German logistics giant Rhenus continues to start crazy "acquisitions"! Following the acquisition of the LOXX Group last month, Rhenus, the harvester in the international freight forwarding market, has taken another move, bringing BLG Logistics Group, a well-known local freight forwarding company in Germany, under its umbrella.
Rhenus Group is a leading logistics service provider in Germany, with operations all over the world, with an annual turnover of 5.5 billion euros. Rhenus has operations in 750 regions around the world and has 33,000 employees. The Rhenus Group provides solutions for different areas in the entire supply chain; including multimodal transportation, warehousing, customs clearance and innovative value-added services.
BLG hopes to focus on its contract, automobile and container businesses, and sell BLG International Forwarding's international freight business to Rhenus. Since 2018, Rhenus has acquired almost all regions of the world; Rhenus will provide its service network for the rest of BLG's business .
Rhenus will take over BLG’s 9 air and sea freight stations in April and integrate these stations with approximately 100 employees into its network of 12 branches in Germany. This new business will enable the company to handle more traffic through its LCL hub in Hilden and the air cargo hub in Frankfurt.
Rhenus said the company also plans to expand its food business, trade fairs and event logistics operations. "In the past few years, we have paved the way for the continuous expansion of air and ocean freight," said Stefan Schwind, general manager of air and ocean freight at Rhenus Germany.
"Due to the addition of business sites, employees and business activities, we are consolidating our network in the German aviation and maritime sectors. We also hope to develop new business areas, such as the use of refrigerated containers to transport food, and in trade fairs and event logistics. Activities."
BLG said it will retain its freight forwarding business in Bremen, focusing on land and sea transportation of heavy and project cargo. Board member Jens Wollesen said: "Even if we no longer have representatives throughout Germany in freight forwarding, we will continue to provide a wide range of international services in our contract, automotive and container sectors."
Last month, Rhenus stated that it would take over the LTL and FTL cross-border specialist LOXX Group and established five business sites in Germany and Poland to strengthen its business in Germany and Europe.
In the past two years, Rhenus has made frantic acquisitions. From Germany, Italy, the United Kingdom to Canada to South Africa and the United States, all freight forwarding companies that Rhenus favors have been acquired.
Recent "acquisition list":
In November 2018, it acquired German freight forwarding SBL;
Acquired the Italian logistics company Cesped in December 2018;
Acquired British freight forwarding Core Management logistics in January 2019;
Acquired Rodair, a Canadian freight forwarder, in early March 2019;
Acquired World Net Logistics, a well-known freight forwarder in South Africa at the end of March 2019;
Acquired LOXX Group in January 2021;
Acquired BLG Logistics Group's freight forwarding in January 2021.
Dominic Hyde, Vice President Crēdo On Demand at Peli BioThermal, discusses the developing trends in freight that have come about as a result of the COVID-19 pandemic.
Previous predications in pharmaceutical transportation trends, highlighting declining air passenger numbers and increasing air freight demand, have all been propelled by the pandemic. Coronavirus continues to cause worldwide disruption and is anticipated to impact industry throughout 2021 and beyond.
Pandemic response - preighters take off
Pre-pandemic passenger numbers were already on the downturn. However, the crisis has significantly accelerated that trend and the crisis capacity crunch came as the number of passenger flights plummeted. The ensuing scramble to transport pandemic payloads saw the deployment of hundreds of passenger planes as freighters, known as ‘preighters’.
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Pioneering Portuguese charter operator Hi Fly led this trend, being the first to convert an A380 for freight by removing the majority of seats
Pioneering Portuguese charter operator Hi Fly led this trend, being the first to convert an A380 for freight by removing the majority of seats to provide more cargo capacity. Despite the sector seeing the grounding of hundreds of passenger planes, earlier than had been initially forecast, which led to a reduction in the availability of cargo space, we’ve seen more planes undergo such conversions.
However, the ongoing drastic downturn in travel means the loss of a lot of capacity in passenger aircraft, and while freighter aircraft are still present and working hard, fleet growth takes time, so there will be a slower response to replacing some of the capacity lost from the passenger side of the industry.
Large widebody aircraft – grounded or retired
Before COVID-19, it was predicted that airlines would cut flights from schedules, mothball larger aircraft, decline production options, and look to utilise smaller, more efficient aircraft – whether for environmental or economic reasons. All those decisions have now been massively accelerated. The forecast to park some of the larger, widebody aircraft has been brought forward significantly due to the COVID-19 crisis, and its ongoing impact has meant the majority of all 747 freighter aircraft have or are being retired. The A380, which Airbus had previously announced it would stop deliveries of in 2021, has also been retired across the board by numerous airlines.
Increasingly, airlines are grounding their A380s in favour of more modern, smaller jets that can fly more efficiently than their four-engine aviation counterparts.
What we will continue to see is a lot more interest in leaner aircraft, such as the A220, the Canadian Bombardier aircraft produced by Airbus in North America.
Sea change in modes of transport
There will be ongoing developments in the sea freight sector too, which has an estimated 17 million TEUs (Twenty-foot Equivalent Unit) serviceable globally, of which six million containers are routinely turning and carrying freight.
Uncertainty in sea and air freight availability saw pharma companies initially ship everything they could, by any mode of transport available, to get it out to the markets. Following months of disruption, passenger airlines began loading aircraft with cargo in the lower decks and loose load cargo on the upper decks.
Whereas I was hoping things might be back to some kind of normality in March, I am now inclined to add another quarter to that. I now think there will be exacerbated sea freight and sea container availability issues throughout the first half of 2021.
