Going up! The Drewry World Container Index has ended its decrease due to a surge in transpacific spot rates by 3.8% The trade lane between Shanghai and Los Angeles, which had seen a notable decrease in prices, experienced an 11% increase in prices during the week. They rose from $1,674 to $1,856, marking a significant recovery. Industry experts have started to express the view that the container shipping sector has turned the corner after the supply chain disruptions more confidently. Blank sailings are believed to have contributed the most to the improvement since carriers have been trying to prop up the General Rate Increases (in some cases, not so successfully).
However, industries like the US trucking can hardly feel the positive changes. Following the "freight recession," with weak demand and oversupply leading to a prolonged period of low rates and low profits, many smaller trucking companies have been forced out of business, while larger firms have struggled to maintain profitability. Despite the challenges, some analysts believe that the industry is likely to rebound in the coming months.
The upward trend also affects charter rates and is making ship owners hold back their plans for vessel scaping. Companies are reluctant to dispose of vessels that could still command high charter rates that, in their opinion, were boosted by stronger demand for shipping services.
Yet again, as companies hurry to reinstate previously canceled sailings on the transpacific and Asia-Europe trade routes, in anticipation of a rebound in demand for shipping services, it may be too early to do so. Some industry experts have expressed doubts over whether the carriers' optimism is justified, noting that the market remains highly volatile. Carriers who ramp up capacity too quickly could end up exacerbating the supply-demand imbalance.
Hot topic
- Longshore and Warehouse Union and the Pacific Maritime Association are on the way to a consensus about a new labor contract for West Coast dockworkers. Some blocking points still remain in regard to the use of temporary workers and the scope of work for union members.
- CMA CGM is in talks with the Bolloré Group to acquire its stake in logistics and transportation operations. The acquisition would give CMA CGM greater access to the logistics and transport market in Africa, where Bolloré currently has a significant presence.
Routes & services
- Vietnam is emerging as a significant destination for US-bound container exports, with a growing number of US shippers choosing to route their goods through Vietnamese ports instead of Chinese ports due to a variety of factors, including lower costs, fewer delays, and the ongoing trade tensions between the US and China. Overall, Vietnam saw a growth rate of 156% in containerized trade into the US between 2017 and 2022.
- Hupac is launching a new direct rail freight service between Warsaw, Poland, and Rotterdam, the Netherlands. The service, which will start operating on May 1, 2023, will run five times a week.
- On April 19, 2023, Russia, Kazakhstan, and Turkmenistan formed a joint venture to increase freight transport along the International North-South Transport Corridor to develop a more efficient and cost-effective transport route linking the Indian Ocean with the Caspian Sea and beyond.
- ÖBB Rail Cargo Group has announced the launch of two new intermodal connections between Italy and Austria. The first service, which started operating on April 11, 2023, connects the Italian city of Bologna with the Austrian town of Wels, while the second service, which will start on May 8, 2023, links the Italian city of Padua with the Austrian town of Wolfurt.
- The rail border between Poland and Belarus is still experiencing delays, causing disruptions to freight transport along the China-Europe rail corridor. The delays are due to stricter border controls implemented by Belarus in response to security concerns.
- CMA CGM has imposed discharge restrictions on the Port of Douala in Cameroon due to concerns about the safety and security of its crews and vessels. The restrictions, apply to all cargoes destined for Douala and will remain in place until further notice.
- ONE has announced changes to the port rotation of its Philippines Express (PHX) service. The new rotation will be Singapore – Manila (North) – Cebu – Singapore, with a bi-weekly frequency starting from M/V CONTSHIP ERA 081N/S.
Other
- Schneider National and Canadian Pacific Kansas City, a joint venture between Canadian Pacific and Kansas City Southern (CPKC), have announced a new intermodal partnership to connect Mexico with the Midwest region of the US combining Schneider National's trucking expertise with CPKC's rail network. The service will run from the Port of Lazaro Cardenas in Mexico to Chicago.
- The European Commission has proposed a new Carbon Border Adjustment Mechanism (CBAM), which would impose a carbon price on imports of certain goods from outside the European Union.
- The ongoing disputes in France are not expected to have a significant impact on the cargo backlog on the River Rhine. Despite the disruption caused by the protests against the French government's policies, the flow of goods on the river has remained relatively stable.
- Taiwanese TS Lines has sold two more feeder vessels as part of its ongoing fleet streamlining efforts.
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.
A new China-Europe logistic and trade exchange center, spanning 100,000 square meters, is set to arrive in Budapest. Koeman, owned by China’s Tonglinada logistic supply chain company, will develop the project on land leased from Nonfungo, a Hungarian firm. The parties signed a land grant contract towards this end on Monday 17 April.
The center will be located in Pest County, an area surrounding Budapest. According to Chinese media reports, the project will receive over 30 million US dollars in investments. It aims to build a logistic center that will provide functions such as warehousing, distribution, consolidation, bundling and re-export trade.
