Asia | US news digest. 8 July
As soon as the Ever Given’s saga has come to an end and Yantian seems to have sighed with relief, Europe-China rail freight traffic is under a threat of being cut. Misfortunes never come singly?
Keeping a sense of perspective when it comes to contract rates is almost impossible as they keep rising due to the strong demand in the U.S. Recent data demonstrates that the index for the State’s imports rose 9.3 and resulted in the benchmark being 36.9% higher than in June 2020. Experts state that no relief should be expected all the way into 2023-2024. This is extremely alarming especially when dwell times at the major ports in and around Shenzhen remain disruptively high. With Yantian no longer blocked, things do not seem to be improving – the sanitary measures could extend into the year, impacting seasonal shipments as far out as Christmas. However, such companies as Maersk cautiously resume the main lane’s services.
In addition, ocean carriers have left the S&P containership market dry by outbidding one another to acquire tonnage to insulate themselves from increasing daily charter rates. Data reports that there are around 301 containerships, changed hands in the first six months of the year, as carriers and non-operating owners tried to take advantage of the disconnect between ship values and charter rates.
Chronic supply chain delays have been a burden for the U.S. ports lately, but not everything about them was negative – California law enforcement authorities have announced that a recent influx of illegal fireworks could have been worse. However, the ports are still struggling with a massive backlog and upstream capacity.
Shortages are the recent plague of almost every industry. For instance, Ford is limiting or even stopping production at its multiple manufacturing facilities, affected with weeks of downtime, because of the global shortage of semiconductors.
Another log in the fire is Belarus that wants to ban the transit of EU products going to China. Rail freight is going to be hit the hardest due to the imposed sanctions by the EU. Belarus promises to fire back with the same measures, although it is still uncertain whether the announced plans are going to be implemented or not.
Meanwhile, rail does see further development with the latest UK service from Xi’an to the port of Immingham that will become available for eastbound services, increasing capacity. The uniqueness of the route is also justified by the fact that it reloads the cargo onto vessels from the port of Kaliningrad, rather than a western European port.
Despite the continuous challenges, the market’s speed keeps going with the new deals. Samudera Shipping Line sells its feeder boxship Sinar Bima to an undisclosed third party for $12.5m as part of its fleet renewal plan. The company has made a strategic decision since due to its size and specifications, Sinar Bima is not the most efficient vessel for the sea routes that the group operates. Others follow suit and expand the assets – Seaspan Corporation has entered into long-term charters worth more than $1.5bn with ZIM for the LNG-powered containership newbuilds. TS Lines has become the latest carrier to sign for four ships with Shanghai Waigaoqiao Shipbuilding. NBOSCO gets in for a trio of 3,300 TEU newbuilds at Yangzijiang Shipbuilding. The fastest-growing container line in geographic terms this year, China United Lines, is planning to take its bow on the transpacific. It has ordered six new ships at Chinese yards to go alongside its existing 19 vessels.
In contrast with ocean freight, average global air freight rates went down by 10% in June compared with the year-to-date high seen in May due to a drop in average dynamic load factors that was reflected in price declines. If rates continue to decrease, they are expected to take capacity out of the market, although load factors and rates will stay elevated.
Vietnam, being an exception to the current rather negative context of the countries’ supply chains, is experiencing a boom in trade. Unfortunately, it might not remain like that for long with the Southern commercial hub Ho Chi Minh City, the current ‘hotspot’, being under lockdown.
Addressing the issue of driver and truck shortages, Geodis has acquired the assets of US freight brokerage firm Velocity Freight Transport, expanding its freight brokerage capacity in North America. It aims to expand its solutions offering in the region at a critical time.
