News digest. 11 Sept
The first month of fall brings not only cooling of temperature but frozen rates and “chilly” imports worldwide.
They kept asking and the pleas have been heard. The never-ending rise in spot rates seems to have finally started to slow down. Although none of the current challenges has been resolved, and market-driven rates are expected to grow, CMA CGM has decided to put further increases on hold until February and focus on the improvement of its services and expanding a much-needed capacity. A relief for the forwarders? It is still unluckily as rates will remain sky-high, squeezing the last bids out of the players, while CMA CGM drapes itself in the hero gown and strives for new developments at the same time by signing a concession agreement for a new terminal at the Khalifa Port with AD Ports Group. In addition, shipping lines keep rejecting allegations of unfair competition. Some have recently claimed that they are operating within the conditions dictated by the market. Shippers and forwarders do not buy these tales especially since the situation remains worrying – if things do not change, many smaller shippers could be bankrupt before Christmas and moreover, if the shipping lines tighten their grip on the container supply chain, many independent forwarders can simply disappear. However, the possible adjustments might be coming from Asia to North Europe direction where after Chinese holidays demand has started to drop. As the result, some of the companies have already reduced the October Shanghai to Felixstowe rate offer to $15,000 per 40ft, which is some $2,000 to $3,000 below current prices. At the same time, it is a good moment for China to take a break and switch its focus on more local advances – it is now back at pushing autonomous vessels. Its first one will start service this October.
This fall also brings a trend of decreasing imports in the US while the pandemic-related disruptions continue all over the world. Despite the fact that experts predict August to be busy and numbers of the TEU handled to be still high, they will fall short of the 2.37 million TEU forecast for August a month ago. September is forecast at 2.21 million TEU, which would be up 5.1% year-over-year. Further cargo delays are anticipated as there are dozens of ships waiting at anchor to unload at the Ports of Los Angeles and Long Beach. The congestion chaos puts the industry at the risk of a collapse in the coming months that are going to be the most crucial for the industry because of the approaching Christmas. Everyone braces up against the challenge. Even the big retailers such as Amazon, Ikea, Walmart, Cargill and Louis Dreyfus have a say at the round table with the FMC on policies relating to the competitiveness, reliability, integrity, and fairness of the system in the current context of the crisis.
Joint efforts are great but it is not what DB Cargo can show off. In addition to the heavily its loss-making rail freight division, the company is on the setback due to the damaged reputation after the union strikes. What also does not help is the fall in the market share of rail freight on the German transport market from 19% to 17.5%. As a part of a rescue plan, the company is pushing forward the alternative transport but shippers will now think twice before entrusting their cargo to a company whose employees are at war with management. However, when one empire falls, there is always another candidate that could potentially replace it. For instance, Kombiverkehr is offering a new intermodal route between Germany and Austria. It is not only environmentally friendly but also creates access to new facilities for Austrian shipments.
Airfreight is on the defense of agility in the wake of mounting customer demand as the logistics giant DSV is expanding its long-term own-controlled freighter capacity thanks to its service for customers who need consistent and scheduled uplift in a turbulent market. Finally, Shanghai’s Pudong airport is slowly coming back on-line after a Covid lockdown and the company expects things to get better, however, it is still too early to predict any major improvements.
