News digest. 9 Sept
What does the future hold? The puissance of the shipping lines in the wake of the skyrocketed boxship charter rates or, if we speak about rail, the sunset of the New Silk Road?
Fame and glory have been the inseparable characteristics of the New Silk Road while the rates were soaring and more customers were favoring this route as more ports were experiencing congestion, but what will be the future of it?Without a doubt, the New Silk Road will not be forgotten but to what extent its use will drop when things eventually get back to normal? Experts distinguish two possible scenarios: the first one is when China keeps investing in rail with the same rates and the same demand for freight, so rail remains more affordable in comparison to ocean freight. The second variant is when the China-EU direction is more stable and the New Silk road is used for the transportation of goods that are truly suitable for it.
Not only has the future of rail perplexed the minds of industry experts these days. The question of lines’ competition is no longer the topic of local governments but everyone’s concern. It is going to be a long way until there is consensus on the future regulations because so far the industry players are mostly concentrated on how to stay afloat in the wake of bottlenecks in the ocean-linked supply chain and the causes of service disruptions; actions undertaken so far by relevant jurisdictions and authorities in response and their results. Let’s be honest, the far-reaching strategies on increasing resilience and smooth operations in the sector are important but it is the highest sector of the industry’s needs pyramid which is difficult to achieve when on the basic level there are still unresolved congestion and shortages. Besides, navigating the competition issues can be more difficult in the future, because new members are entering the tradelane and shipping lines continue the trend of enormous growth in times of the COVID, gaining more influence. Take COSCO – it can soon overtake CMA CGM as the third-biggest container line if the latter does not acquire more ships. Are the lines going to reign or there still be room for regulations? It makes sense for the players to ask themselves this question especially since container lines are bypassing barge operators to operate their own inland routes to service their demand for empties. The recent shake-up of the European waterways was driven by the notoriously famous capacity shortage.
Apart from keeping an eye on the competition like a hawk, the FMC is advocating for broadening the scope of the current audit program to include any discrimination against dangerous goods due to the recent acquisitions of the US carriers in refusing hazardous goods. This is due to the surging imports that are stretching the carriers’ abilities. The consequences may be devastating as the inability to bring these commodities can harm local factories and put the ports under more pressure. The latter has been struggling the most: the data has shown that traffic has doubledglobally in 2021. Moreover, the recent hurricane has added more difficulties to the US ports where at least the Port of New Orleans has resumed its operations.
All the mentioned factors are causing significant shifts across the industry and charter market, where boxship charter rates have recently hit unprecedented $200,000 a day, is no exception. We have already witnessed the big players starting to charter their own vessels, and now the smaller ones are following suit. No wonder since the transpacific market is heavily congested and Asia to Europe direction is less clogged.
What does not kill you makes you stronger they say, and Evergreen services a great example. Having dusted off the past, it is striving for the expansion of its asset by ordering the construction of 24 feeder containerships in a deal worth up to $1.1bn. It is an extraordinary number that shows that the carrier has more trump cards up its sleeve.
Where the health crisis has not interfered, Brexit has. The talks about how difficult it would be to adjust to the new trade agreements have been on for what it seems like forever. It is just now the issue faces the lack of knowledgeable and skilled employees that would be able to work in the new environment. Paired with the drivers’ shortage it brings the UK into a challenging state. If in the beginning, companies were exploiting drivers from Eastern Europe, now when the problem of severe underpayment has been exposed, they can no longer get away with it and ignore the current state of things.
European rail disrupted by the floods and recent strikes welcomes a new departure Rotterdam and Milan. Taking into account that due to the strike in Germany and floods not long ago severely affected traffic in the Netherlands, the new train is a great initiative. Hannibal European Gaterail, the company behind the launch, expects more services in the coming years. Germany has also seen a new development by MSC – a new direct rail service connecting Trieste, Italy, and German Ludwigshafen.
