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Access to South Korea’s two busiest container ports, Busan and Gwangyang, has been blocked, causing box traffic to fall to 40% of normal levels.

The blockades are due to 25,000 truckers, members of the Cargo Truckers Solidarity Union, going on strike again today, demanding a minimum wage system to manage the relentless increase in fuel prices.

The Ministry of Land, Infrastructure and Transport (MoLIT) said container movement at major ports today totalled just 14,695 teu, compared with the usual 36,655 teu.

In Pohang, a major industrial area, incoming and outgoing shipments were delayed, including an 8,000-tonne shipment from Hyundai Steel.

The government said it was preparing military trucks for emergency transport if major manufacturers were unable to receive supplies.

Tanker trailer drivers are also involved in the latest industrial action and the Korea Oil Station Association has asked fuel station operators to prepare sufficient inventory so vehicles can still be fuelled.

The latest industrial action comes nearly six months after truckers ended an eight-day sit-in that was resolved after MoLIT extended the Safe Trucking Freight Rates System by three years. It was introduced in 2020, during the first wave of Covid, to ensure minimum wages and prevent overwork and dangerous driving.

And as well as a minimum wage, the truckers want the Safe Trucking Freight Rates System to be permanent.

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India’s government is looking to sell some 30% of its shares in rail operator Container Corp of India (Concor) by the end of this financial year.

AP Møller-Maersk (APMM) is being seen as a potential suitor, the Danish conglomerate pursuing an aggressive drive into integrated logistics offerings.

Concor, an offshoot of Indian Railways, is the largest container rail operator in the country, with a nationwide inland container depot (ICD) network.

According to industry sources, APMM has participated in a series of pre-bidding sessions held by the government officials leading the divestment.

Sources at Maersk (India) would not comment on any bidding interest, but a spokesperson told The Loadstar: “AP Møller-Maersk is in the process of transforming itself into an integrated container logistics and shipping company, and this means we are continuously looking at how we can effectively connect and simplify our customers’ supply chains.”

The privatisation of Concor was laid out in November 2019, with the New Delhi government intending to dilute its holding to 24% from its 54.8% majority ownership.

But a lack of clarity, and concerns around land licence fees to be settled with Indian Railways, became thorny issues for potential investors.

To allay those issues, the government announced a new land-leasing policy in September, hoping to drive investor sentiment and accelerate the long-delayed divestment.

Other serious contenders are believed to be Adani Group, DP World and PSA, all have a growing container-handling presence in India on the back of terminal networks and remain increasingly keen on end-to-end supply chains.

Ocean carriers are said to be in “panic mode” as bookings from China to North Europe and the US west coast tank, causing FAK rates to plunge to new depths.

Despite aggressive blanking that has reduced weekly capacity on the tradelanes by more than a third, the lines have failed to slow the precipitous fall in short-term rates and, are arguably fuelling the fire by offering sub-economic spot rates via their digital platforms.

For example, rates from Shanghai, Tianjin and Shenzhen to the Le Havre-Hamburg range of container hubs in North Europe, of $1,000 per 20ft and $1,800 per 40ft are now widely available for prompt shipment.

And some carriers are said to be prepared to reduce rates further for volume, and relax or even waive demurrage and detention conditions.

The speed of the rate erosion on the Asia-North Europe tradelane is making a mockery of the spot market indices, which have been unable to keep pace; for instance, the lowest reading this week is Drewry’s WCI, which recorded a 14% decline, to $2,687 per 40ft, for its North Europe component.

“The westbound market seems like it’s in panic,” a UK-based forwarding executive told The Loadstar this week.

“I am getting approximately 10 emails a day from random agents offering very low rates. Today, I had $1,800 into Southampton, which is crazy; it seems to be panic,” he said. “There hasn’t been a Christmas rush on westbound and I put that down to the recession. As a country, we are not buying like we used to during the pandemic.”

He said he was hearing that carriers were blanking sailings right up to Chinese New Year, which falls on 21 January, to drive up rates, but, he added, “personally, I don’t think that the volume is there”.

He continued: “This is all reflected in the number of hauliers contacting us asking for work – again, emails every day saying they have capacity from all ports.”

Meanwhile, on the transpacific, short-term rates from China to the US west coast are sinking to sub-economic levels, dragging down long-term rates as carriers are forced to offer customers temporary reductions on contract rates.