Given the sea freight situation, we will continue to see the utilisation of air freight to transport pandemic payloads. When it comes to economics, without the passengers on the main deck is a much more expensive operational option. However, pharma customers are prepared to pay those premiums.
The volumetric efficiency on aircraft is critical at the moment because it is such a scarce resource. We need to ensure the best use is made of it. With air freight capacity a dwindling resource, it is even more important to have the efficient packing density of temperature-controlled products on such limited air freight resources.
Vaccines vs. virus - rapid response
As the development of successful COVID-19 vaccines continues, approved vaccines are already being administered as part of ongoing mass vaccination programmes worldwide. Temperature-controlled packaging manufacturers continue to play a pivotal part in the global deployment of these, but as COVID-19 vaccines fall into different families of technology, some have frozen and deep-frozen temperature requirements, leading to a scramble to qualify existing solutions for shipping at those specific lower temperatures.
In a rapid response to the logistical cold chain challenges involved, we have adapted our shippers to meet those requirements, as have other providers. There has been an impetus for innovation to support these temperatures in volume. Suppliers stepped up to meet the vaccine temperature challenges by adapting existing shipping solutions. The capacity is there, so I don’t anticipate it will be an issue going forward.
The focus is reverted back to the capacities in the transport modes and – given the nature of these drugs – people are paying whatever it costs to ship them, with rates rising sharply from $2.5 a kilo to $23 – although, that is starting to calm down.
Beyond the current vaccines being approved there will be the need to provide boosters. It is going to create a recurring step up in the volume of vaccines being shipped, alongside the flu vaccines being transported and other pharmaceutical payloads every year.
There will not be a continuous crisis. There will rather be a continuing trend for smaller aircraft with reduced air freight capacities moving pharmaceutical products at temperatures that sea freight cannot do. It really can only fly.
However, there’s not going to be a modal shift from air to sea because sea cannot meet the temperature requirements. You get a displacement, whereby COVID-19 shipments, whether vaccines, test kits and reagents, or some of the therapies which help with recuperation, are flying at almost any cost on a dwindling resource.
The pharmaceuticals, which have more normal temperature shipping requirements, get displaced. In that situation, when the air freight rates get so high, sea freight would normally be seen as a shipping solution.
However, with all of the sea freight challenges, coupled with the fact that their transportation rates have also doubled, there has been some displacement – although not as much as pharma companies would have liked, which is what has kept pushing the prices up in the region of the $23 a kilo figure for air freight we had seen previously in the market.
Sea freight will improve in the first six months of 2021, so some of that displacement can take place more efficiently. Aircraft, however, will still be loaded with COVID-19 related products.
2021 will see the industry learning to operate in ‘the new norm’. Next year, we might start to see some improvements and efficiencies, but I think this year is about adjusting our planning, our capacities and our operations around this spike in demand and the gradually improving capacity picture. Almost like wearing in a new pair of shoes.
Aerial photography of Southern California full of container ships! Terminal operators expect to get rid of the dilemma by the end of spring
Recently, a cold wave swept the United States and quickly plunged the southern state of Texas into disaster. In this unprecedented cold wave, more than 4 million people in the United States have suffered power outages, countless power plants have been destroyed, and electricity and natural gas prices have skyrocketed. ; At present, the price of electricity in Texas has increased by more than 100 times, up to 9,000 US dollars per megawatt, and the price of natural gas has skyrocketed by more than 160 times, reaching US$500, compared with only US$3 in the past; it is jaw-dropping.
Except for Texas, which is in a serious disaster, other states in the United States are not doing well. There are about 168 million people in the United States under the threat of this cold wave. Numerous airports have been suspended. According to data from the flight monitoring website "flightaware", Dallas and Houston , Austin area airports have cancelled more than 2,000 inbound and outbound flights on the 15th . Coupled with the new crown pneumonia crisis that is still raging across the United States, the United States is really miserable.
In terms of shipping, the Southern California anchorage is full of container ships, and the congestion continues to worsen ! The latest video released by the U.S. Coast Guard provides intuitive evidence of the congestion levels in Los Angeles and the Port of Long Beach. From the picture, a large number of container ships are moored at the anchorage in San Pedro Bay, California.
U.S. Coast Guard aerial scene
Data shows that the historic container ship congestion in California ports has not really eased. There are currently 63 container ships in Los Angeles and Long Beach, and 32 container ships are waiting for berths at anchorages. (On February 1st, the highest record of 40 container ships anchored at anchorage)
The Port of Los Angeles announced the number of berth days for a particular container ship through its Signal platform last week. Data shows that some ships stay at anchorage and wait for almost as long as they sail across the Pacific Ocean . For example, as of last Thursday, the 6332TEU container ship "Ever Envoy" has been parked for 11 days. As of Tuesday, the 9,400TEU "MSC Romane" has been parked for 12 days. And the three container ships of 11356TEU "CMA CGM Andromeda", 8452 TEU "Ever Liven" and 4888TEU "NYK Nebula" also berthed for 11 days as of last week.
As of the end of 2020, the number of container ships at anchor has increased to 30; since then, it has remained between 20 and 40. At the same time, the number of vessels at berths in Los Angeles and Long Beach remained at around 20 and 30. Kip Louttit, executive director of the Southern California Shipping Exchange, said: "We seem to have adapted to the new normal of about 30 container ships waiting in line every day. I don't know if this situation will continue."
