Freight Forward: New Services and Alternative Tradelanes

Welcome to Freight Forward, where each Monday, I’ll recap what happened in supply chains the previous week through JOC.com articles and additional sources and also what to expect for the week ahead.

I’m Cathy Roberson, a supply chain writer and researcher. For this weekly series, I serve as a research analyst for the Journal of Commerce (JOC), for whom I identify trends, provide thoughts and input into stories, and assist with express and parcel last-mile queries.

"Container shipping has never seen a situation like the current mass diversions around Africa; the carriers’ response to the attacks in the Red Sea beginning in December is one of the great disruptions the industry has ever faced and will surely be hashed over for decades to come." - Peter Tirschwell, Vice President, S&P Global

• Yet what matters most now is what the impact on the market will be in the coming weeks and months of 2024 in terms of pricing, space, utilization, reliability, and transit times.
• Global container capacity is set to expand by 10% this year over 2023 despite expectations that vessel recycling will hit record levels, writes Mark Szakonyi. Meanwhile, container volume growth will be just 3% to 4%, according to shipowner association BIMCO.? The Red Sea disruption absorbed an estimated 6% to 7% of global capacity.? “The crisis is a blessing in disguise because the amount of ships you need to go around Africa is enormous,” Lars Jensen, CEO and partner at Vespucci Maritime, said during a Feb. 8 webinar hosted by the Journal of Commerce.

• ONE, in a customer advisory last week, said due to the improving situation at the canal, other services are also being considered for a resumption of Panama transits. The carrier also said it was ending its Panama Canal contingency surcharge on US and Canadian exports “due to operation improvements within the canal.” Keith Wallis writes that The Alliance has also increasingly switched its EC6 service back to using the canal rather than via the Cape of Good Hope, although a final decision is still made “on a case-by-case basis depending on available vessel bookings through the canal” the Hapag-Lloyd spokesperson added.
• According to Greg Knowler, a Hapag-Lloyd spokesperson described current European port calls as “relatively seamless,” with no equipment shortages reported in Northern Europe. “Adding extra time in round trips initially spread ships out rather than bunching them up,” An executive at a North Europe terminal said. “Schedules are not fantastic, but the ship arrivals are mostly quite evenly spaced.”

• The diversion of ultra-large container ships away from the Red Sea is delaying shipments for Saudi and, to a lesser extent, Egyptian importers and forcing them to rely on feeder networks, writes Peter Shaw-Smith.? A DP World spokesperson told the Journal of Commerce that the disruption in the Red Sea had significantly impacted cargo delivery to Saudi Arabia, particularly to Jeddah.? “This situation has compelled cargo owners to seek alternative transportation routes to Jeddah, utilizing the UAE [United Arab Emirates] as a pivotal transit hub for both road and air freight,” the spokesperson said.
• Strong vehicle exports and buoyant freight rates propelled leading roll-on/roll-off (ro/ro) operators, including Wallenius Wilhelmsen and H?egh Autoliners, to record profits and revenues last year, and executives say 2024 results are likely to surpass 2023, writes Keith Wallis. “We have a big year coming up in 2024 for shipping,” Lasse Kristoffersen, Wallenius Wilhelmsen CEO, said during an annual results webcast on Feb. 14. About 46% of the carrier’s 2023 volume, equivalent to about $1.2 billion of net revenue last year, is due for renewal this year, covering both vehicle and high and heavy shipments. Most of these contracts will start in 2025, although some will begin in the second half of this year, the carrier said. ?
• A short-haul rail project that will help grow containerized exports of commodities through the Northwest Seaport Alliance of Seattle and Tacoma by reducing the cost of inland transportation moved its first loads last week, writes Bill Mongelluzzo. Theodore Prince, CEO and founder of Tri-Cities Intermodal, said that replacing trucks with short-haul rail to move containers from eastern Washington state to Tacoma will save exporter Ag West International, the rail line’s first customer, about $200 per container move.
• Zim Integrated Shipping has started a new, independently operated express service from the East Coast of South America into the US Gulf Coast as it looks to capitalize on increasing volumes of industrial and intermediate goods moving on north-south trade lanes, writes Michael Angell. Port Houston Executive Director Roger Guenther said in the statement that the ZGT service demonstrates the growth in north-south trade flowing through Houston, with total trade between the port and Latin America having grown 33% over the last five years.? ?