Indeed, Israeli carrier Zim told The Loadstar this week it had been obliged to agree pricing reductions with transpacific contracted customers to protect its business.

“The demand and volume was not there, so we had to deal with a new reality and engage with our customers,” said CFO Xavier Destriau.

According to the latest reading of Xeneta’s XSI spot index, its US west coast component was flat this week, at $1,941 per 40ft, having declined by 20% so far this month, while east coast rates were down 6% on the week, according to Drewry’s WCI, at $5,045 per 40ft.

The one bright spot for carriers remains the transatlantic, where lines continue to enjoy short-term rates of between $6,500 and $7,600 per 40ft from North Europe to the US east coast, according to the spot rate indices.

However, the outlier tradelane is showing signs of succumbing to the general rate demise, as port congestion unwinds on the US east coast, the port of Liverpool resumes normal working after industrial action and, not least, that carriers are deploying more capacity.

For more on shipper/ carrier relations, check out this clip from The Loadstar Podcast of Tia Mohan, ocean and air transportation planning director, Electrolux.

https://youtu.be/xzt_Y-zkSCY

US and China have been tied with international trade connections for years, and now the US imports from China are falling faster than the ones from any other country. They have already dropped by 5.5%. The decrease also concerns exports and bookings. Experts admit that looking for alternative sources for the US importers is an unavoidable strategy in the coming weeks. 

Looking for alternatives is a go-to move for other industry players in light of the falling freight rates too. Increasing blank sailings is not the only strategy to tackle this situation. Such companies as Zim are planning to focus on profitable niche markets for container services and expanding their car-carrier business. Softening demand and sliding rates will most probably become the “new normal”, so there is not much room for maneuvering. 

The bigger number of blanked sailings from Asia has put Northen European feeders under pressure. It is reported that even when the ships come, the volumes are low. When it comes to charter rates, they have fallen to around $14,000 from $60,000 (in April) for a handy 1,600 teu ship. Daily hire rates have been inflated by the two-year contracts that got introduced during the tonnage crunch in the past 18 months, This is a big change from the regular 6 moths contracts with possible extensions. 

Large orders of the new vessels will soon backfire for the market players, experts predict. Now with low volumes, there is a risk of overcapacity becoming the next trend for the coming year. Large boxships are likely to be cascaded onto trades that call for smaller ones, adding to overcapacity dynamics. 

LTL carriers are preparing for a challenging road ahead as well. FedEx Freight has started laying its staff off despite the peak season. 

There is a lot of uncertainty about the year 2023. If in the post-COVID era, companies believed in the rebound, now with the dropped demand and its effect on supply chains and operations, they are not so hopeful. Retailers across Europe raise inventories to have stock available and contract negotiations remain unpredictable. 

Routes & services

• Russia aims to increase capacity on the way to India, on the International North-South Transport Corridor. The corridor's development was slow, so now the parties want to catch up on the potential by developing new routes. The full potential of the corridor is estimated at 14 million tonnes. 
• In a potential response to Russia's plan, the EU is getting interested in Central Asia. EBRD embarked on a study to look for the best connections between Central Asian countries and the European TEN-T network as an alternative to the northern rail route via Russia. 
• The Nizhneleninskoye-Tongjiang railway bridge between Russia and China is now open making the traditional route 700 km shorter. 
• The extension of the normal gauge railway track between China and Vietnam is in the talks as a project that may actually take place. The countries have agreed to speed up this process. 
• On 28 November, Hupac will launch a new direct container service between Italy and China connecting Milan with Suzhou. 

Other

• OJ Commerce has reported Maersk to FMC. The complaint concerns alleged price gouging and collusion and contract breaches committed by Maersk. The debate regarding Maersk’s dominance in the industry is getting more and more intense. 
• Two freight trains collided near Giifhorn in Germany causing the closure of the Berlin-Hanover railway line for the weekend. 
• Representatives of french rail freight have asked for more investment from the government to make rail transport more competitive following the increase in the modal share of rail freight from 9.6 to 10.7% between 2020 and 2021. The association asks the government to help navigate through high energy prices, improve rail infrastructure, and bring back state aid to the rail industry. 
• During the European Silk Road Summit, it has been stated that over 2022 the number of trains has been halved on the Silk Road. The role of Duisport has increased thanks to its favorable location. Although COSCO divested from it, Duisport’s representative claimed that it would not affect the relationship between them. 

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.