As of Tuesday, the average time for ships docking in Los Angeles was 8 days , up from 7.3 days at the beginning of last week. From the information on the waiting time of ships provided by the platform from January 27th, the waiting time for ships to berth has been maintained for about one week, and the data for the last two periods has been extended to 8 days.
The latest data from the Signal platform: 20 ships at anchor, with an average anchoring time of 8.0 days. There are 14 ships waiting to be pre-anchored.
What caused the blockage? The extended berthing time of ships forced some shipping companies to cancel multiple voyages this month. This is not due to lack of cargo demand, but due to lack of available vessels to handle these services. Delays on land have also caused congestion at sea: extremely high inbound volumes and complex logistics inside and outside the port have caused delays on land. One of the challenges facing the port is the new crown virus infection of dockers and a serious shortage of labor.
Despite productivity gains last month, terminal operators at the Ports of Los Angeles and Long Beach said the ports may have to wait until the end of spring to get rid of the ship backlog and congestion that have plagued them in the past six months . The near-record number of containers will continue into the spring of this year, but the backlog of ships at the port and the fully loaded inbound containers at the terminal should disappear sometime between April and June.
The managers of SSA Marine, Yusen Terminals and Fenix Marine stated that in order to alleviate the congestion in the port, two projects to be developed are necessary. First, the COVID-19 vaccine must be widely distributed among dock workers to alleviate the recent labor shortage. During the Lunar New Year holiday this month, container traffic has declined moderately, which should also enable shipping terminals to remove the backlog of fully loaded imported containers from their facilities.
"The terminals are full and there is no place to put these containers. We deliver 35% less cargo (to truck drivers) than usual," said Ed Dannick, president of SSA Containers.
According to data from the HarborTrucking Association, the average truck stay at the terminal in January improved from 93 minutes in December to 88 minutes, but it was still much higher than the record low of 58 minutes in June. Imports peaked during the recovery period after the first wave of COVID-19 lockdown.
The backlog of ships in Long Beach, Los Angeles, is increasing unabated. According to statistics from the Marine Exchange of Southern California, there are currently 63 container ships in the Port of Long Beach in Los Angeles, of which 32 are at anchor waiting for berths and 31 are at berths.
The latest data released by the Pacific Merchant Shipping Association (PMSA) shows that in December last year, the average container stay time at the 12 terminals of the Port of Long Beach in Los Angeles was 4.99 days. This is twice the average length of stay (approximately 2.5 days) recorded by PMSA in the first half of 2020.
“The longer the container stays at the terminal, the more serious the congestion will be. When the container piles up like a mountain, the congestion creates additional and inefficient handling requirements,” said PMSA’s government affairs manager jessicaalvarenga.
The new crown epidemic hits labor in the port
According to the Pacific Maritime Association (PMA), the West Coast port employers' Association and the International Terminal and Warehouse Union (ILWU), the new crown epidemic has severely affected the labor force along the Los Angeles-Long Beach Port. As of January 17, The International Terminal and Warehouse Union (ILWU) reported that 694 of its members tested positive. By January 25, this number jumped to 803.
PMA stated that there is a particular shortage of skilled equipment operators, who need to remove containers from trucks, and then move them into and out of the container yard, which is critical to the operation of the terminal. As a result, the joint committee of PMA and ILWU, which is responsible for allocating workers to the docks on a daily basis, cut the allocation share.
"It boils down to the labor issue at the terminal," said Scott Weiss, vice president of business development at Port Logistics Group, which has a large number of truck and warehouse operations throughout Southern California. "Containers still have bottlenecks in and out of the terminal."
The latest information released by the Signal platform of the Port of Los Angeles shows that due to the new crown epidemic, the productivity of coastal labor has decreased, which has caused ship delays and the average delay of port facilities is 8.0 days .
These ports are working with trans-Pacific shipping companies to reduce Southern California's load until the volume returns to normal. Gene Seroka, executive director of the Port of Los Angeles, said that he is working with shipping companies and terminal operators to "measure" imports until the port catches up. Hapag-Lloyd (Hapag-Lloyd) has announced the opening of a structured route to Southern California in February, and CMA CGM will remove Los Angeles from the trans-Pacific route and use Oakland as the first port of call from Asia. , Followed by Seattle-Tacoma.
The terminal operator said that when workers throughout the supply chain are vaccinated and imports drop, the congestion in Long Beach, Los Angeles, will disappear.
Spring recovery?
Alan McCorkle, President and Chief Executive Officer of Yusen Terminals in Los Angeles, said that in the past six months, the container throughput of these terminals was close to record levels, but there was no overall congestion. This fact shows that if the peak season does not last for six consecutive months, they will have Ability to handle peak season cargo volume. He expects to return to normal in May or June.
Scott Schoenfeld, general manager of Fenix Marine Services in Los Angeles, said that Fenix is showing signs of improvement, so he is optimistic that congestion may be eased as early as April . The density of containers in the yard is not as high as late last year, and more truck drivers are able to transport containers every day.
However, container traffic is still rising, and as overloaded ships continue to arrive in Southern California, this trend will continue until at least next month. NVOCC consultant Jon Monroe said that the eastbound transpacific shipping company has deployed or will add 10 additional loading vessels in February, all deployed at the Port of Los Angeles-Long Beach. Judging from the latest data from the Los Angeles Signal platform, there was another peak in the surge in volume in the eighth week.
Volume surged in the eighth week
Jon Monroe pointed out that although more Chinese factories will continue to maintain at least part of their business this month to clear the backlog of merchandise orders compared to previous years, the total volume of the East Pacific trans-Pacific region should be greater than the previous six months. Months are less.