Air

Update from Day 2 of the Air Cargo Conference (Feb 12- 13)

• The first session on Day 2 was about transporting pharmaceuticals. Panelists discussed the need for trained and dedicated teams to handle pharmaceutical shipments due to specialized requirements. Meanwhile, packaging is evolving to keep temperatures the same for longer periods of time. Technology is growing in importance for more than tracking and monitoring temperature-controlled pharmaceuticals. DFW airport has invested in a ‘cargo cloud’ – a data sharing platform – for shippers, freight forwarders, carriers, and the airport to share data, but there has to be a willingness to share data, and that’s still not there.
• The next session was on emerging technologies. Technology is playing a greater role in connecting airports, freight forwarders, shippers, and carriers. The session showcased some of the technology, including Rippey.AI, Webcargo, raft, 7LFreight, and cargo.one, CargoAI, Descartes and nuVizz.
• How do we manage truck congestion at airports and beyond was a big question at the conference. Per a DHL spokesperson, “Boxes don’t vote. The last mile from airports is ignored. How do you future-proof infrastructure?” Brian Bourke of SEKO Logistics told the audience, “Lessons were learned during the pandemic, but they were not applicable to the airfreight market.” ?Another concern from one of the panelists was the disconnect between ground handlers and the customer. Paperwork can take up to three hours to correct if there is a mistake. How can one improve efficiency around paperwork?

For more, please see the Day 1 recap from the Air Cargo Conference.

Inland

Trucking

• Knight-Swift Transportation Holdings acquired 10 additional terminals from bankrupt Yellow for $2.2 million. The new terminals are a major building block in Knight-Swift’s plans for a national LTL network, writes Bill Cassidy. The company now has 35 terminals in various stages of procurement, development, or reconditioning, including 25 terminals acquired from Yellow.
• Lower US interest rates and improving market conditions may stoke the appetite for trucking acquisitions in the US and Canada this year, writes Bill Cassidy. Much depends on when and how far the US Federal Reserve decides to lower interest rates and how quickly the weak freight market improves. Much depends on when and how far the US Federal Reserve decides to lower interest rates and how quickly the weak freight market improves. But trucking acquisitions occurred last year in a depressed market, and they’ve occurred in earlier downturns as well.

Intermodal

• The US Federal Maritime Commission (FMC) has ordered ocean carriers to stop mandating that cargo owners and their truckers use specific chassis in the merchant haulage business, writes Ari Ashe. The FMC agreed the practices of ocean carriers were unreasonable and not necessary to ensure the smooth flow of cargo.
• Run Rail, a wholesaler with 650 containers working with non-asset intermodal marketing companies (IMCs), has begun to offer service in Mexico through Ferromex and BNSF Railway, writes Ari Ashe. “Shippers working with non-asset IMCs are looking to have options that can show consistent performance and competitive rate structures. We, and other independent equipment providers, certainly offer these things.”

Parcel

• In my ACN column, I wrote that UPS expanded its Saturday residential standard service delivery in major Canadian cities. UPS is Canada’s second-largest parcel carrier, behind Canada Post, according to Pitney Bowes’ 2023 shipping index. UPS shipped an estimated 240 million parcels in 2022, and Canada Post shipped 241 million. FedEx shipped an estimated 104 million parcels.?
• FedEx Express announced its ‘FedEx Life Science Center’ (LSC) in Mumbai on February 14th. According to the announcement, the new facility will meet and support the clinical trial storage and logistics requirements of healthcare customers both within the Indian market and those shipping to India from around the world. The new center is in addition to FedEx’s current LSCs in Japan, South Korea, Singapore, the USA, and the Netherlands. That’s it for now. Please be sure to hit the subscribe button to receive the latest updates. For readers interested in reading more Journal of Commerce stories, click here to subscribe. Enter code FFNL20 at checkout to receive a 20% discount on any subscription option. (Note that this is only for first time subscribers or upgrading a current subscription). What did I miss? Have a question? Let me know in the comments. I’ll be checking back throughout the week to answer questions, address comments, and share additional insights. In the meantime, here’s wishing everyone a good freight week ahead.-Cathy