What We're Reading: BDP Trendwatch Week 36

Truck

Tight trucking market may hamstring Laura recovery effort

In a year that has become the poster child for natural disaster, Hurricane Laura became the latest in a long line of internet meme-generating events that have characterized 2020. To make matters worse for the victims of the first major hurricane to make landfall in the U.S., the recovery efforts may be hindered by the tightest freight market in years.

The average national rates for dry van and reefer truckloads according to Truckstop.com have been increasing consistently after bottoming in early May, reaching the highest levels since 2018. Relief efforts are greatly dependent on transportation of supplies into the disaster zones. With carrier networks already strained due to the surging demand resulting from an economy both recovering and adapting, there may not be as much capacity available to bring in the needed supplies.

Source: Freight Waves

 

Several regions experience air cargo lull ahead of peak season

The rate pause for airfreight is in its third week and spreading beyond the China market, but industry experts expect spot rates to rise again in September as the peak shipping season kicks into high gear.

The per-kilogram price to ship from China to the U.S. fell 7.9% to start last week, with the rate from Shanghai down 10.7% and from Hong Kong down 5.4%. The price drop was greater than the prior week and included exports from Hong Kong this time, according to The Air Freight Index Co.

Airfreight users, however, report strong demand and rates in other parts of Asia outside of China, as well as for intra-Asia shipping. Hong Kong’s adherence to strict COVID testing and quarantine protocols for air crews continues to suppress activity there by some airlines, limiting available space for shippers.

Source: Freight Waves, American Shipper

 

Shipping lines learn to make money by balancing supply and demand

When countries began locking down their economies early this year in the face of the spreading coronavirus pandemic, the world’s container lines braced for a steep decline in shipping demand. Analysts warned that massive financial losses would soon follow at seagoing companies that carry the lion’s share of global trade.

Trade flows have in fact fallen, but the red ink for shipping lines never came.

Instead, profitability across the business is growing and some operators are reporting their best earnings in years.

Source: The Wall Street Journal

 

Collaboration key to West African port congestion

Solutions to the persistent congestion at Nigerian ports are multiple and must include a collaborative element, according to a Dutch consultancy report published last month.

Dynamar publishes regional reports throughout the year and the group’s latest West African analysis shows that the congestion, particularly in Nigerian ports, is persisting, but that the stakeholders are all busily pointing fingers at others rather than developing solutions.

Darron Wadey, senior shipping analyst and consultant at Dynamar, concluded, “This is a very joined-up problem, with no single cause and therefore no single solution. ‘The’ solution will, therefore, need to be joined-up and tackle all the issues raised.”

Source: Container News

 

U.K. companies aren’t preparing for Brexit due to virus, institute says

Many U.K. companies are not preparing for Brexit because the coronavirus pandemic has depleted their cash reserves, according to a major institute.

Firms are unable to stockpile goods due to the financial damage from the virus. Added to that, they’re unwilling to pay further Brexit-related costs on top of those already incurred preparing for previous deadlines, according to the Chartered Institute of Procurement and Supply (CIPS), a global body with 70,000 members. That creates a challenge for prime minister Boris Johnson and Cabinet Office minister Michael Gove, who leads the government’s Brexit planning.

“Johnson and Gove have to persuade people that it’s really going to happen this time,” John Glen, an economist at CIPS, said by phone. “Companies have got the double whammy of COVID-19, while also stocking up for Christmas and potentially for Brexit.”

Source: Supply Chain Brain

 

Panama Canal extends Covid-19 relief

The Panama Canal Authority has extended relief offered to shipping lines to help alleviate some of the problems associated with the global pandemic until the end of the year.

The extension of the temporary relief, first introduced in May, results from the ongoing dialogue between the Canal and industry leaders on how to navigate the industry’s way through the economic and social fallout associated with Covid-19.

"Despite the challenges faced earlier this year, I am confident we will see a steady recovery going into our 2021 Fiscal Year for both the Canal and its customers," said Panama Canal administrator Ricaurte Vásquez Morales.

Source: Container News

 

Global ship orders may take decade to mend as crisis builds

There’s hardly anyone buying new ships, with orders plunging to a 20-year low due to a potent combination of uncertainty over environmental regulations, the economic fallout from the coronavirus pandemic and a lack of financing.

“The IMO has brought in significant, ambitious and important targets around emissions,” said Clarksons Research’s managing director Stephen Gordon. It remains unclear the exact policies and regulations that might be introduced and what technology will be adopted, he said. Ships are long-term investments, and buyers run the risk that their vessels will become obsolete.

Source: AJOT

 

Emirates got $2 billion from Dubai to survive crisis months

Dubai’s government has put 7.3 billion dirhams ($2 billion) into Emirates since the coronavirus pandemic brought global air travel to a near halt in March and said it’s prepared to send more help to its flagship airline.

The state indicated earlier in the year it was committed to providing financial support to the world’s largest long-haul carrier, and a bond prospectus seen by Bloomberg shows the extent of the aid provided over the past five months.

“Any further support will be subject to the airline’s requirements and will depend on the impact and duration of the ongoing Covid-19 situation,” according to the document.

Source: AJOT Air Cargo News

 

Supply constraints limited air cargo growth in July

Global air cargo traffic was weaker than expected in July, but new export orders indicate strong sector growth for the remainder of the year, the International Air Transport Association said Monday.

Anticipation that airfreight bookings will take off again during the next few weeks is echoed by logistics specialists who see heavy ongoing demand for COVID-19 protective equipment, retailers building up holiday inventories during the traditional peak shipping season and major device releases from the likes of Apple, Samsung and Sony.

Air cargo volume showed modest improvement in July compared to June, but remained far below the level in 2019, according to IATA. The trade association said cargo demand fell 13.5% from July 2019 as the global struggles to recover from the pandemic, but the activity was better than June’s 16.6% year-over-year decline. International trade by air, which involves larger aircraft, was down 15.5% from last year.

Source: Freight Waves, American Shipper

 

Digitalisation given fresh impetus by Covid, but the logic was pre-pandemic

Shipping’s main challenge is to use the massive introduction of the digital tools, caused by the Covid-19 pandemic, to accelerate the development of safety solutions.

Digitalisation has probably become one of the most frequently used words in the container shipping lexicon. It includes all the new technologies that aim to increase the efficiency of the shipping processes.

But it remains unclear whether digitalisation and these new technologies have contributed to the safety and the security of the container shipping industry.

Source: Container News