Asia | US news digest. 26 May
Hot growth blasts the cargo market
According to recently issued Intermodal Quarterly Report by IANA, total first quarter intermodal volumes amounted to 4,616,262 units, marking 10.5% annual growth. All domestic equipment category, which is comprised of trailer and domestic containers, saw a 6.3% increase, and international containers, rose by 14.8%.
In the US demand for trucking capacity increased during 2021, and the biggest shortage is seen in the supply of truck drivers. According to experts, from April 2020 to April 2021 shippers’ requests for moving loads increased by 577%, while postings of trucks available to move loads were down 17 percent.
Georgia Ports Authority (GPA) has reported a 38% year-on-year increase in container trade for April, with the Port of Savannah handling 466,633TEU in what turned out to be the second-busiest month in the year.
In an attempt to reduce port congestion and cut emission, this week the US Department of Transportation’s Maritime Administration (MARAD) has allocated $10.8 million for America’s Marine Highway Program (AMHP) designed to further integrate coastal and inland waterways into a unified transportation system that would provide container on barge services on commercially navigable waterways.
Increased demand and supply are not the only factors wreaking havoc in global shipping networks. Cyclone Tauktae has recently forced the Indian port of Pipavav to shut its 1.35m teu capacity facility, causing containerships to re-route and discharge containers at other ports such as Nhava Sheva, Mumbai. This morning X-Press Pearl, 2,700-teu ship, carrying 25 tons of nitric acid, suffered an explosion in Colombo port of Shri Lanka. .Shri Lanka is deploying aircraft and navy vessels to assist in combating the fire.
In this time when availability of containers is of the utmost importance to shippers, China’s lead in container manufacturing cost per unit, cheap labor and low repositioning costs make China’s competitive advantage on the global scale unbeatable. According to experts, three Chinese factories nowadays build more than 96% of the world’s dry cargo containers, and 100% of the world’s refrigerated containers.
Amidst escalated growth of ocean shipments, European freight forwarders Maersk and Hapag-Lloyd have increased their lease rates for 20’ and 40’ feet containers on routes from North America to Australia and New Zealand, and from Indian Subcontinent (ISC) and Middle East to North America. The rate increase is expected to take effect in mid-June and July.
China-Europe rail freight is also benefitting from the overstretched container shipping market. As reported by CNDRF, the number of Silk Road train trips grew by 24% year-on-year in April to 1,218, marking a 33% increase in volumes to 117,000 teu. The demand for rail freight is also on the rise across South East Asia. For example, Shanghai-based Crane Worldwide Logistics is now moving cargo via rail from Japan, Korea and Vietnam.
Turkey’s role in New Silk Road hub is also growing. Thus, on 24 May, two trains with 41 containers carrying 250 tons of melamine-coated chipboard departed from Izmir, Turkey to China. They are expected to travel through the Middle Corridor and the Baku-Tbilisi-Kars rail freight route and reach Xi’an in 12 days.
Development of the Laos-China Economic Corridor is picking up the pace, as the Kunming-Vientiane rail link is getting closer to completion. A new 414 km railway line is intended reconnect China and Southeast Asia, stretching from Boten, on Laos’ northern border with China, to Vientiane, the Laotian capital.
According to experts, as the apparel sector is set to grow by 8.2% globally in 2021, Asia’s current 38% share of the global spend in this market is expected to increase to 41% by 2025, boosting demand for ocean and rail freight across regions and countries.
Building a premier railway connecting Mexico-US-Canada freight network has inspired the recent US$30 billion merger deal that was reached last month between US-based KCS and Canadian CN late last month. Kansas City, Missouri-based KCS’ network connects the US Midwest to ports along the Gulf of Mexico. Its system also reaches deep into Mexico.
High airfreight rates are making freight forwarders come up with new freight business ideas. Thus, Panama-based carrier Cargo Threehopes to launch cargo charter services delivering 40 tons per week to the US aboard a 38-year old converted A300-B4.