Scott Weiss, vice president of business development at Port Logistics Group, said that the 1.8 billion square feet of industrial and distribution space throughout Southern California is not fully loaded, just like last fall before the holiday season merchandise was transferred to stores across the country. However, the availability of space in warehouses and distribution facilities has been mixed. "Some warehouses are in a mess now, others are working well. I think the ratio is about 50-50,"
Scott Weiss said that productivity has generally declined, and warehouses across the region are experiencing labor shortages due to the new crown epidemic, but at the same time, freight volumes are still exceptionally strong. "Everyone I contacted is experiencing record sales and growth, but everyone is working hard to cope."
Weston LaBar, CEO of the Port Transportation Association, said that the current truck capacity is tight, and the availability of workers at both ends of the truck driver's route, the terminal and the distribution warehouse, has been challenged . However, when workers feel safe, they return in large numbers. LaBar said: "The most effective thing we can do right now is to vaccinate."
For most of 2020, the Port of Los Angeles has been struggling to deal with the problem of container surplus. Now that there has been a dramatic turning point, the Port of Los Angeles has also experienced a shortage of containers.
According to the latest statistics from Container xChange, a professional organization in the container monitoring field, the Container Availability Index for 40-foot containers in the Port of Los Angeles has dropped to 0.29.
Container xChange’s marketing director explained: “In the 49th week of 2020, the port’s availability index value for 20-foot containers and 40-foot containers plummeted to 0.27. Compared with the average index from week 1 to week 8 of 2020, these two Both containers dropped by 57%."
It is understood that when the container availability index is 0.5, it represents market balance. If it is less than 0.5, it represents a shortage of containers.
This means that the Port of Los Angeles has a serious shortage of containers.
In the previous Port of Los Angeles, due to the large increase in import volume and the epidemic factor, the port was congested on a large scale, and the efficiency of container turnover was very slow. At the peak, 10,000-15,000 containers were stranded at the terminal, and normal operations were severely affected.
According to a research report jointly issued by Container xChange and FraunhoferCML, a maritime logistics research organization, in the third quarter of 2020, there will be approximately 1.5 million containers in the United States with a turnover time of more than 115 days, while the normal average time should be less than 80 days.
Previously, due to the large backlog of containers in the Port of Los Angeles affecting the supply chain, liner companies conducted large-scale empty container deployment to ensure the normal operation of trans-Pacific routes.
As empty containers continue to be shipped back to the Asian market, the situation at the Port of Los Angeles has undergone a dramatic turn.
The industry also analyzes that the current shortage of containers in the Port of Los Angeles is related to the serious port congestion, the imbalance of market supply and demand, and the labor shortage caused by the outbreak of the Los Angeles Port.
Container xChange CEO Johannes Schlingmeier previously stated that since the summer of 2020, the U.S. container transportation supply chain has been under pressure, and the Port of Los Angeles is facing labor shortages caused by the outbreak of the new crown pneumonia epidemic.
Lars Jensen, CEO of Sea Intelligence, an industry consulting firm, believes: "The main reason for the lack of containers is port congestion."
Regarding when the container shortage will be resolved, Container xChange predicts: "In the next few weeks, as every link in the trans-Pacific route supply chain will face tremendous pressure, container supply will fluctuate further."
Nerijus Poskus, vice president of shipping at Flexport in the United States, believes that the shortage of containers may improve in the second half of 2021.
Lars Jensen said that the lack of containers in the Port of Los Angeles should be resolved before the summer of 2021.
He further explained: "After the international financial crisis in 2008, we also experienced a shortage of containers. The shortage of containers in 2010 took about 3 months from the appearance to the resolution. If we put it now Under the same background, it means that the current lack of containers in the Port of Los Angeles may also be resolved soon."
In recent days, the shipping industry has been in a panic due to the shortage of containers, and ocean freight has soared abnormally, which has affected the supply chain of the manufacturing industry.
However, currently, according to an indicator that tracks global shipping containers, the global shipping shortage seems to be showing signs of easing.
The "Available Container Index" developed by the online platform Container xChange shows that this index can be maintained between 0.35 and 0.38 until the Chinese New Year in mid-February.
This index: if it falls at 0.5, it means that the supply and demand of containers is in balance; if it is lower than 0.5, it means that the supply of containers is in short supply; if it is higher than 0.5, it means that the supply is oversupply.
When the shortage of containers was the most serious last month, the index fell to an ultra-low level of 0.06 to 0.13 depending on the size of the container, and the index began to rebound this month.
It is reported that the imbalance of container shortages in 2020 will be particularly serious in Shanghai. As the Chinese factories resumed production after the epidemic eased, the demand for goods exported to the United States surged, but no empty containers were found to deliver goods out of the port.
But Container xChange said that the situation is now moving towards a normal level .
"One of the main reasons for the improvement in the imbalance between supply and demand is that the shipping industry has made every effort to transport a large number of empty containers from the world's major congested ports back to China. The Lunar New Year may become a turning point for the lack of containers. The Lunar New Year holiday starts on February 11. "
Port of Los Angeles, USA
According to media reports, at present, many shipping companies are eager to ship empty containers back to China from the Port of Los Angeles in the United States and refuse to carry American goods. This has largely alleviated the current shortage of containers, but it has caused the export of American agricultural products to suffer.
For this reason, the US Federal Maritime Commission (FMC) has stated that it will investigate shipping companies' refusal to load American agricultural products and transport empty containers to them. If the investigation is unreasonable, it will impose a fine.
