EU | UK news digest. 3 June
While the sea rates are high, the railway industry strives for growth in its full span.
A significant increase in freight rates facing the industry worldwide has brought crucial consequences for lower-value commodities such as furniture and large electrical and electronic appliances that are becoming priced out of the main intercontinental freight markets. The assembled furniture is the worst hit with the freight rate now accounts for up to 62% of the retail value of the goods. In case of appliances, the freight spot rate now accounts for up to 41% of the retail value for large appliances and up to 27% of the retail value for small ones. Logistics companies are dealing with the following dilemma: to pay spot prices of $12,000 to move a 40-foot box from Asia or to pay a rate that their products could not sustainably support to get the ordered goods to customers. The technical advances also do not come in handy when dealing with the crisis - Maersk Line has confirmed that a failure of its booking systems was not due to a cyber-attack, but rather the result of a technical failure. It is not the first time it collapses, so the company is determined to take a close examination of the cause of the problem. It is impossible to expect any sort of uncertainty to appear in sight, according to the recent surveys, there is little unanimity among air cargo shippers as to the outlook on rates. For example, on the Asia-Europe route, 46% of the sample anticipate that prices will be stable in August when compared to end-March levels – stability being defined as upward and downward movements not exceeding 10%. Many do not share the same opinion. As for transatlantic shippers, there are also dipping their toes in what their counterparts on the transpacific have been dealing with for some time since the increase in spot rates has not omitted this sector either. The ones for westbound containers last week were almost double those charged at the end of March. Meanwhile, container rates in Europe climbed 57% in the first four months of the year, largely helped by a 30% surge from March to April. Another stumbling rock impacting the situation is the Extinction Rebellion of the climate activists that have been protesting for days, blocking roads and the Köhlbrand Bridge, an important traffic artery in the Port of Hamburg. As a result, Maersk and MSC have decided to exclude Hamburg on the next four voyages and divert into Bremerhaven which is going to further disrupt already stretched supply chains and impact port congestion at the container hubs of North Europe. Maersk has also voiced its opinion on the initiative regarding future sustainable policies regarding a more harmonious legal approach - a global tax of at least $450 per tonne of fuel oil in the medium term at the current oil price.
Complexity is added by the new post-Brexit trade regulations. UK business is looking for workarounds to continue trading with the EU after Germany announced it would be ending VAT exemption for goods valued at less than €22. Such companies as DHL try to take pre-cautious decisions by informing customers of the pending change. In turn, FedEx Express, to simplify the arrangements, announced that it had reached an agreement with KPMG to offer a streamlined IOSS solution at a discounted fee, which it said would help e-commerce sellers outside the EU comply with the new rules.
A major shift is continuing in the rail freight sector. It started in 2020 with the Netherlands seeing a 6.2% drop in goods transported by rail. The transit from Belgium to Germany decreased by 20.6% in 2020 to 1.3 million tons compared to the previous year. Many countries in Europe have enabled access to rail at a reduced or even nullified rate to support railways during the pandemic. However, due to the administrative backlog, not everyone will be compensated. The notoriously famous Suez Canal blockage has forced more companies to Eurasian rail freight. Germany-based Fressnapf Group put its products on the aforementioned tracks for the first time and not only reduced the distance in half, but also dropped CO2 emissions by 75%. To expand transcontinental rail freight volumes Kazakhstan’s Eurotransit and Hungary’s East-West Intermodal Logistics Service (EWILS) have signed a strategic cooperation agreement. They are planning to build a new facility in line with EWILS’ East-West Gate (EWG). In the UK, GB Railfreight has set the objective to transform one of the largest potential development sites in the East Midlands into national distribution, logistics, and rail freight hub. DP World’s deep-water ports at Southampton and London Gateway have become the first two locations in the UK to handle Freightliner’s new 775m intermodal container trains.
The Polish LOTOS Kolej has entered the Lithuanian transport market. The Polish carrier signed a cooperation agreement with Lithuanian LTG Cargo enabling it to transport cargo through Lithuania to Poland and other neighboring countries. The Kolin terminal in the Czech Republic will be connected to the Halkali terminal in Istanbul thanks to the Turkish logistics company’s (Mars Logistics) new launch. Another company Turkish Pasifik Eurasia has partnered up with the Austrian Rail Cargo Group (RCG) on the New Silk Road, establishing the Turkish Köseköy terminal nearby Istanbul as a new hub. Haropa Port, the maritime complex comprising the ports of Le Havre, Rouen, and Paris, has launched the Seine Axis Major River and Sea Port, the fifth-biggest hub in Northern Europe.
Ports of Stockholm hosted Sweden’s first container barge shuttle service on inland waterways between Stockholm Norvik Port and the Port of Vasteras. Services will be operated by the German company Reederie Deymann, which introduced the EU-class inland waterway container barge into Lake Malaren to operate services linking the two ports.
