News digest. 18 Sept
No Time To Die or Skyfall? For those vigorously moving forward by drowning forwarders, the current state of things is a win, for the latter – another nail in the coffin. The airfreight is also letting it crumble.
As the market moves into the third quarter of the year, experts have started anticipating annual forecasts. In comparison to Q2, they are expected to be much higher thanks to constantly changing demand patterns, bottlenecks, and other disruptions in the supply chain that cause a higher than normal volatility. Besides EBITDA, volumes will not slow down as well, and ports all over the world will have to brace up against another challenging period. The increase will be a matter of not just the coming month, but years setting up the scene for the “new normal”. As a result, average utilization rates will increase from 67% to over 75%. The world is already struggling with the congested ports and in the future, for the sake of the adjustment, improved data flow can be used to materially reduce the time taken for containers to transit the port and consequently increase capacity. Other than that, one cannot control the weather that recently has been causing trouble to the facilities worldwide. As one of the temporary solutions, the ports of Los Angeles and Long Beach are going to extend operating hours at truck gates to reduce a massive backlog of containers gumming up supply chains. The measure will provide only immediate relief and will not last for long.
Another thing that also was not destined to last in the first place is the charter rate reduction on the Asia-North Europe tradelane. One step backward, two steps forward just to create some fuss and stay at the same dead point.. The new surcharge of $2,000 per 40ft introduced by Maersk has broken all the intentions to cap the carrier rates increase into pieces. New players have to join the club of those who decided to charter or commission the chartering of additional container shipping capacity on their own.
If one thought that a possible alternative way out of the clownery above is by air, they would have to reconsider. Freight rates from Bangladesh have almost doubled in the past month, with rates to the US now at about $12 per kg, to Europe $5 per kg, and $4.25 to the Far East. The scapegoat is, as usual, the increased demand that outruns capacity. In addition, aircraft were flying without at least 20% of their shipments, due to a failure to hand over cargo in time. It will only get worse because with the holidays looming in the distance shippers will try to move inventory in an already constricted capacity market. Companies that still have the resources to launch the new survives do so – JD.com introduced an air cargo service between China and the UK, its first regular freighter offering to Europe.
Flash warning: more congestion is on the way. Although some companies are starting to move goods from Bangladesh by feeder vessel into Colombo and from there either flying it to its destination or using trucks from India, they are still afraid of the COVID outbreaks. The crisis stretches from Asia to the US where there are 38 container ships waiting to enter the Californian ports, equating to a total of 228,955TEU. The unprecedented situation leaves experts torn. Some believe that things will slightly improve because the current case is caused by the increased time taken by containers to complete their voyages, and this will luckily abate. The majority of the expert sorority claims that the end is nowhere near and targets Chinese Lunar New Year 2023 as a possible point for relief.
However, there is No Time to Die. Recently CMA CGM has already appeared in the hypostasis of the hero capping the spot rates, and now it is the official partner of the new James Bond film, No Time To Die. The title is symbolic and perfectly describes how even the biggest players on the market are doing whatever it takes to stay in business. More than 1,000 containers were mobilized for the shoot, after all, the capacity shortage has been here for so long… one or two days of rent will not make a difference, won’t they? CMA CGM has nothing to lose anyway as it has recently added another order for six LNG dual-fuelled 7,600 TEU ships.
Meanwhile, the green train is moving forward. The VTG has completed a trial with the transport of liquefied natural gas by rail. The imitative serves the company’s belief that rail is for the first time a fully-fledged alternative not only for inland shipping, but also for road transport and pipelines. Many experts support the premise and claim that no progress in the direction of sustainability is possible without investments in rail infrastructure.
Intermodal follows suits and gains some significant moves in its piggy bank. MSC has lodged a bid to take over Brazil’s Log-In Logistica Intermodal. Log-In has seven feeder boxships in its logistics portfolio that can be a valuable asset for MSC. Another thing is that Cargobeamer and Eurotunnel have joined to provide a new intermodal service between Ashford in the UK and Perpignan in the south of France. The number of departures will also increase as the peak season approaches.
