EU | UK news digest. 30 May
Despite the soaring rates, European logistics companies are on the rails of expending their capacities. From Ireland to Norway, the new facilities aim for growth acceleration
For a brief moment, it might have seemed that the situation regarding the container freight rates had started to improve since some routes began to see pricing tail off, however, the numbers continued at elevated levels this week with no signs of decrease. According to data provided by FBX, the spot rate for Asia-North Europe climbed 9.1%, to reach $9,871 per 40ft, while another indicator, Drewry World’s Container Index (WCI) showcasing the Shanghai-Rotterdam leg stood at $10,174 per 40ft, a 3% gain on last week. Numerous shippers started to cancel their orders because the freight rates cancel out their margin; it equally affects the ones seeking long-term contacts. The forecast about the coming weeks is also worrying: transatlantic shippers are preparing a new set of GRIs and/or peak season surcharges, ranging from $500-$2,500 per TEU. The WCI has also shown that the composite index of eight major routes worldwide went up by 2% 6,257 from a week earlier. This is a historical record: the numbers are 12 times higher than the amount of TEU ordered in the first five months of 2020 and more than 60% higher than the last record that occurred in 2005.
While the shippers are unable to adjust to all the uncertainties shuttering the market, the industry is experiencing a soaring splurge in volumes (they are currently 300% above what they already were) combined with an alarming shortage of drivers. It is time to operate at a higher speed and make the supply chains more agile. Many haulage operators see the government as the main driver of change and demand practical actions; otherwise, the situation will escalate to a threatening state. Logistics UK has backed this request and, in addition, strongly criticized the government’s New Plan for Immigration, closed on the 6 May 2021, which would introduce changes to the penalties imposed on logistics businesses and their drivers regarding vehicle security and migrant incursions. People-smuggling gangs are indeed a big problem in the UK, however, the business group states that the new measures may critically affect the haulers and drivers who may become the unwitting victims. In the framework of spikes in demand and the growth rates, it is not strategically wise to deprive the vehicle operators of any defense and put them at risk. Not only the British government is advised to reconsider its agenda, but also this week the BVRLA has addressed the launch of the CAZ (clear air zone) in Birmingham planned on June 1. With the expected rates (daily £50 charge to enter the zone, £8/day for non-compliant cars), the BVRLA suggests that around 60% of the 200,000 vehicles that enter the city center each day could be affected.
In times of instability, any glimpse of a positive prognosis becomes particularly crucial. The Port of Hamburg Marketing has predicted that container traffic volumes will stabilize in 2021 and that it expects the hub to handle 8.7 million TEU. China, the port’s biggest commercial partner (16% increase in trade) is the biggest contributor to this improvement. Besides, Mercer Holz is planning to increase its efficiency regarding the transportation of wood. Thanks to the new wagons by TRANSWAGGON, the company wants to acquire a more homogenous fleet without changing rail cars for each different shipment. British DP World Southampton follows suit by receiving the new generation of environmentally friendly HMM ships. They will be deployed on the Asia and North Europe trade lane.
If for some countries Brexit has become a stumbling rock in attempts to overcome the crisis, Ireland seems to be extracting the benefits. A good example is the upgrade of the Amsterdam-Dublin container service by Samskip. The company started moving cargo with a larger, faster ship, which now also calls at Port of Waterford, a hub in the making for UK-Europe trade.
Norwegian terminal Narvik is also planning an expansion of its capacity. The new 30 million euros project is aimed to increase the current number of TEUs (30 000/year) that the terminal is handling to 100,000 TEUs per year. The construction is expected to start this coming fall and conclude by 2023. As for the Port of Oslo, it will receive three electric stacker cranes on 29 May 2021 as part of the plans to improve the sight’s performance.
Some experts believe that success will be determined by the three-dimensional approach that includes hinterland connectivity, investments in intermodal, and the development of the rail sector. The Spanish government is investing €6 billion to connect hinterland facilities with the major urban ports through rail networks in the future. The Mosnov Multimodal Transport Terminal will connect the Moravian-Silesian region in the Czech Republic, as well as neighboring regions in Poland and Slovakia. Mediterranean Shipping Company (MSC) UK has renewed its partnership, which began in 2002, with GB Railfreight (GBRf) with a new five-year deal, so despite the challenging reality, the European companies are focused on strengthening the connections with each other.
The Evergreen deal has not been resolved yet. Egypt has added its say, stating that the sheep moved indeed too fast and the size of the vessel contributed to the accident. The SCA has said that Shoei Kisen is willing to pay $150m in compensation.
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