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Following the dropping demand and freight rates, carriers have culled sailings and temporarily suspend a number of services on major east-west tradelanes. However, the decrease in Chinese exports made blank sailing ineffective, which means that a more radical strategy is needed. Now companies are being very cautious because nobody wants to cut out a loop which would lead to a lost market share.
Despite the challenging situation in weakening demand, Cainiao secured 3,000 flights and will offer six export logistics guarantees to support Chinese sellers hoping for the e-commerce bounce. However, experts do not share the same confidence expecting that the usual peak season will not occur.
Normalcy is not expected to restore any time soon, especially after the strict lockdowns in Ningbo-Zhoushan which has taken the largest hit. The volume has dropped by 29%.
The next strike in Liverpool has been announced threatening the operation of hauliers that are now caught in between the fighting sides.
The Vietnamese government’s plan to extend the domestic box ship fleet may result in decreased operational costs for local shippers. For example, the ports of Singapore, Hong Kong and Malaysia may be exempt from import taxes if the shipment is done by domestic ships.
China has declared that its deal with Germany regarding COSCO’s investment in the Port of Hamburg must stay between the two of them without the interference of the US.
Routes and services
- RZD Logistics has started container train services from Moscow to Iran to accustom growing trade with India by transloading.
- All in all, North-South Transport Corridor is believed to become the key to new Eurasian logistics services and routes, if sufficient investments are provided.
- The Trans-Afghan railway, which will connect Uzbekistan to Pakistan, is now open to foreign investors.
- A third cross-border railway port will be constructed between the Baktu port in Tacheng, Xinjiang and Abai Oblast in Kazakhstan.
- Express logistics has launched its first train running from Birmingham International to Mossend in Central Scotland with light parcels.
- From Nov 22, OOCL is launching the East Africa Express service with the rotation Nhava Sheva- Mundra – Jebel Ali – Abu Dhabi – Mombasa – Dar Es Salaam – Nhava Sheva.
- From Nov 10, ONE will operate a new weekly service, Philippines Express 2: Singapore – Manila(North) – Davao – Singapore.
- Pelindo has received CMA CGM Alexander Von Humboldt. It is the largest containership to call PT Jakarta International Container Terminal.
- SASCO is planning to establish South Africa’s first national carrier following the government’s strategy.
Other
- China plans to strengthen its supply chain relationships with Vietnam since it has proved to be an attractive alternative for manufacturing investment. Chinese e-commerce companies are also setting up shops in Vietnam.
- AD Ports Group has purchased an 80% equity stake in Dubai-based Global Feeder Shipping for $800 mil.
- MSC has acquired Conti Canberra, Conti Darwin, and X-Press Kanchenjunga surpassing Maersk in the size of its fleet.
- The Italian government will spend additional 200 million euros to provide state aid for the shift from road to rail until 2027.
- Import shipments in the US continue to favor east ports. Data shows that currently the West Coast only accounts for 38% of imports vs 62% for the East Coast.
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.
Container spot rates on the Asia-Europe and transpacific tradelanes are on course to dip below pre-pandemic levels before the end of the year.
However, ocean carriers’ operating costs are significantly higher than they were in 2019, which could force more exposed lines back into the red in the first quarter of 2023.
According to Lars Jensen, CEO of Vespucci Maritime, given the extremely weak demand, the sharp decline in spot rates was “inevitable”.
But he added that after rates had bottomed out, there could be a bounce-back in demand, which would support a freight rate recovery.
Both Maersk and ONE reported material weakness in their liftings at third-quarter earnings calls this week, with Maersk down 7.6% and ONE down 9% in the period, compared with the previous year.
Meanwhile, the spot market indices are unable to keep pace with heavy discounting on exports from China. For example, Drewry’s WCI North Europe component declined by a relatively modest 4% this week, to $3,684 per 40ft, after falling by over a third since September.
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China’s manufacturing sector has shrunk for the third month in a row, with Beijing’s zero-Covid policy causing more logistics disruption and a dip in ocean shipment volumes.
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) came in at 49.2 for October, the third consecutive month the number has been below 50, indicating a contraction in activity.
Wang Zhe, senior economist at Caixin Insight Group, said: “Manufacturing activity was still weighed down by Covid-19 outbreaks and consequent tightening of prevention and containment measures.
“Both output and new orders saw further declines, though at a slower pace, as Covid controls dragged business activity and consumer demand down. Overseas demand also continued to weaken, albeit again at a slower pace.”
