Wall ornament & Wooden Statue hand made by Bali Craftman.

From 8 January 2023, China will no longer implement quarantine and infectious disease management measures for the entry of personnel and goods into the country. After almost three years of strict measures, the government has loosened its grip on the pandemic control. Indicative is the classification of Covid-19 as a slightly less threatening virus and the revised protocols concerning its control and prevention announced on 26 December. Can these latest developments also impact the China-Europe rail freight business?

First, it’s essential to look at two points of China’s new Covid-19 prevention and control protocols closely related to China-Europe rail traffic. To begin with, according to governmental decisions, “from January 8, 2023, Covid-19 is classified as a ‘Class B infectious disease’. No isolation is required anymore for people infected with the virus […], while there will be no requirement for quarantining when entering the country”.

The absence of quarantine concerns both people and goods. It will facilitate the transport of products destined for China since waiting times to ensure that cargo is safe to enter the country will be eliminated. Both Europe and China look at the development with optimism since it could signal a new peak season following winter production and respective eastbound exports in 2023.

Additionally, the second point concerns the optimisation of people flows between China and foreign countries: “Personnel travelling to China should undergo a Covid-19 test 48 hours before their departure. Those with a negative result can travel to China without applying for a health code from an embassy or consulate abroad. Testing and centralised isolation of all staff after entry will stop,” mention the revised rules.

In total, there are three ways that China-Europe rail freight could benefit from the relaxed rules. As analysed below, the new approach could positively impact eastbound volumes, Eurasian multimodal transport and the re-emerging possibility of business trips.

Entry quarantine

The goods most affected by entry epidemic prevention measures are fresh food. In June 2020, imported salmon caused a resurgence of the domestic epidemic and directly affected cold chain transportation in Europe: since seafood products are generally stored and transported in refrigerators, the virus has a chance to survive in the cold for a long time. After this incident, the import of salmon has encountered many obstacles, and the customs have become extremely cautious. Coincidentally, in January 2022, the Manzhouli Port announced that the import of fruit was prohibited, and the reason was that the imported fruit tested positive for Covid-19.

Imported fruits entering the Chinese market through border inspection also face cumbersome procedures. In addition to the conventional customs declaration, inspection and quarantine certificates, disinfection certificates, and fruit nucleic acid test certificates are also required. Therefore, the new policy implemented in 2023 will reduce the complicated procedures of fresh food imports, reduce customs clearance time, and create more prospects for the market of fresh food imports. The China-Laos ‘fruit train’ previously reported by China Railway Transport and the China-Russia special fresh produce train launched by Russian Railways in April this year will also go straight to the fast lane.

Multimodal transport

On top of the limitation of goods’ imports, restrictions on personnel during multimodal transport operations also prolonged the overall transit times between China-Europe. As an essential part of multimodal transportation, truck drivers have encountered slow customs clearance procedures and even travel bans due to strict epidemic prevention and control. The approaching relaxed Covid-19 rules in China could result in better conditions for truck drivers. Moreover, they could boost domestic multimodal routes, such as the direct truck connection between Hong Kong and Shenzhen, which will also assist in achieving faster and more efficient cargo forwarding to China-Europe freight trains.

MAXMODAL wishes you happy holidays and all the best for the New Year! 

2022 has been full of challenges but the challenges always lead to the best opportunities. Dream big in 2023 and MAXMODAL will be by your side to help you achieve your aspirations. 

Happy holidays! 

Hi Everyone,

This is Cassie work for New Chain logistics Co.Ltd Now.

We are engaged in logistics market for 18 years headquarter in Shenzhen

We are global TOP 100 NVOCC to North America and have directly contract rate with different carriers(OOCL/COSCO/EMC/CMA and so on). 

New Chain Logistics Main Business:

1.FCL service & LCL service

2.Hawaii Sea Shipping

3.Vietnam Malaysia etc=>USA(own contract)

4.India=>USA(own contract)

5.Air shipping

We are looking forward to be in associate with your esteemed organization.

Thank you!

Cassie

The hike in energy prices is threatening the future of France’s rail freight and intermodal operators, according to industry body Fret Ferroviaire Français du Futur (Alliance 4F)

It has slammed the government’s “silence” in response to its demands for financial relief.

