News digest. 14 Oct
The drop in congestion has not lasted for long. The new epicenter has emerged, this time in the UK.
The hopes to see the ease of congestions last for a bit longer have been crushed way before shippers had a chance to gulp fresh air as UK’s Port of Felixstowe has added up to the chaos. The notoriously famous drivers’ shortage has contributed to an immense backlog of the port that handles a significant amount of the UK’s containerized freight. The delays will affect all sectors from marine to retail and if the ice does not break, they can potentially impact nearly $2 billion of trade imports. As congestion continues, such big companies as Maersk chose to anticipate the problems and divert ships from Felixstowe. Sleepless nights are ahead for everyone trying to get out of the blockages as well for the Ports of Los Angeles and Long Beach that are officially expanding their operating hours to 24/7 schedule. The government backs the decision. Big retailers are also going to use night hours to move their cargo. Although the sector is still deep into a soaring demand, there are indicators that consumer behavior will eventually stabilize and now it seems to be shifting towards services. The question of “when” it is going to happen remains unsolved. The future is a mystery, besides, it is better and more pragmatic to focus on the present especially when the US congestion spills further in Asia. If before it was mostly Chinese blockages affecting the countries across the Atlantic, now it is vice versa. Normally outbound containers are moved into yards in the port to await loading, but because of the worsening congestion in the US West Coast ports, shipping schedules and high volumes of transhipped cargoes from China have led to a relentless arrival of outbound containers. As a result, Busan is becoming increasingly congested and forcing the officials to create temporary storage from the hinterland of the West Container Port in Busan New Port. A further increase in spot rates is probably right around the corner. According to the predictions, on the global scale, consumer inflation will hit 4.5% by the end of this year with container freight prices and soaring commodity prices highlighted as a big contributor, adding 1.5% to the countries from the G20 list economic state.
It is obvious shipping sector is one of the biggest and hulking when it comes to change. Indeed, the industry moves 80% to 90% of the world’s traded goods. From the environmental perspective, it contributes to 3% of global greenhouse gas emissions, so consequently, shipping has to contribute to the reduction of emissions the most. To put it in numbers, 70% of the shipping industry’s energy mix needs to be green hydrogen-based fuels by 2050. Experts claim that a realistic carbon levy will be critical, putting an adjustable carbon price on each fuel to prevent new fossil fuel investments and stranded assets. However, to follow the deadline, a much faster pace should be implemented.
Congestion is not solely a marine phenomenon. To resolve the bottleneck on the rail, a new, large logistics center is going to be built in Malaszewicze, Europe’s main gateway on the New Silk Road in Poland. Despite the promising future, the construction will take significant time and investments, so In the meantime, delays will be the ultimate part of the daily routine. It is not only the EU’s headache – the total rail freight volume in Horgos, China’s closest port to central Asia and Europe by land transport, is up to 48.5% year on year leaving the country no other option but to develop intermodal. This is where partnerships become the biggest assets, thus Bangladesh CCBL is going to build a rail Inland Container Depot in Chittagong to boost the transportation of containers by trains. Among other developments, is the vigorous attempt of Hupac to strengthen its positions by taking over the operations of the Novara CIM terminal in northern Italy through a subsidiary. The company went further and projected further investments in upscaling of its services. Meanwhile, France taps into an interesting rail-river alliance. SNCF Réseau and VNF want to work together and improve operational complementarity between rail and river networks to enhance the modal shift. The focus will be on transparency, cooperation, and digitalization. Waahaven South in the port of Rotterdam sees a temporary solution for its fire extinguishing system. Although the final one is yet to be implemented in 2023, the current change might allow the terminal to continue operating.
Post-pandemic talks to some extent remind of discussion about post-apocalypse. Well, taking into account the cost of all the disruptions, it does seem like one. Resilience is equivalent to the new armor that will protect the industry like a shield. When it comes to airfreight, the outlook is bright no matter the challenges. World trade is forecast to grow at 9.5% this year and 5.6% in 2022, e-commerce continues to grow at a double-digit rate, therefore, joint efforts and modernization should be the man pillars. Moreover, let’s take the positive effect of the mentioned e-commerce – south-it is a great opportunity for intra-Asia trade, as investments are already pouring into improving cumbersome cross-border logistics.
