air freight

Space issues causing trouble for shipping routes

Unusually tight capacity for the time of year is leading to rising rates, booking restrictions and backlogs for European exporters needing to ship from Europe to the Middle East and Asia.

This is in part attributed to exceptionally high levels of post Chinese New Year shipping cancellations, which have meant price increases for Europe to Asia container rates.

At this point, all bookings are being honoured, even though there seems to be a perception that this isn’t the case.

Hapag-Lloyd have introduced a US$200 peak season surcharge (PSS) for containers from Europe North Continent to East Asia, effective for sailings as of 15 March and valid until further notice. Many forwarders are recommending at least 3 weeks advanced notice of bookings.

The bankruptcy of the Hanjin shipping line last year has had a knock on effect from when it ceased to accept new cargo. Hanjin was the 7th largest container shipper in the world and the news has meant that their cargo has had to be distributed amongst an already nearly full to capacity fleet. Other shipping lines eventually took over their cargo, but at a price, with vessels already operating at high capacity.

Patrik Berglund, CEO of containerised ocean freight data specialist Xeneta said that data indicates that the current short-term rates for 40’ containers from North Europe to Asia averaged US$969. This level of pricing started in November and December ahead of Chinese New Year and had stayed high – and slightly continued to move upwards, Berglund said.
He said it was difficult to give a precise and short answer to the reasons for the current unexpected capacity crunch and high prices, but suggested it was due to a combination of carriers extracting more capacity than predicted demand and re-routing of capacity onto other corridors.

Xeneta had indicated in the lead-up to Chinese New Year that container lines operating on Asia-Europe trades were taking stronger measures than usual to maintain the recent recovery in ocean freight prices by making major cuts to capacity in the weeks after Lunar New Year. Since towards the end of 2016, the market has experienced a strong and sustained recovery, with container rates around 125% higher than they were around this time last year for Asia-Europe routes, Xeneta said. Xeneta’s sources had indicated that carriers were “taking stronger measures to deal with overcapacity to make sure the market stays up”, indicating that lines were attempting to prop up prices by reducing westbound sailings by 33% in the week immediately after Lunar new year and by around 43% from full capacity the following week. Xeneta noted at the time that this behaviour from carriers may mark a distinct difference compared with this period normally in previous years, when rates traditionally slide in the aftermath of Chinese New Year.

china uk

First rail freight service to China has departed from the UK

The first rail freight service from the UK to China departed on its 17 day, 7500 mile journey on April 10th.

British goods including soft drinks, vitamins and baby products are in the 30 containers carried by the train, which will be a regular service.The DP World locomotive left its terminal in Stanford-le-Hope, Essex, for Zhejiang province, eastern China. It will pass through France, Belgium, Germany, Poland, Belarus, Russia and Kazakhstan. It is cheaper to send goods by train than by air and faster than by sea, according to its operators.

The first rail freight service in the opposite direction, from China to the UK, arrived three months ago, the link to the news article we wrote is here. The new service is linked to Chinas One Belt One Road initiative, something we discussed in our news post here.

International trade minister Greg Hands said: ‘This new rail link with China is another boost for global Britain, following the ancient Silk Road trade route to carry British products around the world.‘It shows the huge global demand for quality UK goods and is a great step for DP World’s £1.5 billion London Gateway port as it also welcomes its first regular container ships from Asia.’

The train finally arrived in China on the 29th April (2 days later than the predicted 27th) and was greeted by traders and shipping company officials when it arrived at Yiwu West station.

air freight

Air freight rates climb in March

The latest figures from Drewry’s Sea and Air Shipper Insight report show that average ‘all-in’ air freight rates across 21 major east-west trade lanes increased by 7.9% year on year in March to reach $2.84 per kg. Prices were also up on February levels when airlines achieved an average price across the trade lanes of $2.73 per kg.

Drewry said that this time last year prices remained broadly flat compared with the previous month but added that current prices were still relatively low. The major airports reporting tonnage figure surged month-on-month displays that despite relatively low airfreight rates, there has definitely been growth in the trade. Capacity continues to rise, albeit at a slower pace than last year, although utilisation has gone up along with the rise in load factors.”

Major airports have seen double-digit rises, while key carriers also reported good tonnage increases – the biggest gains from Lufthansa, up 19% year-on-year, and American and United rose 24%. Meanwhile, airlines have reported that product launches are now no longer confined to the fourth quarter and perishables are in year-round demand.

Back in February, Drewry said it expected pricing to soften through March, due to lower volumes following the Lunar New Year holiday and the easing of congestion at the US West Coast ocean ports. However, beginning in April, rates should recover as air freight demand picks back up.

There was a two cent dip in prices paid compared with February, but month-on-month declines are expected at this time of the year and the rate of decline was much slower than that of both 2015 and 2016.

The improvement in airfreight prices comes as airlines have been seeing unusually high demand for the time of the year, with some suggesting this is down to a containership capacity shortage as shipping lines are in the process of launching a series of new alliances. Underlying demand also seems to be improving, while jet fuel prices have increased by around 30% compared with a year ago.

MOL Triumph

The worlds largest container ship takes its maiden voyage

The worlds largest container ship, the MOL Triumph, set off on her maiden voyage from Xingang, China on the 10th April. With a gross tonnage of 210678, deadweight of 197500 tonnes and length and breadth of 400m x 59m it certainly does pack a punch – with the ability to carry 20,150 twenty foot containers.