Rising from €56 per megawatt per hour (MWh) last year to €473.51/MWh next year, the electricity bill paid by rail freight operators to SNCF Réseau, France’s rail network manager, will have increased more than eight-fold, it said.

“This is enough to put a stranglehold on the sector, putting its very survival in danger.”

During a meeting with French transport minister Clément Beaune last month, Alliance 4F called for a cap on the price of rail traction electricity of €180/MWh and the exoneration of tolls paid by operators to SNCF Réseau for using the rail network, with the state picking up the tab.

However, more than a month on, Alliance 4F said it had yet to receive a response from the government.

“We have no visibility as to the relief we are requesting in order to cope with the explosion in electricity prices, the unsustainable nature of which is putting businesses at risk, especially the smallest ones in the sector. Without an appropriate response [from the government] the momentum we have seen in modal shift in freight transport between 2020 and 2021 will be seriously compromised.”

Alliance 4F added: “The lack of support [with regard to the energy price hikes] affects the entire logistics chain, including road hauliers using combined road-rail transport, which are likely to suffer a cost increase of 15% to 20%.

https://youtu.be/2344XSIKJXo

Three key drivers shaped ocean shipping markets in 2022: the end of the container boom, the invasion, and China’s worsening economic and geopolitical situation.

Here’s a look back at this year’s coverage of how each driver impacted shipping rates and volumes.

Container shipping boom finally winds down

The traffic jam of container ships stuck waiting off U.S. ports reached an epic peak as this year began. There were 109 container vessels waiting off Los Angeles/Long Beach on Jan. 9, with around 150 waiting off all U.S. ports combined (story here).

Shipping spot rates eased from stratospheric 2021 highs but remained exceptionally strong in the first quarter, buoyed by congestion and inventory building. The timing couldn’t have been worse for U.S. importers negotiating 2023 annual contracts that started May 1. They agreed to unprecedented contract price hikes (story here).

The Southern California queue whittled down through the spring. But like a game of whack-a-mole, congestion popped up instead on the East and Gulf coasts. Shippers, fearing disruption when the West Coast port labor contract expired on July 1, switched volumes to other coasts (story here).

By the end of July, the countrywide count of waiting ships was all the way back up to around 150 — marking a second peak — driven by East and Gulf Coast congestion (story here).

The number of waiting ships has been falling ever since. The Los Angeles/Long Beach queue was effectively gone by late August and officially declared dead in November (story here). The total number of ships waiting off all U.S. ports was down to around 50 by this month.

U.S. import volumes remained strong through August, then began falling sharply starting in September, led by declines at West Coast ports. By November, declines were countrywide (story here).

The moderate spot-rate decline in the first half of this year accelerated in August and September — spot rates fell off a cliff. More recently, the pace of spot-rate declines has slowed.

Spot rates have sunk below annual contract rates signed early in the year — to the dismay of shippers that signed those contracts. In many cases, annual rates have been adjusted lower mid-contract and more volumes have been shifted to spot (story here).

Ocean carriers face major challenges ahead, given sinking spot rates, lower contract rates kicking in halfway through next year (if not sooner) and a massive flood of new ships that’s about to hit the water.

However, carriers are far from in distress, still pocketing billions per quarter. Profits didn’t peak until the third quarter of 2022 (story here). Carriers are entering this down cycle with enormous cash cushions. Some analysts believe there is a path through the minefield ahead.

Russian invasion resuscitates tanker business

The pandemic was not a “black swan” — it was a known risk — but it had black-swan-like effects on shipping. Just as the pandemic eased in early 2022, world trade was shaken by yet another historic event: Russia invaded Ukraine, setting off the largest armed conflict since World War II, one that could become much larger at a moment’s notice.

Container shipping fallout has been limited. Major shipping lines immediately “self-sanctioned” and pulled services from Russia. Given Russia’s small market size, this had little effect on container lines.

Tanker markets, in contrast, have seen huge changes.

A photo of an LNG ship; LNG spot shipping rates have surged

First, Russia throttled down pipeline deliveries of natural gas to the EU, then someone blew up the pipelines. The EU needed to fill its stockpiles by this winter, prompting an armada of liquefied natural gas tankers to deliver cargoes from the U.S. Gulf .

