News digest. 12 Aug
The US government passes the new generous infrastructure bill and tightens the grip around big shippers at the same time. The clouds are thickening above European rail as Germany expects more delays.
So far, it is businesses that have been suffering the aftermath of supply-side bottlenecks and increasing transportation costs, but in the future, as the situation does not seem to improve, the customers will take turn and feel the consequences of the increased demand too. Prices are expected to increase well into Black Friday and holiday shopping seasons.
Meanwhile, it is a triumphant week for the US ports as the Senate has passed a historic infrastructure bill, which will send $17 billion to the sector – an incredible investment amid to deal with backlogs, reduce congestion and emissions near ports and airports, and drive electrification and other low-carbon technologies. At the same time, Washington DC is taking additional steps to prepare the battleground against shipping monopoly. According to the Ocean Shipping Reform Act, recently introduced into Congress, there would be new minimum requirements for service contracts and greater powers for the Federal Maritime Commission. The bill is due for further discussion. However, the critics have already voiced their concerns, claiming that the new legislation does not include all parties –a protectionist race to the bottom in the regulation of international ocean transportation is not a winning strategy. Still, supporters prevail as more than 100 signatories have backed the new bill and seconded that carriers have abused the situation to their advantage. This is unacceptable especially since some of the supporters expect spot rates on the Pacific to crash through the $20,000/FEU mark by the middle of the month.
In addition, the capacity shortage is squeezing the last forces from the carriers as they try to find enough container tonnage for their extra loaders from Asia. For example, although Maersk announced two new loops between Asia (where more closures and disruption at the Port of Ningbo-Zhoushan after the chaos in Vietnam are possible) and the US west and east coasts for August, they require too many vessels – a luxury that hardly anyone can get.
According to the recent update, the US major ports will remain constrained in the summer months with the hardest hit Port Hueneme, Los Angeles, Long Beach, and San Diego. In addition, the number of ships at anchor is growing.
The already mentioned Port of Ningbo-Zhoushan is living up to the gloomy forecasts as one of the container terminals has closed due to a positive Covid test. Cargo owners are already having flashbacks to a Yantian-style nightmare. In turn, trying to solve the industry’s extreme container shortage, Shanghai has launched a new empty container transportation center.
India has proposed to include the Iranian port of Chabahar in the International North-South Transport Corridor. The hub already has prospects of becoming a transshipment point connecting India, Iran, and Central Asia. However, the main disadvantage is the lack of a railway connection.
A big part of the congestion occurring at intermodal rail terminals is under uncontrollable factors that is why when STB demanded the Class I railroads, to explain what they were doing to address the congestion occurring at the intermodal terminal, the answer was not that easy. In its defense, the company has assured that it is doing its best to optimize the movement of freight over our railroad and at the terminal, however, it is not responsible for shippers’ strategies and approaches.
The drivers’ shortage that has been the UK’s pain seems to last much longer than anyone has expected. At least, the government has conceded that the queues of lorries looking to cross the Channel are here to stay. As a result, it has expanded emergency powers to handle the queues into a permanent protocol.
Rail, the high hopes of the industry in the context of constant congestions and blockages, has been hit by the train drivers strike in Germany. Currently, 190 freight trains are at a standstill, which is devastating since the country is a European rail freight hub connecting the whole continent and a knot for intercontinental traffic. For this reason, DB Cargo is cooperating with German private rail companies to secure the operation of trains where possible.
Meanwhile, the increase in container rail traffic spills in Europe. The Port of Barcelona has grown 46% in the first half of 2021. The port has moved 161,735 TEU compared to 111,132 TEU moved compared to the same period of 2020. At the same time, the Port Authority of Valencia plans to foster technical assistance for the preparation of the Valenciaport 2030 Strategic Plan.
Amazon’s big hopes for drone delivery have proven to be dystopian. The initiative has failed due to the lack of skilled and advanced employees and overall too many promises that the company has made that could not be kept.
