News digest. 2 Oct
When lights go off, what will ignite the hopes of shippers? More disruptions are on the way.
As China dives deeper into the darkness in a quite literal sense, more disruptions are being caused by the electricity supply reduction amid the slash carbon emissions. The problem is, nobody knows how long it will take and some state that the power cuts will be extended all the way in October and it will add more uncertainty to long-haul container shipping since factories simply ill nit be able to produce goods. This is making the shipping lines go practically crazy – if before it was just difficult to book a vessel, now it is becoming impossible because the lines rip up agreements and leave the forwarders in the darkness of uncertainty. They are planning to “lie low” at least until after the Chinese New Year holiday in February, when the lines believe they might start to need to ask shippers for cargo. However, it does not cancel the desperation of shippers to move their cargo, thus they are left with nothing but the alternative of cycling through one forwarder to another in the attempt to find a more profitable option. These continuous searches paired with goods stuck at ports are about to cause the shortage of important items such as garments. This is especially true for the US market. Some companies try to anticipate obstacles and use their various connections extended to China and Southeast Asia, but since these regions are heavily suffering from delays and congestion, the attempts to get back on track have not been successful. The possible strategy could be the prolongation of their production lead times and beginning transporting goods well before purchase according to the delay updates. The latter is not the only thing worth keeping an eye on. Another one is the new prices set by MSC for shipments from Europe to America that will take effect on 25 October. The growth of the fresh Freight All Kind rates falls in the range from $500 to $1000 depending on the size of the container. May the force be with them. The new implementations are destined to rip through the plateau that some experts claim the container market has achieved.
When shipping fails, will intermodal hold hope? It is not a secret that small and mid-sized exporters are having the toughest times in the whirlwind of the crisis, so the big player HMM will collaborate with South Korea’s Ministry of SMEs and Start-ups to give them multimodal logistical support by allocating 20 TEU of shipping slots which is truly a gulp of the fresh air in the context of the congested ports in California. As for the latter, among the recent steps taken to resolve the riddle is the one by The Port of Long Beach that is going to start a pilot program offering 24-hour cargo pickup to help move the piled up cargo. International support seems to be America’s sudden asset – Canadian CPP Investments has acquired a 100% stake in Ports America. Joint efforts mean more investments, greater expansion and more chances not to sink in the waves, so this week the industry has seen a series of major consolidations and the railway sector is no exception either. Scan Global Logistics has taken over Horizon International Cargo and Hapag-Lloyd has gotten a 30% stake in Eurogate’s Container Terminal Wilhelmshaven at Germany’s JadeWeserPort to further boost fortunes.
England continues the development of the rail sector with the extensive ground works to strengthen heavy freight traffic on the West Coast Main Line. Network Rail has invested 1.5 mil euros as part of the Great North Rail Project to secure the cutting. Overall, European rail takes a positive spin after a rather gloomy previous weeks. The transformation is directly linked to the automatic coupler that will change the whole sector because so far, Europe is the last market that uses standard manual couplers. The extensive rail growth concerns the UAE too since its National Railway Network is one step closer to completion thanks to the delivery of the new railway. The whole project will connect seven emirates and significantly push the country towards competitive advantage.
Although the UK has turned in the direction towards solving the drivers’ shortages crisis, it is unluckily that future measures will cause immediate relief as the damage caused by the lack of the workforce is already enormous. According to the analytics, customers are suspending their shipping operations and container haulage costs have more than doubled in most cases; more experts say the situation is worsening by the day. Even if the government is finally going to take the right measures regarding visa procedures, what is the guarantee that is not too late?