The profits on LNG cargoes shot so high that charterers snapped up most of the remaining tonnage on long-term contracts so they wouldn’t miss out. Due to the resultant lack of spot vessels, LNG shipping spot rates rose to around $500,000 per day (story here) — the highest day rate paid for any kind of cargo transport ship in history. Rates have since fallen back to $200,000 per day.

In June, the EU voted to ban seaborne crude imports from Russia starting Dec. 5 and products imports starting Feb. 5 (story here). Trade routes began to shift before those dates. More Russian exports flowed to China and India. The EU replaced Russian imports with cargoes from the U.S., Brazil, West Africa and the Middle East.

The longer voyage distances of the replacement routes pushed up spot rates for crude tankers (story here) as well as product tankers (story here).

As 2022 draws to a close, the big question is how EU sanctions on tanker insurance will affect Russian exports to non-EU countries. The G7 and EU price-cap plan is designed to keep sanctions from reducing volumes too much while still curbing Russian oil income. It might work in practice even if it doesn’t on paper (story here).

No matter what happens with the price cap, it has been a banner year for crude and product tanker owners. Stock investors and traders reaped the rewards of war-juiced tanker rates. If 2021 was the year of container stocks, 2022 is the year of the tanker stocks (see story).

The China factor

No country is more central to shipping than China. It is the world’s largest importer of dry bulk cargo, the largest charterer of crude tankers, the second largest importer of LNG and the largest source of containerized export cargo.

China is the world’s largest shipbuilding nation. Its factories construct over 90% of the world’s containers. It boasts seven of the world’s top 10 container ports.

When China stumbles, so does shipping. China stumbled in 2022. The International Monetary Fund expects China GDP growth of only 3.2% this year, down sharply from 8.1% in 2021. Investment bank Evercore ISI expects China growth this year of only 2%.

China’s demand for dry bulk imports was battered by a property development crisis and COVID lockdowns (story here). Pandemic measures decreased the mobility of citizens, curbing fuel demand and thus demand for tanker imports. Lockdowns simultaneously snarled container cargo supply chains.

U.S. imports from China slowed faster than overall imports. China Beige Book CEO Leland Miller warned that “the China growth story is over now.”

China’s economic malaise is just part of the story for shipping. The other involves geopolitical tensions. First came China’s allegiance to Russia in the wake of the Ukraine invasion. Then came live-fire military exercises off Taiwan.

Shipping market participants are now openly talking about and planning for the possibility of a future war between the U.S. and China. As with the pandemic and the Ukraine-Russia war, a U.S.-China military conflict does not meet the definition of a black swan but promises the gravity of consequences associated with one.

“What happened this year has amplified and emphasized that you’d be foolish to depend on a steady supply at a low cost from China, given what might happen geopolitically,” said Paul Bingham, director of transportation consulting at S&P Global.

For energy shipping, a future U.S.-China war is “almost not even worth worrying about because the consequences are so big,” said Flex LNG (NYSE: FLNG) CEO Oystein Kalleklev.

“If that happens we’re all screwed. Russia and Ukraine would look like a small bump in the road. You would have an energy shock like you’d never seen before. The whole world economy would stop.”

The current situation on the market is radically different from what it used to be like at the same time last year when shippers were desperate for contracts and ready to pay any price. Now with decreased demand, overcapacity, low spot rates, and blank sailing as the main practice to stabilize the situation, the tables have turned. However, experts say the bottom of the spot rates might have been achieved on the Asia-North Europe and Asia to US west coast routes. There are some signs that this is where the rates may pick up. Drewry’s WCI index actually recorded a slight uptick, to $1,706 per 40ft and Xeneta XSI reading ticking up 1.3%, to $1,529 per 40ft. With all the uncertainty, there are only two big questions for shippers: how much of their diminished volumes they will commit to renegotiated contracts, and how much will be reserved by the spot market? They already expect poor performance from carriers with worsening arrival predictability. 

FMC called for 20 shippers to prove how they comply with the prohibitions of OSRA 2022. It states that it is illegal for ocean carriers to discriminate or retaliate against a shipper for filing a complaint or challenging a charge. With this being stated, FMC will thoroughly investigate any allegation of illegal behavior and proceed accordingly in case of a violation. 