US financial website CNBC reported that from October to November last year, it was the peak season for American agricultural products exports. Shipping companies refused to carry hundreds of millions of dollars worth of American agricultural products exports, and would rather take the time to ship empty containers back to mainland China ports to load profits. Higher Chinese export products.
So FMC launched an investigation and reviewed data from several key ports in California, New York, and New Jersey to find out whether the shipping company’s refusal to carry violated the Maritime Act.
According to FMC's survey, data from the Port of Los Angeles, the Port of Long Beach, New York and the Port of New Jersey, in October and November last year, it is estimated that as many as 178,000 standard containers were rejected. CNBC estimated the value of the affected agricultural products based on the export price of each TEU soybean/oil seed/grain item on the U.S. Bureau of Statistics website in the Port of Los Angeles.
However, industry insiders said that although shipping companies’ refusal to carry US agricultural products has caused losses to US exports, it has indeed alleviated the shortage of containers in global shipping to a certain extent in the near future, which is expected to be alleviated in the Lunar New Year.
Entering 2021, the imbalance between supply and demand in the container shipping market has still not been resolved, and the persistently high container shipping rate is becoming a major threat to the global economic outlook this year.
The shortage of containers is difficult to alleviate, and the freight rates of various routes remain high
Affected by the epidemic and the peak shipments before the Spring Festival, the volume of goods on the European and North American routes remained high, the port congestion, and the lack of containers made container turnover difficult, and the imbalance of supply and demand in the container shipping market has not been effectively alleviated. The freight rates of all routes around the world have remained high.
Recently, due to the epidemic situation, the port congestion has caused the average space utilization rate of container ships from Shanghai Port to Europe to continue to be fully loaded. Most ships maintain the original freight rates, and only the spot market booking prices have dropped slightly. According to statistics from the Shanghai Shipping Exchange, the freight rate (sea freight and ocean freight surcharges) for exports from Shanghai to the European basic port market on January 15 was 4,413 USD/TEU, down 0.9% from the previous period; the freight rate for Shanghai exports to the Mediterranean basic port market (sea freight) And shipping surcharge) is 4296 US dollars/TEU, the same as the previous period.
The North American route also has bottlenecks in container transportation. The average space utilization rate of ships from Shanghai Port to the East and West US routes is nearly full. The freight rates of the routes are stable, and the spot market booking prices have increased slightly. On January 15th, the freight rates (sea freight and ocean freight surcharges) for Shanghai exports to the basic ports of the West and East US ports were 4,054 US dollars/FEU and 4,800 US dollars/FEU, respectively. The West US routes rose slightly by 0.9% and the US East routes rose 1.1%. .
The South American epidemic is severe, the import demand is large, and the transportation demand is high. Consolidation companies are increasing overtime shipping schedules to ease the shortage of capacity. The average space utilization of ships on the Shanghai Port to South America route is over 95%, and most of the flights are fully loaded. Some shipping companies have increased booking prices, and the spot market freight rates have risen slightly. On January 15th, the freight rate (sea freight and ocean freight surcharge) for exports from Shanghai to the basic port market in South America was 8907 US dollars/TEU, up 3.2% from the previous period.
In Asia, the two major port congestion problems in Singapore and Malaysia, Port Klang are the most serious. Many European or Middle Eastern routes skipped these two ports and did not call. Therefore, freight forwarders had to ship customers to Singapore or Port Klang. The cargoes of South Korea will be imported and exported from the neighboring Johor Port. It is estimated that Singapore, Port Klang and Ho Chi Minh City may rise before the Spring Festival holiday on the Southeast Asian route.
At present, there is no news about the increase of freight rates on the routes of Europe and Southeast Asia. However, because of the obvious shortage of space, the purchase fee for the US route remains high. The purchase fee for the US Eastern route was increased to US$4,000/FEU in mid-January, but so far there has been a purchase fee of US$6000/FEU. The purchase fee has reached US$2500. In addition, the port of Los Angeles and the Port of Long Beach have recently reported that hundreds of dockers have been diagnosed. The multi-billion dollar logistics economy of the two ports may be severely slowed down. The situation is even more unoptimistic.
Consolidation costs have risen several times, and the global economy may be profoundly affected
Most people in the industry believe that the problem of imbalance between supply and demand in the container shipping market will continue at least until the first quarter of this year. Nerijus Poskus, deputy general manager of Flexport, a San Francisco freight and customs brokerage company, estimates that the current global container gap has reached 500,000, which is almost equivalent to the world’s 25 largest vessels. Compared with last year, the loading capacity of 20,000 boxes of ships may increase the pressure on shipping costs this year.
Experts pointed out that it is expected that a large number of empty containers in Europe and the United States will be shipped back one to three months after the Spring Festival in April and May. The shortage of containers is expected to be alleviated, but the specifics are still difficult to say. In the follow-up, the impact of the lack of containers can be judged by three major signals: retail inventory, global ship on-time rate, and the latest container ship supply and demand. If the retail inventory level remains at a low level, it indicates that demand is still strong; if the ship on-time rate starts to rise from a low point, it means that the port congestion has been eased.
According to Alphaliner’s latest estimates in December last year, the global container loading and unloading volume this year has increased by 3.5% higher than last year; the capacity supply has increased by 3.9% annually, and the gap between supply and demand has narrowed, which shows the oversupply of the container shipping market in the past decade The phenomenon has been reversed. Although this year seems to be a year of healthy supply and demand, if the epidemic breaks out again, the market will be full of uncertainties.
