Global Logistics - Weekly Recap

Now that the Far East to North Europe Xeneta Shipping Index is just 12% away from March 2020 levels, we are close to completing the cycle. As for most BCOs and SMEs, the struggle is almost over, but not without some consequences for smaller firms. Many small retailers have been forced to close their doors or are drowning in debt from covid loans and bank borrowings. Due to the rise in interest rates, they have been thrown out of the frying pan and into the fire. Carriers have enjoyed a successful run with billion-dollar PnLs and 48-month bonuses, but the broader population has suffered as a direct result of rising transportation costs and/or rising consumer prices.?

As I have always?stated, the trend is your friend until it bends at the end. Although weekly decreases in freight markets have slowed, the trend is still downward. With the exception of a few, most BCOs I speak with are not in a hurry to sign long-term contracts.?

Reposting some banks' views on global container shipping from my yesterday's post for those who missed it.

- Oversupply to continue putting pressure on rates, even if demand improves in 2H23.

- Container shipping oversupply now emerging in 2023 and 2024 (See the Chart)

- Demand outlook remains muted in 2023 with the industry expecting c.4% volume decline

- Barclays expect freight rates to normalise at or below pre-pandemic levels given significant oversupply ahead and weak underlying demand

- HSBC has Buy ratings on Maersk given its re-rating potential due to vertical integration and attractive dividends/buybacks

- According to HSBC, market spot rates are expected to stabilize in the coming months, led by sequential improvements in volumes during the second half of the year. HSBC see downside risk in 2024.

Zim integrated shipping services ltd ZIM.N: JP Morgan raises target price to $30.4 from $17.6

Hapag Lloyd Ag HLAG.DE: JP Morgan cuts target price to EUR 133 from EUR 143

A.P. Moller-Maersk Maerskb.CO JP Morgan cuts target price to DKK 25080 from DKK 25500

DCSA’s member carriers commit to a fully standardised, electronic bill of lading by 2030. Nine ocean carriers commit to converting 50% of original bills of lading to digital within five years and 100% by 2030 to accelerate the digitalisation of container trade. Switching away from the transfer of physical paper bills of lading could save $6.5 billion in direct costs for stakeholders, enable $30-40 billion in annual global trade growth1, transform the customer experience and improve sustainability. The bill of lading is one of the most important trade documents in container shipping. It functions as a document of title, receipt for shipped goods and a record of agreed terms and conditions. Ocean carriers issue around 45 million bills of lading a year. In 2021, only 1.2%of these were electronic(DCSA)

Retailers Hope to Bargain for Lower Ocean-Freight Rates. In the ocean-shipping spot market, where importers book shipping containers without a contract, rates have dropped to $1,000 on some trans-Pacific routes. Retailers in the U.S. hope to slash shipping costs and save millions of dollars when they sit down later this month to negotiate long-term contracts with ocean carriers following last year’s surge in rates. Some companies expect to cut ocean-freight rates by half or more, which in turn could allow retailers to slow or stop price increases for goods.??

Danish analysts see “price war” behind carriers reaction to recent container demand collapse. Danish maritime data analysis company noted the different approaches of container shipping lines to the demand decrease at the beginning of 2020 caused by the Covid-19 pandemic outbreak and in the recent container demand collapse, which started in September and continued until the end of 2022. In the first case, Sea-Intelligence said that carriers reacted swiftly, reducing liner capacity at a pace matching the drop in demand.

MSC expanding standalone services to grow its network outside the 2M. MSC is focused on expanding its standalone services outside the 2M Alliance as the two-year notice period on the vessel-sharing agreement runs out. The carrier has tapped into the burgeoning Indian export market to the US with an expansion of its Sentosa loop, offering a direct connection from the Indian ports of Mundra and Nhava Sheva to the US west coast gateways of Long Beach and Oakland.

Air Passenger Load Factors Back at 70% for China’s Big Three. Passenger loads at China’s top three airlines are rebounding as travel picks up again, boosted by people flying back to their hometowns for the Lunar New Year holidays and celebrating the chance to reunite with families and friends after nearly three years of Covid restrictions. China Southern Airlines Co. filled 72.7% of its seats in January, the highest passenger load factor among the trio, exchange filings show. That was up from 63% a year ago. Air China Ltd. was next, with a passenger load factor of 69.9% for the month, followed by China Eastern Airlines Corp., at 68.3%.

