News digest. 20 Aug
The delays are taking more time than initially expected bringing some ports almost to the verge of collapse while others are still trying to cope. Will the ease at Ningbo bring the change or is it too late?
West Coast ports are barely coping – no sooner than summer peak season approached, shippers are already bracing up for Christmas. If before the Port of LA had only expected to max out, it seems like it is already reaching its peak. Although experts predict volumes to fall back to 880,000 TEUs in September, the collapse of exports from Los Angeles continues. The community is alarmed that if the trans-Pacific shipping system maxes out soon, some Christmas retail sales could be at risk. Moreover, it is the empty containers that remain the port’s highest export commodity. As a result, with exports from China and the rest of Asia rising substantially, it has led to allegations of carriers breaking contracts with US exporters.
Major delays are vigorously taking over the sector. Those in North Europe were bad enough, but now the congestion in China has severely affected the overall state pushing it to the verge of disaster worldwide. Recently Philippine Port Authority has warned local importers and exporters to prepare for more challenges. The data confirms that the average voyage delay days had tripled in the first half of this year. China’s Golden Week Holidays adds up to the pressure forcing shippers for the already mentioned struggle of blank sailing. The tactic is to tighten space on vessels by skipping ports or even entire routes owing to lower demand after shut down and thus further push the rates higher. Although it has been announced that the port authority in Ningbo is planning a phased resumption of services, the congestion has spilled beyond China’s port so the aftermaths are still going to cause significant damage.
The peak season that has already brought enough trouble, has encouraged big conglomerates to take matters into their hands. Walmart is planning to charter ships rather than pay sky-high rates to global liners for shipments that tend to arrive late. It is following the example of Home Depot that earlier took a similar move.
Apart from the obvious pressure that the crisis has caused to the ports, without a doubt, it has revealed the pain points of the industry and the urgent need for an infrastructure upgrade. For example, Taiwan has joined the list of countries planning to invest in their ports. Seven ports are to be rejuvenated under a US$1.37bn plan by the Ministry of Transport and Communications.
With the demand for road transport and customized logistics continuing to grow, DHL is on its way to build momentum by constructing a new road transshipment facility near Frankfurt. The previous capacities no longer serve the needs and besides, the road freight is significantly cheaper and generates fewer emissions than airfreight, which makes it a perfect alternative for investments.
When discussing the positive impact of green development, it is important not to omit the question of the cost that in the majority of cases can become the deciding factor of the future strategic steps. The ambition plan to achieve a 55 % reduction in emissions is a good reason to accelerate the leveling of external costs for all modes of transport. Once again, experts second that rail is part of the solution to the current environmental problem. While it all seems promising, it is still a big question whether the maritime industry is ready to make such a drastic shift. Let’s take the UK – yes, the rail network investment has increased significantly in the past three years, but the obviously greater funding for the road network points to a much bigger swing still required.
Meanwhile, the authority of the Port of Valencia is planning to invest $280 million to improve rail access and infrastructure as more than 2,000 trains have passed through it.
However, the development of rail is also subject to political factors. The destiny of China-Lithuania trains has become a mystery as it is unclear if the cooperation will be suspended or not due to Lithuania and Taiwan announcing their intention to strengthen their bonds. No matter the outcome, the volumes between Lithuania and China are so insignificant that the impact will be minor even if they decrease.
To strengthen its ocean freight services DPDHL is fully acquiring Hillebrand. The deal aims to include additional services within the comprehensive range of products.
As France implements an EU directive limiting cross-border load weights to 40 tonnes, hauliers express their concerns.The move can cause the issues of weights and dimensions to come up at the commission.
Australian shippers are in the same boat with other players dealing with the consequence of the capacity squeeze – container detention costs imposed by shipping lines. On top of that, with port congestion rife in Singapore, Australian export cargo has suffered long delays.
The recent opening of its largest container depot in Indonesia has become a real breakthrough for the CMA CGM Group. Given its close proximity to the neighboring industrial warehouses, travel time and distance between the facilities are significantly reduced which makes the facility extremely efficient.
