News digest. 7 Dec
Another wave of fever in Asia. Will the disruption be as severe as before or has the industry learnt its lessons?
While the memories of the previous lockdowns and their aftermaths on supply chains worldwide are still fresh, there is now an increasing alert of the new cases. Not only Europe is putting up its armor but Asia as well with Ningbo upgrading the emergency responses to the highest level. The virus outbreaks already caused the disruption at the port earlier this ear and the ripples of it spread a lot more farther than Asia. Will history repeat itself or can the early measures help mitigate the risk of a shutdown? Experts believe that the new variations of the COVId-19 will emerge but to what extent they are going to affect global transportation is uncertain. Unknown variables also concern the carriers’ pricing behavior and how will the fact that the shipping sector is now more consolidated will influence the pace that rate changes with? Besides, the existing allies do not necessarily introduce positive changes. For instance, many Asian exports have found themselves lost and abandoned after Maersk decided to transform its ocean business and stopped accepting their bookings. As the result, the exporters have to go for deals with the giant’s rivals which is not a good alternative because now with short-term freight rates holding at highly elevated levels and new FAK ratesincreased by $2,600 and $3,850 per 20’ and 40’ containers respectively, operators are leaving no stone unturned to find extra loaders. In this case, operators of ad hoc sailings come into the spotlight, particularly from Asia to North Europe. Holding onto tonnage, they are being encouraged by buoyant demand and booking restrictions to make further round-trip voyages. Moreover, they advertise their ships well in advance. Meanwhile, the Port of LA and the Port of Long Beach have reported a combined decline of 37% in ageing cargo on the docks, so the authorities have again postponed the implementation of the dwell fees, this time until December 13.
Small import businesses are in the same boat. The new customs changes between the EU and the UK coming next year are going to be tough for many of them. The new policies will include full import controls for EU goods and the UK’s largest business group, Federation of Small Businesses is signaling a lack of capacity among small businesses to handle the adopted changes. COVID cases, Christmas rush, delays, etc. make a snowball of troubles, thus experts advise firms to ensure that they have all they need to make declarations through negotiations with suppliers, consider alternative providers if it is necessary, and think about different transportation routes. Most definitely, not by air as it is promising to be an expensive variant as rates keep increasing with Shanghai to North America rates topping $14/kg this week. Can England benefit from the New Silk Road since it has been the headliner of the majority rail advanced in Europe? Not so fast. The development of overland trade has very much failed to get its feet wet in the cold waters of the North Sea mostly due to administrative procedures. In addition, little to nothing has been done in the way of new rail traffic through the Channel Tunnel either. Is it the political relation to blame? The upcoming Silk Road Summit will unveil the current state of things. Meanwhile, mitigation of the pandemic effect remains a priority, and Spain is planning to extend the reduced track access charges in its budget most probably for the last time because after the rail law is renewed, the authorities will track these charges independently. Moreover, it is going to invest 24.2 bn euros in rail infrastructure over the next five years and advance the improvements in the Mediterranean Rail Freight Corridor. Building a sufficient web of rail connections is a part of The UAE Government’s agenda too. It has announced the launch of the UAE Railways Programme, linking Saudi Arabia to the Port of Fujairah. The project is promising to be tremendous as it will be the largest one to consolidate the strength of the union for the next fifty years. Sea Port of Saint-Petersburg can also be added to the list of those improving its operations. By the end of this year, it has upgraded its storage facilities, railway infrastructures, power-engineering facilities, and repaired its berths which resulted in added kilometers of new railways and construction of two new cargo yards.
China follows suit and spreads its influence farther in Europe thanks to the first eastbound train from Slovakia towards Xi’an using a cleaner route in terms of CO2 emissions. Overall, despite the growing concerns about the ocean freight sector due to the new virus outbreaks, China speeds up on its rail development and spans the merge of the state-owned rail companies in an attempt to secure its supply chain.
The freight haulage sorority is about to see the new leader of green technology and it will be Canadian National that will deploy a FLXdrive battery-electric freight locomotive, the first fully battery heavy-haul locomotive in continental North America. Competition intensifies as recently DSV has unveiled a “Green Logistics” planning to take a starring role in accelerating the green transition of the freight transport sector. The company has proposed four solutions adaptable across all major transport modes.