The project has received support from Hubei (Wuhan) and Heilongjiang provinces in China, as well as Pest County in Hungary. The first phase of the project will involve constructing the main warehouse structure, supporting facilities, and railway lines. It is planned to be operational at the beginning of 2024, facilitating the storage and transportation of over four million tons of goods per year. This new logistic center could further strengthen Budapest’s function as a rail freight hub on the New Silk Road.
Budapest and its potential
As a rail freight center, Budapest shows its advantages. It has good infrastructure, good connections and there are a lot of industrial companies settled here, a lot of them from China. However, that is not to say that the city does not know of any challenges. The popularity of the city also has its consequences, namely the heavily congested network. This congestion is not to be resolved until the freight-only V0 railway line is constructed.
Chinese operator Andy Luo from Dimerco explained the reason behind such popularity. “The transit time of this route is about seven days faster than the traditional route via Malaszewicze; at fastest, Budapest can be reached within fourteen days. In addition, Budapest has a complete railway distribution network. After the goods arrive in Budapest, they can be delivered to Bucharest/Constanza, the port of Koper, Duisburg and Hamburg within 2-3 days.”
Budapest has its potential, and the new China-Europe logistics center could help expand that potential by directing traffic and ultimately, give shippers and forwarders some ease.
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The Kazakh railway company KTZ and the new rising star on the BRI Shandong Port will work together in developing multimodal transport services and electronic services on the New Silk Road. In doing so, it will not only consider the traditional route through Russia but also the Middle corridor via the Black Sea Caspian Sea.
This was formalised in a recently signed memorandum of understanding. The two parties are willing to share regular transit routes on both the northern and the middle corridor. It is also looking at developing new services, such as a maritime link across the mentioned seas.
Shandong port
Shandong Port was formally established in 2019, integrating Qingdao Port, Rizhao Port, Yantai Port and Bohai Bay Port. The merger of the four ports has made the Shandong Provincial Port Group the largest port group in China, with the group’s cargo throughput exceeding 1.6 billion tons in 2022.
Ever since, it has been a successful hub for rail-sea transportation. It has successively opened a number of railway lines starting from Qingdao and Rizhao and passing through Alashankou and Korgos. At present, trains can reach Almaty within 10-15 days from the port, saving nearly 30 days compared with sea transportation.
Qingdao and the BRI
That there should be an increased focus on Qingdao has been agreed upon by several countries in the region. Qingdao should be used as a bridgehead to build an Asian rail-sea intermodal transport center, is the general consensus. In this way, it should also be a hub on the Belt and Road.
At present, the multimodal transportation center of Qingdao Port connects Japan and South Korea to the Asia-Pacific region in the east, the SCO countries in the west, ASEAN countries in the south, and Mongolia and Russia in the north. After signing the memorandum with KTZ, it will further strengthen the relationship with Central Asia.
Led by MSC and CMA CGM, ocean carriers are again scouring the charter and sales and purchase markets for tonnage to boost capacity and increase their market share.
With demand prospects improving, especially for the second half of the year, and freight indices showing weekly gains, some carriers are using the huge cash reserves accumulated over the past two years to bolster their networks and gain a commercial advantage over more conservative lines.
According to Maersk Broker’s weekly report, in the past two weeks the second-hand containership market has experienced “probably the highest level of activity seen in almost a year”.
“The main driver seems to be the race for market share for some of the biggest liners, with MSC still leading the charge with continued purchases,” it says.
“Where we, at the start of the year, only saw MSC and various Chinese companies as buyers, they have now been joined by a large group of other liner operators.”
MSC’s latest swoop on the S&P market, to add to its armada of more than 300 second-hand ships acquired since August 2020, is the 20-year-old 6,078 teu Lisbon, reportedly purchased for $22.5m.
Meanwhile, London shipbroker Braemar’s list of 13 representative containership charter fixtures finalised in the past week includes seven vessels taken on hire by French carrier CMA CGM.
“The buzz in the container chartering market continued,” says Braemar’s report today. It says only the dearth of supply of open tonnage is preventing more fixtures, “with the scarce supply side not providing many options for operators to cover their requirements”.
A broker contact told they had “a long line of charterers” requiring tonnage, adding: “They don’t seem to be put off by the age of the ship, or that they may have unexpired charters.”
Among the charters concluded by CMA CGM was the 2015-built, 2,339 teu geared Minerva, leased for 42 months for trading in the Caribbean at a daily hire rate of $15,000. It also managed to secure the 2,202 teu 2017-built Cape Quest for 11-13 months at $20,500 a day for delivery in North Asia.
