EU | UK news digest. 29 July
For some, through-the roof rates are another burden, while for others, they are a gold mine to explore – how containership owners build fortunes.
Four months later, the prodigal son, Ever Given, full of containers, carrying more than 18,000TEU, has arrived in Rotterdam commemorating the end of the notorious saga. Containers for Hamburg will be loaded later onto Ever Utile to continue the journey to the German major port.
The dynamic of the spot rates remains the same – they keep increasing. Freight rates from Rotterdam to New York grew 5% to US$5,624 per FEU. Rates on New York to Rotterdam are on the last week’s levels. British Freight Association only proves that the situation will be evolving in the outlined by external circumstances vector. The shortage of landside transport will remain, whilst carriers will not accommodate low yield freight. For containership owners, it is nothing but the great news and the opportunity to strike the gold mine by fixing their ships on lengthy periods with ocean carriers at highly elevated daily hire rates.
Meanwhile, the circumstances do not seem so bright for shippers. They are now facing the sourcing issue: it has to be shifted. A recent survey of North American manufacturers has revealed that 83% are likely, or extremely likely, to reshore sourcing. The first push for it was the tariff war between the US and China when companies had already begun to shorten their supply chains. There are now two camps: first are diversifying their supply chains to reduce the risk of single- or limited sourcing, while others look to production closer to their markets or bringing production in-house. Both approaches have their pros and cons and it is up to the shippers to make a choice based on their initial needs.
Another shift that is unprecedentedly needed in the industry regards the drivers’ shortage. For a long time, Brexit was considered the root of the problem and as a result, it has sucked the oxygen from the true causes. Experts advocate for the government to focus on such challenging aspects as long hours, poor wages, diabolical facilities, and loads of responsibilities – for which drivers receive very little recognition. There should be a reset in the mindset while it is not too late.
In the veiled race of vigorous fleet expansion, MSC has taken the lead thanks to the latest decision of CMB Financial Leasing to buy vessels from Guangzhou Shipyard International for a long-term lease to MSC. Now it has a total operating capacity of 4.08m TEU. As for the intermodal abilities, Maerks strikes with the launch of weekly intermodal rail service in Bulgaria connecting the port of Burgas with Plovdiv and further to Sofia. It is a purely strategic decision – entering the rail transport market even for short distances facilitates two things: the trust of shippers and big customers due to its efficient performance and a cultural shift in the mindset of shippers who now look to alternative ways of transport.
Another important service that has been started recently is organized by the Vietnam Railways and operated by Ratraco. It is the first direct rail freight connection between Vietnam and Belgium that promises to become regular. However, the intermodal shift is not going smoothly mostly due to challenging weather conditions. The floods that have hit Belgium, Nothern Europe in general and Asia have caused major delays, although there are critics who doubt the context of the disruptions and even conduct the investigations. In addition, there is a lack of equipment and a shortage of rail cars available for transloading at the borders.
While there is an ongoing tendency of switching from ships to rail, Ukraine is shifting to road. Recently it has increased the track access charges for rail freight operations, which, consequently, will push more companies towards road transport. Experts claim that logistics providers simply will not tolerate the higher tariffs. The decision will backfire at Ukrainian Railways that will lose way more income compared to if they maintained their track access charges lower.
Meanwhile, an alternative for Belgian rail transport between the Flemish seaports and the Mediterranean Sea appears thanks to the reopening of the Artère Nord Est in northern France. The whole line is an important rail freight corridor connecting the ports of Antwerp, Zeebrugge, and Ghent with the south of Europe and due to the floods traffic has been heavily constrained. Among other positive achievements in rail is the increased number of weekly trains between Rotterdam and Bavaria in southern Germany signifying the rise of the route capacity. In the light of the growing demand of shippers towards the Dutch port, it is extremely beneficial for the industry.
As a part of its public sector reform, the Moroccan government will sell a 35% strategic stake in the Societe d’Exploitation des Ports, to Tanger Med for 600 mil. The partnership is also expected to enable Moroccan industrialists, importers, and exporters, with a more efficient and competitive service offering.