Strange phenomena are frequent under the epidemic. Although the global economy is still severely hit by the epidemic, the container shipping industry has experienced the most severe price increase in history, and the shortage of supply has intensified the upward trend of container freight rates. Comprehensive data shows that the current freight rates of popular routes such as the European and American routes have increased by several times. The Australian routes have increased substantially by nearly 9 times, and the European routes have also soared by more than 5 times, even for Southeast Asian routes. Prices have also risen, and have increased more than four times since the end of last year.
Some manufacturers frankly said that they can no longer afford the current level of freight rates, and it is even more difficult to pass on the additional costs caused by the soaring freight rates to customers. The goods that were supposed to be delivered in the fourth quarter of last year have not yet been able to ship due to lack of containers and no flags. However, the warehouse can no longer accommodate the piles of goods. Some European countries even bid 8,000 euros (about 63,000 yuan). No usable container can be found. This is a situation that has not been seen in the past few decades.
Obviously, the soaring freight rate caused by the imbalance of supply and demand has affected the operation level from the supply chain level. The company is forced to reduce production or increase inventory pressure, which affects cash flow, and even affects the entire industrial chain because of the reduction in orders. The demand side. Consumers and companies have to bear the increased cost of shipping freight, which may have a longer impact on the economy than the problem of "missing containers".
Container xChange said that the shortage of container equipment that has lasted for several months is expected to end because the container availability index (CAx) is undergoing positive changes.
According to Container xChange analysis, the Chinese New Year may become a turning point , with the 20-foot and 40-foot dry cargo index increasing to 0.34 and 0.37 respectively, indicating that the availability of empty containers is much higher than last month. CAx data comes from millions of containers tracked by Container xChange. Container xChange CEO Johannes Schlingmeier said: “An index of 0.5 indicates market balance, and a value below 0.5 indicates a shortage of containers.” Container xChange pointed out that although the latest data in January was well below 0.5, indicating that there is still a shortage of container equipment, but 20 feet and The 40-foot container data has begun to approach the normal container shortage level in China's main export markets.
David Amezquita, the company's director of data, said:
Compared with December 2020, the availability of 20-foot containers in January 2021 has increased by 37.5%, and the availability of 40-foot containers has increased by 200%, which is a positive trend.
Data from xChange shows that in the past few months, there has been an extreme shortage of containers across China. In Shanghai, which has always been in short supply, the index reached a record low in December 2020, of which the 40-foot container availability index was only 0.13. The company said that as China's container manufacturing plants are running at full capacity to expand production capacity, coupled with the shipping company's efforts to transport empty containers back to China, the Chinese New Year may become an important turning point.
With the substantial increase in container supply, Shanghai Port's container availability index is returning to normal levels. Other ports in China are also undergoing positive changes. Taking Qingdao Port as an example, the availability index of a 20-foot container even reached 0.5. The container availability index of other major Asian hub ports such as Singapore Port, Navassiwa Port and Port Klang also showed the same trend. Compared with December 2020, the availability index of standard containers at the Port of Singapore in January 2021 has increased by 58%, Port Nawahiwa has increased by 35%, and Port Klang has increased by 54%.
There are signs that the container availability index will remain stable in the coming weeks. Until mid-February, the availability of 20-foot boxes will stabilize at around 0.35, and the availability of 40-foot boxes will stabilize at around 0.38.
In the past two months, the cost of transporting goods from China to Europe has more than quadrupled, hitting a record high, due to the pandemic disrupting global trade and the shortage of empty containers.
Data from shippers and importers show that the freight for transporting a 40-foot container from Asia to Northern Europe has risen from approximately US$2,000 in November last year to more than US$9,000.
Lars Jensen, CEO of maritime consulting company SeaIntelligence, said that the reason for the increase in freight rates is the market's competition for limited resources-containers.
In the first half of 2020, due to a sudden slowdown in global trade due to the epidemic blockade, shipping companies have suspended large-scale shipping and thousands of empty containers are stranded in Europe and the United States. In the second half of the year, when Western countries' demand for Asian-made goods rebounded, competition among shippers for available containers pushed up freight rates.
John Butler, Chairman of the World Shipping Council, said, "The freight volume has dropped from a sharp decline to soaring to the highest level in history, and the effective handling capacity of the terminal has exceeded the upper limit."
He added that the congestion in the port has caused freight rates to rise, and shipping companies charge additional fees to compensate for the longer waiting time.
British freight forwarding company Edge Worldwide CEO Philip Edge said that some shipping companies charge US$12,000 per container, much higher than the US$2,000 in October last year.
The British Household Electrical Appliance Manufacturers Association stated in a statement, “According to member companies’ disclosures, shipping costs have increased by more than 300% since 2020. Especially for some commodities, the increase in shipping costs has exceeded the net increase Profit. Therefore, these costs will have to be passed on to the end user."
The owner of a leisure goods importer in Manchester said that the shortage of containers is having a “huge impact” on his business, and some orders placed in November are still waiting to be shipped. "The question is, is it to pay $12,000 now and pass the cost on to the customer, or to wait at the risk of exhausting inventory?"
Economists say that such interruptions and delays are beginning to affect global supply chains. Neil Shearing, chief economist at Capital Economics, said that "transportation pressure is accumulating and may increase further."
A recent survey by IHS Markit found that in December last year, the delivery time of manufacturing suppliers in the Eurozone reached the worst level since the peak of the pandemic lockdown in April. Shipping delays and general commodity shortages were "widely mentioned" by suppliers. .
