trade. Unfortunately, it might not remain like that for long with the Southern commercial hub Ho Chi Minh City, the current ‘hotspot’, being under lockdown.
Addressing the issue of driver and truck shortages, Geodis has acquired the assets of US freight brokerage firm Velocity Freight Transport, expanding its freight brokerage capacity in North America. It aims to expand its solutions offering in the region at a critical time.
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The multimodal shift: when a former dystopia can become a reality.
The sad soundtrack for ocean freight might be coming to end with experts predicting $100bn profit for carriers this year due to a paucity of supply. Despite that the flood of orders for newbuild containerships stemming for delivery in 2023 will break records for an injection of liner capacity – and potentially tip the supply-demand scales back in favor of shippers – carrier profits in the interim will see them set up for a long time in the future. Meanwhile, CMA CGM and Hapag-Lloyd are going to implement the new Peak Season Surcharges in Europe. The German shipping carrier will apply a PSS of US$500 per TEU and US$1,000 per FEU from the Middle East and Indian Subcontinent to North Europe. For the big players, it is a bearable move; however, smaller shippers are again the ones suffering the most. For them, the matter is about not only spiraling freight rates but also the widening spread in the market that has become a critical competitive parameter for importers. It is especially difficult to handle in the light of continuous disruption in global liner schedules. On the brighter side – the situation at Yantian is improving and companies are reporting upcoming repatriation of their ships to the port.
Alternatives are coming from different frontiers. The new multimodal link, with a shipping link between the UK and Kaliningrad, will be launched from Xi’an to the port of Immingham with its availability for eastbound services. In turn, freight forwarders and cargo owners are shifting some containerized cargo to bulk vessels. They are trying to find affordable and available capacity to move shipments. However, the solution seems as a short-term means as it will have a limited effect on the current capacity squeeze. Who knows, perhaps, with all the skyrocketing rates hyperloop concept will become a pretty much mundane alternative? HyperPort aims to use high-speed capsules to transport containers between ports and inland destinations.
Maersk comes into the green spotlight becoming one of the few companies that are undertaking particular, beneficial steps orientated at more sustainable future. The majority has not even released their SR reports and those who have, do not include the ships they charter, which is absurd from an environmental point of view. They have to be taken into account for an accurate evaluation of the environmental performance of a carrier's fleet.
The e-commerce boom can bring a positive change into UK ports that can use it as an opportunity to improve efficiencies and remove bottlenecks in inland logistics through a more regionalized business model. For example, the Port of Liverpool has expanded opening times and improved handling capacity to alleviate bottlenecks. Consequently, the aftermath spreads over hauliers – there has been a remarkable turnaround in access to the Mersey gateway with the Port of Liverpool releasing additional slots through its hourly resource checks.
A significant milestone has occurred for Hellmann Worldwide Logistics as it has acquired the overnight express provider Innight Express, based in Hungary and Romania. The company aims to expand the Central and East European markets.
The train locomotive of the industry obtains a new connection between Cosco’s CSP Zeebrugge terminal and Strasbourg in eastern France with daily roundtrips thanks to cooperation among Naviland Cargo, CSP Zeebrugge, and Zeebrugge port authority. There is also a stopover in Antwerp. Moreover, InRail completed its first train trip connecting Škrljevo in Croatia and Creutzwald in north-eastern France in a unique route. This step can surely be counted as the company’s international benchmark. However, not everything is stress-free for rail. The Iranian government is not clear on its decision to build the railway line between Astara and Rasht, as it is hoping for other infrastructure through Armenia and Azerbaijan to play a leading role. As the result, the missing link on the railway corridor from Russia to India is likely to remain underdeveloped for much longer.
Not only rail will see a strengthening presence of women, but the shipping sector too. The UK Chamber of Shipping has confirmed that Sarah Treseder will succeed CEO Bob Sanguinetti. Currently, she is the CEO of the Royal Yachting Association, where she has been for more than 10 years.
