EU | UK news digest. 6 Aug
Diving deeper into unknown waters – the unchartered territory.
Although everyone understood (and then witnessed) what impact the combination of high demand, under-capacity, and supply chain disruption would have on the shipping industry, nobody could have expected that long-term contracted rates would jump to 28.1%(compared with June) and blow the previous record of 11.3% in May 2019. The hike of this magnitude is a clear indicator of how constrained the industry is now. Experts are anticipating companies’ next move – big changes are looming over and it is a matter of time when we all see how significant they will be from the global perspective.
Average hire rates have jumped by almost 47% just in one month. While chartering fraternity is looking for the right words to describe the astonishing situation, it is crystal clear that the market is deep into an uncharted zone. S&P deals are now fully controlled by liner operators as they buy ships and then flip them around to a tramp owner along with their charter-back at a corresponding rate.
The capacity turmoil in terms of equipment also adds logs in the fire. Despite the developing volumes, the obstacles regarding it can hold an explanation of the current shortages. In comparison to the historical average, these days the factor indicating TEU of equipment in circulation has dropped. Companies are wishing to become asset-light but this intention is strongly affecting the delivery time, as equipment shortage is the bottleneck of the industry. Moreover, the issues will take significant time to resolve since the annual production output is capped at 4.5 mil. to 5 mil. TEU, so none of the important factors is in favor.
More factories are shutting their production down due to the new lockdowns in China and Vietnam. Among them are already Toyota, Honda, and Nike. None is left unaffected – many electronic companies are struggling with keeping up their production sights up and running because of the complicated situation. Ships continue queuing in the South China Sea.
Rail is doing moderately better, although the definition of “better” can hardly be identified in the current context. DB Cargo UK is planning to lease its Mossend EuroTerminal rail freight facility near Glasgow to Maritime Intermodal. The latter is extremely important as it allows facilities for changing between diesel and electric traction.
To provide further support for the growth from Intra-European feeder networks, Peel Ports has made an investment in two ship-to-shore cranes for the Port of Liverpool that will significantly enhance the Port’s capabilities for ACL. It also further compliments the Irish Sea hub proposition connecting the world to Liverpool and the largest consuming and exporting region of the UK. The crane development also occurs in Budapest. The repair of one of the two cranes at the BILK terminal has reached its final stage. Reconstruction work is underway.
In airfreight, the shortage of handlers has led to some companies losing about one-third of their capacity. German and Belgian airports are reported to be among the worst affected. As the flights are coming back, there is a lack of skilled workers and this technical unemployment cannot be reversed shortly. The situation is evolving very fast, so the best strategy is to be dynamic and reactive. Some companies have begun to cut or suspend short-time work for ground staff, while their handling arm is currently hiring.
A period can finally be put at the end of the Ever Given’s epos as the ship has arrived in the Port of Felixstowe, in the UK, four months after its initial schedule.