Routes & services 

• CNC, owned by CMA CGM, will start a new service on the 3rd of January: Singapore – Port Klang (Malaysia) – Yangon (Myanmar) – Port Klang – Singapore – Sihanoukville (Cambodia) – Singapore.
• Since China eased COVID restrictions, the hopes to return to normality on the New Selk Road have been up. Experts are optimistic about the volume of westbound trains, and some companies have already planned to increase the number of trains to Europe. 
• APM Terminals and DP World called to focus on central and eastern Europe, and  Central Asia from the perspective of the Middle Corridor. Central Asia in particular should be seen as a market on its own, not just a mere transit region. However, transit times and the cost of the route are not competitive, and this is something that requires close attention. 
• Uzbekistan has sent its first train loaded with copper to Europe via the Middle Corridor. The country also announced its plans to invest more in trade with the EU. 
• CNC has launched a direct service linking Myanmar and Cambodia to Singapore and Malaysia called Yangon Cambodia Express (YCX). From January 3rd, the rotation will be Singapore – Port Klang – Yangon – Yangon – Port Klang – Singapore – Sihanoukville – Singapore.

Other

• FedEx wants to cut costs significantly and to do that, the company will outsource a lot, park aircraft, close offices, eliminate Sunday delivery and release drivers at its Freight division. The company plans to remove $2.7 billion in costs.  
• Trucking index keeps sliding with no sign of improvement. ATA For-Hire Truck Tonnage Index fell 2.5%, month on month, in November, following a 1.2% slip in October. Since shippers no longer need capacity, truckers, reportedly, are willing to accept almost any load that comes their way. However, not everything is so frustrating. The global downturn is not expected to be severe. 
• The German government will reduce electricity prices for railways to 13 cents per kWh. 
• Following a bomb alert on Dec 21, the MSC Lorena had to change its course. Now the ship is at the Scheldt.
• DP World and Hassana Investment Company will invest $2.4 billion in three of DP World’s UAE assets to capture the potential of the wider market in the long run. 
• Bolloré SE has sold Bolloré Africa Logistics to MSC Group for the price based on an enterprise value of $6.4 billion. Nevertheless, the Bolloré Group will continue to have a significant presence in Africa, particularly through Canal+, and expand its operations to other industries. As for Maersk, the company wants to keep strengthening the continent’s connections and boost commerce inside Africa. 

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.

https://youtu.be/YYfxo2otxCw

A year ago, shippers were desperate to agree annual contract deals with ocean carriers to secure their supply chains, and were prepared to do, and pay, ‘whatever it took’.

And carriers were holding ‘beauty contests’ to determine the most attractive large-volume BCOs to be included in their exclusive customer portfolios.

But 12 months on, the container liner shipping market has seen an 180-degree turn – world economies are being racked by huge hikes in energy costs, high inflation and spiralling interest rates, causing a pause in discretionary spending by consumers and a sharp downturn in demand.

Since the ‘non-event’ peak season in July and August this year – traditionally when carriers garner the most revenue from pre-holiday season orders – container spot rates from Asia have collapsed, along with demand, as carriers have been obliged to heavily discount their short-term rates.

Moreover, the margin between the weekly decreasing spot rates and the elevated annual contract rates became so great that one by one carriers buckled and granted their core contract customers dispensation to book cargo via their spot platforms.

Meanwhile, despite an aggressive blanking strategy by the shipping lines, including ‘slidings’ and sending vessels on the backhaul from North Europe back to Asia via the longer Cape of Good Hope route, carriers were unable to turn the fall in spot rates back to pre-pandemic levels, or below on some tradelanes.

Nevertheless, there is evidence over the past couple of weeks that the spot rate bottom may have been reached on the key Asia-North Europe and Asia to US west coast routes.

For instance, this week’s Asia-North Europe component of Drewry’s WCI index actually recorded a slight uptick, to $1,706 per 40ft.

And there was another sign this week that the rot had stopped on the route, with inbox receiving very few ‘spam’ e-mail quotes from China-based forwarding agents offering “prompt space with all carriers at $1,000 a box”.

And on the transpacific Asia to US west coast route, spot rates also seem to have plateaued, with the week’s Xeneta XSI reading ticking up 1.3%, to $1,529 per 40ft.