News digest. 23 Nov
Shipping lines have done unimaginable and destroyed even the tech atlantes. A wracking ball that is worthy billions of dollars.
Shipping lines triumph has taken off. Now they definitely have everyone’s attention, even of those who come from different industries such as tech. The reason for it is their resounding success in surpassing the profits of the biggest companies such as Facebook, Amazon, Netflix, and Google. It is difficult to recall any other industry that managed to achieve such accomplishment especially in the time of the crisis. The wealth of some of the marine giants reportedly reaches up to $5.6 billion, a massive growth from $567 million in the same period last year. The records do not end just there. Despite the persisting bottlenecks, the Port of LA is still being number one in handling TEUs. The updates report 902,644 TEU, which is an 8% decrease from last year, however, the overall cargo is up to 22%. More is yet to come with agencies forecasting a record holiday season coming up. However, the industry knows the examples when too rigid anticipation for growth has caused inventory backlogs. Besides, the situation is perplexed with China’s recent decision to ban many reefer shipments through the port of Dalian due to the COVID outbreak. Hapag-Lloyd is advising customers to divert reefer containers to other ports such as Tianjin and Qingdao. Such drastic contrast – either cosmic profits or earnings going down 50% in other sectors is causing extraordinary volatility in the shipping sector. It is an extremely tricky time for the investors as, accosting to experts, the “level of whiplash” over the past couple of years, has been bruising even for the most nimble ones.
The geographic area of booming TEUs is not limited just to the US – Australia previously announced its skyrocket demand, and, according to the October assessment, the Port of Sydney has handled 1 million containers. Since the dynamic is not going to slow down, the port authorities realize the importance of clearing out the space. Apparently, the best way to make shippers move is to threaten them with dwell fees. It worked in the beginning and is working now. The number of container vessels waiting in San Pedro Bay to unload at the ports has dropped from a high of 83 on November 12 to 61 on November 22. Way to go for the ports of LA and Long Beach. In the meantime, the latter has been connected with South China thanks to the linkage introduced by Orient Overseas Container Line.
Rail has also enjoyed its fair share of the blooming volumes, although not without operational problems that arise due to political tension with China and even the ghost of suspension in operation with Lithuania. Congestion in Kaliningrad brought its disruptions as well because the city was a promising transition hub to Belarus. It is reported to remain severe, so China Railway Express trains are gradually shifting back to the Mala-Brest rail line. Meanwhile, Ukraine takes the complicated context as a chance to promote itself as an alternative gateway to Western Europe and is building a 100,000 teu-capacity terminal at Mostyska, on the border with Poland. The expansion of any kind requires significant investments, and in the case of Turkey, the government is planning to increase financial contributions by 60%. The Kars Logistics Centre is in the spotlight as it is the primary tool of the government’s policy to attract more traffic from the New Silk Road via Turkey. In addition, it is aiming to influence the main traffic flows passing through Russia. Is it realistic or ambitious? However, not all initiatives coming from “above” are destined to be accepted. The UK’s Integrated Rail Plan has received negative feedback from the Railway Industry Association. The document was a long-awaited one, but after it was out, it confirmed the speculations that rail projects in the north of England would be scaled back or abandoned. The representatives of the national trade body have voiced their readiness to cooperate and discuss the further steps at the round table. The situation is much clearer in Vancouver now as the storm has died down and Canadian Pacific will restore rail service in British Columbia. A new line connecting Italy and France will also be launched shortly. Calais-Domodossola line will be available for all types of units and it is the first time when Cargobeamer has its own terminal, which makes the work more efficient now. Another advancement in intermodal has seen the light in Poland where Contargo has established a national company. The world can potentially see a new promising player in Eastern Europe, especially since with an annual transport volume of 2.1 million TEU, Contargo is one of the largest container logistics networks in Europe.
Airfreight has definitely been hit among the hardest with the jumped demand and won the pedestal of the most under-invested in the recent news headlines. To address the pain points, DHL is going to expand its international fleet with a far-reaching forecast that the global freighter fleet will be 70% larger than the pre-pandemic fleet by 2040. Beyond added capacity, the additional freighters will allow DHL to fly eco-friendlier and more cost-efficiently. Rival Airbus is also benefiting from growing freighter demand, thanks to the orders made by CMA CGM Group.