US imports have bounced back in March (up 4.2% from March 2019), despite a significant drop in China cargo. The shifts in trade flow away from China may be driven by a combination of factors, including supply chain disruptions caused by the pandemic, rising labor costs in China, etc. There is also a rising demand for shipping services as SCFI has seen its largest weekly gain in 23 months, settling at $1,033. Higher rates may also be the result of the carriers’ capacity management as updates report successes following blank sailings and service cancelations. Some forecasts are even too good to be true, promising reassurance to shippers who have been grappling with rising rates and supply chain disruptions in recent months that the rebound is near. The Port of LA’s bumped imports serve in favor of such predictions However, from now on, it will not only be a matter of increased consumer confidence but labor agreements that need to ensure smooth operations. Charter rates are on the rise as well.
The rising demand for shipping services drives new orderbooks of vessels which may pose a threat of overcapacity in the future. The trend is also likely to lead to increased competition among carriers, which could put downward pressure on rates.
Container depots in China are filling up due to a decline in exports, which has been attributed to a range of factors including the ongoing COVID-19 pandemic, supply chain constraints, and increasing competition from other manufacturing countries. Changes in vessel deployments and service offerings in the region are on the way.
Hot topic
- Recent union actions at the ports of Los Angeles and Long Beach have been declared illegal by a federal agency in the United States. The National Labor Relations Board ruled that the International Longshore and Warehouse Union engaged in unfair labor practices by imposing work slowdowns and other disruptions during contract negotiations with port employers.
- Brookfield Infrastructure Partners has agreed to acquire Triton International in a deal worth $4.7 billion creating the largest container leasing companies in the world.
- The German government is reconsidering a proposed investment by COSCO in the Port of Hamburg, citing concerns about national security.
Routes, services & rates
- More use of small shallow-draught terminals will link ports in Asia and Europe with Ukraine through the Danube River. Maersk has become one of the first companies that started to look for alternative routes to accommodate clients from Ukraine.
- A freshly restored rail crossing, Berezyne-Basarabeasca railway line, between Ukraine and Moldova has seen the first launch of trains.
- Forwarders are calling for changes to the Precision Scheduled Railroading system used by US railways, citing concerns over service disruptions and capacity issues. The PSR system, which prioritizes efficiency and cost reduction, has led to the consolidation of rail yards and the reduction of staff and equipment.
- Maersk has opened new service facilities in Mexico City in Mexico, with a dedicated satellite center in Santos, Brazil to provide repair, maintenance, and storage services for its container fleet.
- ÖBB Rail Cargo Group starts a new service between Budapest, Hungary, Rijeka, Croatia, and Koper, Slovenia.
- Irish Rail is developing a new rail freight terminal in Dublin as a part of a broader effort to promote rail freight as a more sustainable and efficient mode of transportation.
- MSC has added a direct call at Ennore, India on the westbound leg of its Australia Express Service (AEX).
- TX Logistik has launched a new intermodal service linking its jointly operated Duisburg terminal in Germany with the Italian city of Padua.
- CMA CGM will call its vessels at the port of Gdansk instead of the port of Gdynia.
- NWSA, a marine cargo operating partnership between the ports of Seattle and Tacoma in the US has launched a new incentive program to encourage shippers to use rail transportation for their cargo. The program offers discounted rates for cargo that is transported by rail and originates or terminates within the NWSA gateway.
Other
- Maersk has introduced a new methanol-powered feeder vessel, which will be used to transport cargo between ports in Northern Europe. The use of methanol as a fuel can significantly reduce carbon emissions compared to traditional marine fuels.
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.
In the first quarter of 2023, the China-Laos Railway’s import and export freight volumes increased by 274,4 per cent year-on-year. According to customs data from the Chinese city of Kunming, goods transported along the route in the first four months of 2023 amount to 1,033 million tons.
Increased volumes also correspond to more trains. Data from Laotian authorities show that 954 freight trains transited on the Laos section of the China-Laos Railway, a year-on-year increase of 112,47 per cent. According to CCTV News, there are more than 2,000 different types of goods transiting along the corridor.
From China to Laos, it’s primarily mechanical equipment, household appliances, vegetables, flowers, and machinery parts, while the goods transported from Laos to China are mainly metal ore, cassava, and barley. It has only been 16 months since the opening of the China-Laos Railway in December 2021, and the corridor is constantly growing.
Laos connects to Vietnam
On 1 March, Vietnamese infrastructure investor DEOCA Group signed a joint venture agreement with Laos oil trading company PTL to research the construction of the Vietnam-Laos railway. According to the agreement, the railway will link the Laotian capital Vientiane with the Vietnamese port of Vinh An. The total length of the railway will be 554,7 kilometres, with a standard gauge and an operational speed of up to 150 km/h. The total investment will reach 4,38 billion Chinese Yuan (roughly 582 million euros).
Most importantly, the planned new railway line will connect to the China-Laos Railway and reap the maritime advantages of Vinh An, where goods will arrive by rail and then be shipped directly to markets such as Thailand, China, South Korea and Japan through a changeover. Although the agreement is still at the feasibility stage, it gives a new blueprint for the future of rail-sea transport between China and Laos.
