The multimodal network news digest - issue #39

Transitory illusion

Recent improvements in container shipping volumes and rates are likely to be temporary and do not indicate a sustained recovery for the industry. Although some shipping lines have reported strong results for the first quarter of 2023, the underlying fundamentals of the market, including overcapacity, low freight rates, and weak demand, have not really changed. Despite the efforts of the container shipping lines to push rates up by reducing capacity and canceling sailings, they have been hampered by weak demand.  The current market conditions are likely to persist in the coming months and container shipping lines should focus on improving their operational efficiency and reducing costs in order to remain competitive instead of trying to put pressure on shippers to accept higher rates. For example, securing long-term contracts on the trans-Pacific trade lane is already a losing game because of declining export volumes from Asia, combined with overcapacity in the market. 

Hot topic 

• The ongoing conflict in Sudan has led to the closure of several key transportation routes, including major highways and rail lines. Maersk and Hapag-Lloyd have suspended cargo bookings for the African nation until further notice.
• Chinese companies are moving their supply chains out of China to manage risks. India and Malaysia are becoming the keu destinations instead. While many companies are looking to diversify their supply chains and reduce their dependence on China, the process is likely to be slow and challenging and will require significant investments in infrastructure, technology, etc. 

Routes, services & rates 

• The shipping rates between Europe and the US have been declining due to decreased imports from Europe. A due to mong the factors that contributed are The Suez Canal blockage and the shortage of containers, canceled sailings, and decreased demands in the post-COVID era.
• Contrary to the decreasing rates between the EU and the US, the Indian ones dropped because of an oversupply of container capacity, but negotiations over long-term contracts between shippers and carriers have helped to stabilize the situation. Experts suggest that this could lead to a more balanced market in the future.
• Shippers are concerned that a recent Bangladesh’s court ruling that opening its two seaports, Chittagong and Mongla, to Indian domestic cargo could lead to increased congestion at the port of Chittagong.
• MSC has announced updates to its India Africa Service (IAS). The new rotation: Mundra – Nhava Sheva – Colombo – Abidjan – Lomé – Tema – Coega – Abu Dhabi – Jebel Ali – Mundra. 
• MSC has made changes to its Gulf and South America East Coast (SAEC) String 1 services. The new rotation: Veracruz – Altamira – Houston – Mobile – Cristobal – Cartagena – Santos – Itapoa – Navegantes – Paranagua – Santos – Rio De Janeiro – Salvador – Cartagena – Cristobal – (Veracruz). 
• A new railway line connecting Iraq and Turkey is back on the table. The project has been under discussion for several years, but has not yet been realized due to various challenges. The proposed railway line would run from the city of Mosul in Iraq to the Turkish port of Iskenderun. 
• The first French Postal Express freight train departed from Chengdu, China, bound for Europe. It is the first time a French company has used the Chengdu-Europe railway route for express postal services.
• Canadian National Railway (CN), Union Pacific Railroad, and Ferromex subsidiary GMXT have launched a new intermodal service connecting Mexico, the US, and Canada. The service will run between Monterrey in Mexico and Winnipeg in Canada, with connections to major US cities.

Other

• The U.S. Environmental Protection Agency has awarded $400m in federal grants to reduce truck pollution at ports across the country. The grants will support projects to replace older, high-emitting trucks with newer, cleaner models, as well as other initiatives to reduce emissions from port-related activities. 
• The EU recognizes governments’ importance in coordinating their efforts to support the transition to sustainable fuels in the trucking industry. 
• MSC is planning to expand its standalone network of services following the end of its 2M alliance with Maersk. The company plans to add new services to its existing network, with a focus on connecting Asia, Europe, and the Mediterranean.
• Deutsche Bahn and the German Train Drivers' Union have failed to reach a wage agreement for the third time in recent months.
• European ports have fallen below pre-pandemic levels due to ongoing supply chain disruptions and reduced demand in some sectors. While some ports have seen a rebound in traffic, particularly those handling essential goods like food and medical supplies, overall volumes remain lower than they were before the pandemic.
• FMC has been granted new powers to block anti-competitive agreements between ocean carriers, a move aimed at promoting fair competition and protecting consumers. Under the new rules, the FMC will have the authority to block agreements between carriers that could lead to price fixing or other anti-competitive practices

These are only several changes that occurred in more than 250 bn freight rates across 25 million routes with more than 1 million market players. Want to share some news about your company, services, and routes? Just post them on MAXMODAL, a multimodal network that digitally connects routes and rates worldwide to automate sales and operations across container transportation & logistics industry. Join to innovate.