Topics on container freight rates
Container spot freight rates are soon likely to sink below pre-pandemic levels. Declining freight rates are expected to slash container companies’ bottom line by more than half next year. According to maritime research and consultancy firm Drewry, the profits of key liners are expected to fall to $100bn next year from $275bn this year.
Topics on shipping lines
Emerging carriers with smaller vessels deployed on Asia-Europe trades are under increasing pressure, with more pulling out of operations. China United Lines had become the second “newcomer” carrier, following Allseas Shipping, to exit the market, said Alphaliner in a report.
Speculation that Mediterranean Shipping Co may seek to go alone outside its 2M alliance partnership with Maersk is misguided, according to one of the people instrumental in setting up the vessel-sharing agreement.
CMA CGM will acquire two terminals at the Port of New York and New Jersey as the carrier continues to invest pandemic-fueled profits driven by huge container demand into key assets supporting its end-to-end logistics strategy. The acquisition of Global Container Terminals’ (GCT) Bayonne and New York terminals for an undisclosed amount bookend the French carrier’s late 2021 purchase of Fenix Marine Services Terminal in the Port of Los Angeles for $2.3 billion.
China Merchants Energy Shipping Co plans to order up to six large methanol dual-fuel pure car and truck carriers as the state-owned giant aims to increase its market share in international ro-ro shipping.
A.P. Møller – Maersk announced that CEO Søren Skou would retire on 1 January, handing over the reins to Vincent Clerc with the carrier firmly on the path toward becoming an integrator of global container logistics.
TradeLens is out, but blockchain is not, says GSBN chief
The Maersk-backed trading platform TradeLens is being discontinued and will stop operations at the end of the first quarter of 2023. Maersk conceded that TradeLens, founded on the bold vision to leap global supply chain digitization as an open and neutral industry platform, has not been as successful as envisaged.
Some believe blockchain technology will not find its place in shipping since it consumes enormous processing power, incurs exorbitant storage costs for users, and creates a lasting incompatibility with alternative solutions. However, GSBN challenges this view. Encryption can keep data secure, private, and immutable. This key feature makes it an ideal part of the “common infrastructure” for efficient information exchange in a highly fragmented industry, said GSBN chief executive Bertrand Chen. In his view, the root cause that spells doom for TradeLens is its overestimation of the ability of shipping, despite the industry’s sheer size, to deliver returns on early investments by a tech company.
Topics on decarbonization
The European Union has reached a preliminary agreement to include shipping in its emissions trading scheme. It comes alongside a complementary deal that earmarks about €1.6n ($1.6bn) from revenues raised to help subsidize the maritime sector’s green transition.
The Federation of European Private Port Operators is concerned that the geographical scope of the European Union’s Emissions Trading System and FuelEU could harm the competitive position of the bloc’s terminals. Their extra-EU application means that shipping companies could avoid their financial implications by adding a call to a non-EU port.
Aligning company strategy to the IMO’s evolving climate targets is fundamentally flawed, according to a new study that urges shipping companies to plan against objective climate science rather than a movable political consensus. The authors argue the report is arming politicians and industry with a scientifically accurate benchmark of knowledge that sets out what a 1.5°C target will look like for the industry and what action needs to be taken. Furthermore, the report argues that investment decisions based on a process built upon consensus-building and ratcheting-up ambition are fundamentally flawed for a sector with long-life assets, which need to be designed and built for decades of operation.
The global shipping industry needs to make a 45% reduction in emissions in 2030 compared with 2010 if it is to align with the trajectory to a 1.5°C target set out by the Paris Agreement. However, according to the latest in-depth analysis published on 8 December by the Maersk Mc-Kinney Moller Center for Zero Carbon Shipping, the industry is “very far away from aligning with the Paris 1.5°C trajectory,” and correcting the industry’s course will require “immediate collective action on an unprecedented scale.”
Costco exits ship chartering with $93 million charge
US big-box retailer Costco is getting out of the ship chartering business as rates fall and vessel capacity returns to the market. But in doing so, the company said it would have to take a massive charge against earnings for paying charter rates at the peak of shipping demand. Along with Costco, other major retailers such as Walmart, Home Depot, and IKEA were chartering container and breakbulk ships, using their containers, and contracting with trucking companies for drayage to deal with record freight rates and historically tight shipping capacity. Having those assets also enabled shippers to avoid bottlenecks at West Coast ports.
Read more: JOC
Retailers bank on themselves to handle final mile
Retailers are bringing management of last-mile transportation legs in-house to improve on-time delivery rates, customer experience levels, and costs. In recent earnings statements, multiple retailers, including Macy’s and The Home Depot, have noted their drive to either expand their final-mile capability or to enable more “buy online, pick up in store” (BOPIS) options for customers.
Last-mile technology vendor OneRail 30 November landed a $33 million round of funding from venture firms to capitalize on increased demand for final-mile coordination across the retail, healthcare, construction, and third-party logistics sectors. The funding will be used primarily to grow its sales, marketing, customer support, and business development teams.
Topics on logistics
US exporters moving goods out of eight terminals at four key US container gateways in September saw an average change of between 1.4 and 22 days to the date in which they could tender loaded containers to those terminals, according to a study by visibility provider Portcast.
Three of the most prominent US freight brokers, J.B. Hunt, Uber Freight, and Convoy are partnering on digital standards for appointment scheduling, a unique attempt between competitors to resolve a long-standing area of friction for shippers and carriers.
Shipper demand for more flexible transportation options, coupled with gig-economy technology, is increasing the use of drop-and-hook trailer pools, with Ryder System adding a drop-and-hook service to its COOP vehicle-sharing platform.
South Korean truckers vote to end 16-day strike
Thousands of striking South Korean truck drivers voted to return to work on 9 December, ending a 16-day stoppage, the impact of which gradually lost steam this week as the government ordered more truckers back to work and driver support for the job action waned. About 62 percent of the 3,570 drivers that took part in a ballot organized by the Cargo Solidarity union voted to end the strike, the union said on 9 December. That compares with approximately 25,000 union and nonunion drivers who initially went on strike on 24 November.
Read more: JOC