Global Logistics - Weekly Recap

In terms of container carrier performance YTD, they are treading water. There is plenty of free cash flow across the majority of carriers to last a decade (BUT not something shareholders would want to hold onto). If last week's Hapag-Lloyd share price fall is any indication, then we can expect a lot more such corrections from listed container carriers in the months to come.

For investors, the question is how long they want to hold on to those massive gains they achieved in 2021/2022. Is it time to offload and book profits?

On the freight side, there is nothing noteworthy to comment on. It is one step forward, two steps back. Despite what many would suggest, the market may be very dull during the summer months. According to Xeneta Shipping Index by Compass, backhaul from North Europe to the Far East is below 2019 levels.?This week, Drewry's composite World Container Index increased by 1% to $1,763.28 per 40-foot container. According to Drewry, Shanghai to Rotterdam rates increased by 3% or $53 to $1,645 per feu.?In the next few weeks, Drewry expects spot rates on routes other than the transatlantic to remain stable.

On the dry bulk side, it's index.BADI edged up on Friday due to stronger demand in the Capesize segment but declined for the first time in three weeks.?Overall, the index, which takes into account the rates for capesize, Panamax, and supramax vessels, increased by 13 points to 1,558 on Friday but declined by 1.1% this week.

The Danish Ship Finance Shipping Market Review was published last week.?The following are some salient points.?

• Fleet utilization in the first four months weakened as the container fleet expanded by 1.3%, while easing port congestion also added around 3-4% to the active capacity.?
• Seaborne Container trade volumes decreased by 3.7% in 2022
• The order book is at a historical high of 7.5 million teus (29% of the fleet)
• Scrapping was low, with 11 vessels sold in 22. In 2023 first four months, 19 vessels were demolished.
• Freight rates have fallen before the arrival of new tonnage
• Surplus tonnage is expected to put pressure on earnings

Generally, it covers the most important aspects of shipping, and it's an informative research note to read. Containers, dry bulk, crude and product tankers, LPG carriers, and other topics in the industry are in the report.

Alliances’ capacity stands at just 39%. Alphaliner's latest report shows that the major container shipping alliances control just 39% of the global box shipping fleet, far below the 80% they previously had.

Crowley to Launch Multi-Modal Service Between Mexico, U.S., and Canada. Crowley will launch an end-to-end, integrated ocean and rail service between Mexico and the U.S. Midwest region and into Canada.?

The entire dry bulk supply chain is set to meet at Geneva Dry. To date, there has been no single, global dry bulk event where miners, traders, commodity giants, shipowners, operators, managers and tech providers get together under one roof to thrash out deals and make important collaboration agreements. This is set to change with the creation of Geneva Dry, a high-level summit for the entire dry bulk supply chain. (This will undoubtedly be a fantastic event - it's definitely on my list.)

Dubai Maritime Authority Issues New Directive to Enhance Transparency. Dubai Maritime Authority (DMA), at the Ports, Customs, and Free Zone Corporation, the government authority responsible for regulating, coordinating, and supervising all aspects of Dubai’s maritime sector, has introduced Directive No. 1 of 2023 on transparency of local sea container charges in Dubai.

Lufthansa Cargo sees revenues, profits and volumes fall in Q1. After three consecutive years of record profits, it was back to earth with a bump for Lufthansa Cargo in the first quarter of the year as revenues, profits and volumes all declined.

FedEx Boosts International Delivery Capabilities with International Economy? Services in Asia Pacific. Effective May 2, 2023, customers will now have access to FedEx International Economy? (IE) services connecting the Asia Pacific to 170 markets worldwide. The IE service typically delivers within APAC in two to five business days* and to major markets in Europe and the U.S. in four to five business days*. Customers who want to ship less urgent shipments with day-definite delivery will get the same reliability as FedEx time-definite International Priority service. (FedEx)

European road freight rates Q1 2023: contract rates start falling as spot rates continue to drop. The Upply x Ti x IRU European road freight rates index for Europe shows that both spot and contract rates are falling q-o-q, dropping by 7.5 and 2.8 points, respectively. (IRU)

Deutsche Bahn completes digital freight train test run. Deutsche Bahn (DB) has completed the first practical test of the so-called digital freight train. This test train was equipped with various prototypes of digital automatic couplers (DAC). The trial convoy ran throughout Europe for several months to assess the functionality of DAC under different conditions to identify possible weak points.

Too many firms stumped by smart factory challenge - Gartner. Gartner report shows businesses are hungry for smart factory supply chain benefits but says they underestimate the challenge, so struggle to make headway.

SM Commodities Index - March 2023 (CIPS/S&P Global)

Manufacturing output falls despite overall supply chain optimism, according to April PMIs. British factory output and new orders contracted at the start of the second quarter of 2023, but manufacturers were more optimistic and input costs rose at the weakest rate since May 2020, according to newly released data.

Shopify to Lay Off 20% of Its Workforce as It Sells Logistics Business to Flexport. Flexport is buying Shopify’s logistics-fulfillment operations, including U.S. e-commerce platform Deliverr, setting up the freight company to add home-delivery services that would compete with Amazon.com for retailer business.

AI pioneer says its threat to the world may be 'more urgent' than climate change. Artificial intelligence could pose a "more urgent" threat to humanity than climate change, AI pioneer Geoffrey Hinton told Reuters in an interview on Friday. Geoffrey Hinton, widely known as one of the "godfathers of AI", recently announced he had quit Alphabet (GOOGL.O) after a decade at the firm, saying he wanted to speak out on the risks of the technology without it affecting his former employer.

The island is one of the most beautiful places on earth, and I'm happy to call it home.