The companies surveyed stated that they are consuming inventory of raw materials and semi-finished products, resulting in a decline in inventory.
Bert Colijn, senior economist at ING, said that "supply shortages and rising freight rates may slightly curb trade growth."
On the occasion of the Chinese New Year in February, the Asian manufacturing industry slowed down. Shipping companies hope to use this time to solve the problem of increasing backlog orders, which will temporarily cool freight rates.
However, BIMCO chief shipping analyst Peter Sand said that the shortage of containers may continue for a long time in 2021. Although the shipping company has ordered new containers, in his opinion, such a move is "too small and too late."
Lars Jensen also believes that although freight rates may drop slightly, "there are still a lot of goods waiting to be transported."
John Butler pointed out that only when epidemic-related restrictions are reduced and people have more diverse service choices, the pressure on the maritime supply chain can be alleviated, but no one can say when it can be improved.
The air cargo market has ushered in a new year, but there is no sign of cooling. International transportation activities usually weaken after the holiday season, but due to the unusual air transportation mode and the severe shortage of air transportation caused by the new coronavirus pandemic, demand and freight rates remain high.
The logistics company expects that the air cargo volume will not decline before the Spring Festival, because the manufacturer plans to continue operations during the traditional holidays.
The latest comprehensive statistics of World ACD and CLIVE Data Services in December show that compared with 2019, air cargo volume has fallen by only 3.7% to 5% respectively. These data show that the air cargo industry has recovered a lot since it bottomed out in May last year, when demand dropped by nearly 40%.
The demand for air transportation is largely driven by continuous inventory replenishment, the inventory-to-sales ratio of consumer goods is close to the lowest level in history, and a saturated marine container market. Analysts and logistics providers said that the congestion of ports and railways and the shortage of empty containers continue to push up shipping prices and cause serious delays, especially for main routes from Asia, which promotes a further increase in aviation demand.
The goods sought for air transportation include automotive equipment, consumer goods purchased online, and medical supplies related to COVID-19. Airplanes are also used to transport the new crown vaccine, because a large number of vaccines are transported by land, and sometimes only a few containers are needed for each flight, so it is not clear how many ordinary goods they replace. Nevertheless, when the capacity is tight, the vaccine will be given priority to board the plane.
San Francisco-based freight forwarding company Flexport said in a customer advisory update report that the remaining demand for game consoles and smartphone product releases in the fourth quarter will increase capacity constraints by mid-February.
Bruce Chan, vice president of global logistics at investment bank Stifel, said in a monthly comment that shippers are also more inclined to use air operations as an inventory buffer because their forecasting models have been completely overturned by the epidemic. He wrote: “Predicting consumption patterns and when they will stabilize is a huge fear, and the path forward is hardly linear, especially when the new coronavirus reignites and the government further implements blockades and border closures.”
In addition, many Chinese manufacturers announced that they will continue production during the Lunar New Year period from February 12 to 26. Factories are usually closed for 10 days or longer so that workers can celebrate with their families, but because the Chinese government encourages workers to celebrate the New Year on the spot, many factories will continue to operate this year. Flexport said this could create a backlog, as many freighter flights were cancelled a few weeks ago due to the expected full transport. Any backlog will depend on whether the factory continues to produce or take vacations at home.
The demand for air freight is so strong that experts predict that by the end of March the market will return to the level before the epidemic. This trend is in sharp contrast to the passenger traffic of the aviation industry, which is expected to remain sluggish until vaccination becomes more common in the second half of the year. Even then, the recovery of international travel may be slower, which means fewer aircraft for long-distance trade. Aviation industry officials said they don’t expect a full recovery until 2024.
Globally, freight rates are more than twice what they were a year ago, and freight rates from China to Europe and the United States are 2.5 times what they were a year ago. According to data from digital sales platforms, market information services and freight forwarders, the aircraft on these routes are full.
According to World ACD data, the average freight rate soared by 80% in December last year, from US$1.80 per kilogram to US$3.27 per kilogram, the highest year-on-year increase since May last year, but it fell by 10% since January this year.
Freight rates are under tremendous pressure, because although more all-cargo operators have added freighters and flights, global capacity is still about 20% lower than 2019 levels. The main culprit is the insufficient supply of wide-body passenger aircraft on international routes, most of which are still grounded due to the poor travel market. In fact, with the strict implementation of travel restrictions, airlines will reduce flights in the first quarter. For example, Air Canada and WestJet suspended 25% and 30% of their system capacity in the first quarter.
According to data from the International Civil Aviation Organization, the global all-cargo fleet increased by 22.4% to 673 aircraft in 2020. Airlines continue to increase capacity, including improved aircraft from passenger airlines, but this is not enough, because the space shortage is three to four times the decline in demand, and the gap may be even greater in the short term.
In the past month, Qatar Airways has added three Boeing 777 freighters to its fleet, and China Airlines and AirBridgeCargo have each added a factory-built aircraft. Swiss International Air Lines has added Seoul, South Korea and Lima, Peru to its cargo network. The flight from Zurich will be operated by a 777-300 extended-range passenger aircraft dedicated to cargo. The flight from Zurich will be operated by a 777-300 extended-range passenger aircraft dedicated to cargo.
