EU | UK news digest. 10 June
MSC is vigorously moving towards becoming the largest carrier. What does it mean for Maersk?
A monumental milestone is approaching for MSC in its buying spree as its fleet capacity edges above 4m TEU. It is on the cusp of overtaking 2M partner Maersk and becoming the largest carrier. The gap between the two industry giants is just 106,000 TEU. In contrast, with 40 vessels, representing 724,000 TEU, under construction, MSC has the largest orderbook of all the container lines. The company has demonstrated a significant expansion that accounts for 4% this year.
With consumers reverting to spending their money on services in post-pandemic world and the frontloading of goods, importers are facing a looming threat to demand. The biggest challenge will be for carriers locked into long-term expensive charters because the soaring freight rates have forced them to charter extra tonnage, driving daily rates to high levels. However, according to the recent update, the freight rates carriers are currently able to charge, both on the spot and long-term contracts, are more than enough to cover the higher charter rates. When the average shipping cost per TEU was around $1,000, many lines reported achieving an average rate per TEU of $1,500, with more increases set to work through – it illustrated just how profitable today’s market conditions are. However, carriers need the high freight rates to continue for some time to insulate them from the cost of their long-term charters.
Long-suffering cargo owners have to brace against further contagion of the Port Yantian. The analysts warn that the disruption would eventually spill over and disrupt European and North American markets. Since the end of May, the Alliance has canceled or transferred 29 calls and confirmed omissions running up to June 25. Operations in YICT’s eastern area of the terminal – where mother vessels mainly berth – continue to experience low productivity, which is about 30% of its normal level, while all operations in the western area of YICT have been suspended until further notice.
In Italy, the tax police have seized assets worth more than $24 mil. from the local unit Deutsche Post DHL as part of a fraud investigation. The company has already stated that it has always complied with the law and will provide to the investigators all the needed cooperation. Milan prosecutors allege that an unnamed company that identifies itself as a Deutsche Post DHL’s unit failed to pay value-added taxes and pension contributions due for staff by relying on contractors instead of hired workers.
The road transport market demonstrates a more positive forecast regarding a post-pandemic recovery. European road freight spot prices jumped by more than 8% in May to a three-year high as available capacity plummeted to a three-year low – experts attribute it as a positive sign. Transport capacity and prices on the route between France and Great Britain are developing in line with the trends observed in the overall market. Compared to the previous month, transport capacities on the corridor fell significantly – by 25.4%. They now stand at 88.1 index points.
ArcelorMittal plans to add 1,200 new wagons to its Ukrainian fleet during 2021-2022, which will increase its owned fleet by 1.5 times, to make its supply chain between the two sites and customer run smoother. The new Theemsweg route in the port of Rotterdam is about to be connected to the Harbour Line. Although it is good news, it also means that the crucial rail freight corridor will be unavailable for six days in the first week of November. However, the initiative is excepted to pay off – it is an important strategic step forward because there will be more rail capacity and the perpetually disruptive Calandbrug will finally be replaced by a piece of new railway line in the largest port of Europe. The New Silk Road acquires a direct connection between Shanxi and Paris.
In Austria, a legal amendment has been proposed to increase the transport of waste by rail in alignment with the EU green strategy. Currently, 80% of this waste is still transported by road, although the cargo type is very suitable for rail transport.” To ensure the CO2-neutral supply and disposal chain for commercial and industrial parks, the ÖBB suggests making a rail connection a prerequisite for the approval of commercial and industrial parks in the future.
Britain’s changing economic profile has highlighted the need for more rail-served warehousing because the model of a trading economy is now far more dependent on distribution than manufacturing. That new pattern of demand is driving the development of a network of designated Strategic Rail Freight Interchanges (SRFIs) – purpose-built to handle distributed goods, primarily in intermodal containers, but also serving growing markets in express freight and high-speed parcels.
Lufthansa and United have demonstrated a relatively good resilience to the crisis thanks to their transatlantic cargo joint venture. The two companies are no focusing on deepening the partnership by accelerating connection and data exchange to provide joint solutions to customers.