Etihad Cargo expand European capacity via two new gateways. Etihad Cargo, the cargo and logistics arm of Etihad Airways, will offer increased capacity to the European market via two new gateways with the introduction of two new routes from its Abu Dhabi hub to Copenhagen in Denmark and Düsseldorf in Germany. The carrier will also introduce additional services to Frankfurt. The carrier currently operates seven passenger and four freighter flights per week to Frankfurt. From 1 May 2023, Etihad Cargo will increase weekly flights from eleven to 15 with the introduction of four new services. (IRW)

Hong Kong Airport aims to further enhance sea-air services. Airport Authority Hong Kong (AAHK) has signed a cooperation framework agreement with Dongguan Municipal People’s Government to further develop intermodal operations. The airport authority has been leading the development of Hong Kong International Airport (HKIA) Logistics Park in Dongguan and a new airside intermodal cargo pier at the airport to allow screening, palletisation and acceptance to be completed in Dongguan before being shipped to HKIA airside by ship for flights heading to overseas destinations.

10 Things to ask your climate partner when measuring Logistics & Transportation emissions. (BIFA)

1. What emissions factors do they use?
2. What methodologies do they adhere to
3. Can they clearly explain the results
4. What modes of transport can they support
5. Do they use vehicle or vessel identifiers to make your measurements more accurate
6. Do they offer routing and distance calculations
7. Are they accredited by a recognised independent standard
8. Can you sign-up and get started straight away
9. Is it easy to integrate and share data
10. What happens when we can’t reduce our emissions further

Market conditions plunge combined transport promising a rough year. European combined transport (CT) contracted in the last quarter of 2022 by 6,46 per cent. The drop owes to hostile market conditions like high electricity costs and reduced economic activity, but also poor railway performance. “All growth noticed in 2022 is now reversed after Q4”, says UIRR. The future outlook for combined transport could be better too. According to UIRR’s Sentiment Index, the general business sentiment for 2023 is marked as ‘negative’. Indicatively, the last time that this happened was in the spring of 2020, when the Covid-19 pandemic was gaining global momentum. (RailFreight)

DHL Express today announces the launch of GoGreen Plus, a new service that will allow customers to reduce the carbon emissions associated with their shipments through the use of Sustainable Aviation Fuel (SAF). This is a first for global express carriers, and will initially launch in the UK, shortly followed by Italy, Denmark, Sweden, Canada, Australia, South Africa, and the United Arab Emirates. Starting this month, customers based in these countries will have the option to select GoGreen Plus when choosing their shipping service through MyDHL+, the company’s online shipping and tracking platform. The service is designed to be fully flexible as it can be selected for individual shipments. GoGreen Plus will become available to all DHL Express customers globally over the coming months, with customers being given the chance to tailor the CO2e reduction they want to achieve and the amount of SAF they use(DHL)

How burnout is catalysing rogue spend & bad decision making. An increase in rogue spend and bad-decision making could be the result of intensifying procurement burnout numbers. According to founder and CEO of Keelvar, Alan Holland, there had been a “significant increase in demand” for automation as a result of rising burnout among buyers. Holland provided his thoughts to the official CIPS new outlet, Supply Management, adding that “Sourcing professionals have been swept up in a perfect storm of global volatility, geopolitical disruption, and inflation and they’re struggling to stay afloat.”

Global 3PL Market to Generate Revenue of More Than $2.3 Trillion, Report Says. The global third-party logistics (3PL) market was valued at $1.1 trillion in 2022, and is estimated to reach more than $2.3 trillion by 2031, according to a research report by India-based analytics and advisory company, Astute Analytica, drawing on its research database. The report, titled “Global Third-Party Logistics Market Report, By Mode of Transport; By Service; By End-User; By Region; Segment Forecast, 2023-2031,” predicts the market will grow at a CAGR of 8.7% during the forecast period 2023-2031, largely driven by the increased demand for integrated supply chain solutions and services as businesses strive to become more efficient and cost-effective.

Saudi Arabia has more than 212 industrial investment opportunities: Minister.?Saudi Arabia’s Minister of Industry and Mineral Resources, Bandar Al-Khorayef, has confirmed there are 212 industrial investment opportunities through the Invest in Saudi platform. The platform currently presents 82 out of the 163 investment opportunities previously announced by the Kingdom’s national strategy Vision 2030, and will add the rest by the end of 2023.?During his participation in Al-Ahsa Investment Forum 2023, the Minister indicated that the industrial sector is one of the focal points of Vision 2030 which aims to achieve an industrial renaissance and unleash enormous capabilities into the strategic sector, Saudi Press Agency reported.?(Arab News)

The Irish are still the kings of rugby.?#sixnations2023