In the past year, many freight forwarders have greatly increased the use of dedicated charter flights to ensure that they can provide transport capacity to their customers. German logistics giant DB Schenker significantly expanded its private aviation network last week. Now it has two routes, connecting Europe, Asia and North America for the first time. The cargo management company controls a total of 43 Boeing 747 or 777 freighter flights every week-equivalent to the space of a 135 wide-body airliner. Munich Airport is the hub for DB Schenker's intercontinental cargo between the United States and Asia.
The global container cargo volume has soared, and the existing container ships have almost all been used up, which has led to a sharp increase in container freight rates and container ship rentals.
Faced with the reality of shortage of ships, shortage of containers and high freight, what should we do?
There is no limit to rising container ship rents
As of 2020, the rental level of container ships has reached the highest level in 12 years, and this trend showed no signs of slowing down in the next few weeks.
The rising rent of container ships presents a sense of unlimited.
Clarkson Research introduced in the latest market report that with rising freight rates and continued optimistic forecasts, the demand for large ships in the chartering market, in particular, has not decreased. (Maersk: The congestion in the container supply chain will not improve in the near future)
In the past week, the income of all the container ship sectors has improved.
The charter rate for a 6800 TEU container ship with a charter period of 6-12 months rose further by 1% from the previous week to 34,500 USD per day.
In the ship type below 3000 TEU, the Atlantic and Pacific markets continued to be active, which led to the continued increase in charter rates. The charter rate for the 1000 TEU ship type under the 6-12 month charter period rose 3% year-on-year to 9,500. USD/day.
As shown in the above chart, in general, this year's container ship rental levels of various ship types have increased significantly compared with last year, not to mention the relatively flat or even sluggish market in 2017 and 2018.
Fearnley Securities, the Norwegian investment bank, said in a briefing on Monday that there are few signs that the container shipping market will stop its strong upward trend because demand continues to exceed the supply of capacity.
Fearnley's data also shows that the current container rent of traditional Panamax container ships under the current 12-month charter period has exceeded US$25,000 per day. In addition, the rent of larger container ships of 6000-9000TEU type has also been rising.
Fearnley added that the "activeness" of feeder-type container ships continues to increase, and the one-year rental level of a standard 1,700 teu container ship has also approached $18,000.
The highly influential New ConTex Index (New ConTex Index) provided by the Hamburg Shipbrokers' Association, which reflects the situation in the container ship chartering market, also continued to rise to 737 points from 726 points last week.
In fact, according to the index report of this institution, the rent levels of ships of all lengths of almost all ship types recorded in the report are continuously rising. As shown in the chart above.
There are almost no ships available in the world, causing freight rates and rents to skyrocket!
Clarkson said that in terms of freight rates, the Shanghai Container Freight Index (SCFI) reached a record high of 2783 at the end of 2020, an average of 56% higher than last year in the past 12 months.
Fearnley said that although the increase in the SCFI index for the week that ended on January 15 slowed down from previous weeks, the index rose by 0.5%.
The rapid rise in unbalanced demand in phases is the main reason for the sharp rise in container freight rates and container ship rentals.
For example, Xinde Maritime.com reported in "Container freight rates have risen sharply, should container shipping companies take the blame? "Introduced in "After experiencing the sluggish demand in the first half of 2020, the demand for container cargo has experienced an astonishing rebound in the second half of last year.
According to data compiled by BIMCO, the global container traffic dropped by about 7.3% (about 5 million TEU) in the first five months of this year, but then by November this year, the global container traffic dropped by only 1.7% compared with the same period last year ( About 2.6 million TEU). This means that in the second half of this year, container shipping companies have to meet the nearly 30% increase in cargo volume with the capacity to meet normal demand.
Trevor Crowe, an analyst at Clarksons Research, also said that the recovery in freight volumes is the main reason for the dramatic market volatility.
Clarkson said that in 2020, the global volume of container trade in teu is estimated to have fallen by 1.9%, which is better than initially worried about. But this number does not fully reflect the changes in the turbulent 12 months. In the second quarter of last year, the volume of seaborne container trade dropped by 10% compared to 2019. However, in the second half of the year, due to the backlog of transport demand released by the economy, the volume of container transport increased significantly.
At the same time, Clarksons Research stated that the growth of the global container fleet's capacity has remained at 2.9%, which was "under control" as expected last year.
The agency also added that the number of new ship orders in October (relative to the existing ship capacity) once dropped to a new low of 8%, but with the increase in orders, it had fallen to 10% by the end of this year.
The distant water cannot quench the thirst of the nearby, and it takes a certain amount of time to build a new container ship. With soaring demand and limited increase in container ship capacity, the global market's utilization of existing container ships has reached its limit.
According to data provided by the shipping consulting company Alphaliner for Xinde Maritime Network, the current global "inactive" container ships account for only 1%, which is approximately 600,000 TEU in total capacity.
It is worth noting that Alphaliner analyst Jan Tiedemann further explained to Xinde Maritime Network that the meaning of whether it is "idle" or "inactive" in the table does not mean that the ship is "in idle". layout' state.
Jan Tiedemann further explained that there may be several reasons for ship inactivity, including waiting, damage to be repaired, or being in the contract handover period. In addition, some ships in the shipyard’s docking repairs, special inspections, conversion of desulfurization towers or ballast water treatment systems are also classified as inactive ships. For example, out of the current inactive capacity of 600,000 TEUs, 370,000 TEUs are in In the shipyard.
According to the above data, this means that there are almost no ships that can be re-entered into the transportation market in the world.
No ships are available, so the rise in container ship rentals is of course a matter of course. In addition, because there are not enough containers in the world, there is a logical basis for the skyrocketing container freight.