MOL will sail to Dalian, Qingdao, Shanghai, Ningbo, Hong Kong, Yantian and Singapore, before it transits through the Suez Canal. It will then continue on to Tangier, Southampton, Hamburg, Rotterdam and Le Havre before calling back at at Tangier and then Jebel Ali on the return voyage to Asia.

The new 20,000 TEU-class container ships are equipped with various highly advanced energy-saving technologies. These include low friction underwater paint, high efficiency propeller and rudder, Savor Stator as a stream fin on the hull body, and an optimised fine hull form. According to MOL, these technologies can further reduce fuel consumption and CO2 emissions per container moved by about 25-30% when compared to 14,000 TEU-class containerships. Additionally, the vessel has also been designed with the retrofit option to convert to LNG, in view of the implementation of the International Maritime Organisation’s new regulation to limit emission in marine fuels, which will come into effect in 2020.

MOL will take the delivery of the second 20,000 TEU-class vessel in May 2017. Eventually there will be six 20,000 TEU-class containerships unveiled, and they will be phased in gradually on the existing trade routes of MOL.

MOL Triumph takes the title as the world’s largest containership from the 19,224 TEU MSC Oscar and her three sister ships. The four vessels were delivered to Mediterranean Shipping Company in 2015 by South Korea’s DSME. They measure 395.4 meters in length and have a beam of 59 meters.

At this time, we are anticipating the ship arriving into Southampton on roughly the 11th May, and we will keep you updated with its progress.

one belt one road

China’s One Belt One Road Initiative – how will it affect global trade?

Since 2013 China have been advertising the One Belt One Road initiative, a scheme to join a network of roads, ports, railways and other links from East China through Southeast and South Central Asia to Europe.

This belt of land based links is paired with the Maritime Silk Road, which stretches from Australia to Zanzibar. The initiative involves developing six economic “corridors”: 1. a China-Mongolia-Russia corridor; 2. a new Eurasian “Land Bridge”; 3. a corridor from China to Central Asia and Western Asia; 4. a China-Indochina peninsula corridor; 5. a China-Pakistan economic corridor; and 6. a Bangladesh-China-India-Myanmar economic corridor.

Back in 2011, US President Barack Obama launched the Trans-Pacific Partnership (TPP) trading bloc across the Pacific region. The TPP is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (until January 23, 2017) and Vietnam.

Now that Obama successor Donald Trump has carried out his pledge to withdraw from the TPP, the expectations are that Chinese-backed strategies like the OBOR will gain momentum. China experts say that this is a positive development, but there is scepticism over whether Beijing will follow through with the large amount of funding needed, whether big debt-financed projects bankrolled by China will benefit the recipient countries, and whether those projects will actually make sense in the long run.

China experts and economists say that the initiative makes sense and that it will accelerate as the U.S. turns more insular under Trump. “It is unfortunate that many U.S. diplomats and members of the previous administration worked for nearly a decade to push toward the TPP and now it is torn apart,” says Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong. The U.S. is turning its back on the rest of the world at a time when the world needs an open and engaged America, he says. “It is very likely and understandable that China … will try to fill those gaps with this initiative, and that is very logical — it’s something the U.S. will later deeply regret,” Kuijs says.

One of the main factors driving the OBOR effort is the slowdown in China’s own economy. With this in mind the policies are seeing a drive to create new markets for Chinese goods, political influence in the region, and security for the country’s natural resources supply chain. The initiative is part of the larger plan to shift Chinese goods to markets and to create jobs for Chinese companies. The infrastructure also means that products can get from China to Europe in days rather than weeks – a significant reduction in cost and time.

It seems that moving forward without relying on trade from the US and other larger countries, and also Great Britain post Brexit, China is moving to become even more of a global trade super power. Realising that there has been a shift in the global trade agreements in recent years means that China is reacting proactively to an ever changing market. Forecasts show that the OBOR project may take half a century or more, but ultimately is more than likely to succeed.

London gateway

Big changes in shipping alliances open the door to the world for London Gateway

New London Gateway services are now available to and from the Far East in the wake of big changes in shipping alliances.

The recent changes are affecting the location and timing of many international shipments, one of the notable benefits however is that the London Gateway now has deep seas connections for the first time. The Alliance will be using London Gateway for two transatlantic loops and 2 Asia – Northern Europe.

Supreme customers looking to import their shipments to London and the surrounding area can take advantage of this.

Interested in London Gateway arrivals? Please contact our import team to discuss your requirements, we’d be happy to help.

 

airfreight-offer

Free customs clearance on any air freight bookings this month!

For this month only, we would like to offer our loyal customers free customs clearance on any air freight bookings made!

We have electronic links to all UK airports. This means that our team can skilfully arrange customs clearance for your cargo. With knowledge of all customs clearance procedures, home use, CFSP, IPR, OPR and warehousing entries we can also organise BTI classification for your goods.

Our team of highly skilled experts at our office at Heathrow Airport have extensive knowledge of handling all aspects of air shipments, with daily nationwide collections and an air freight consolidation service. We are able to offer a range of direct and indirect shipment options from any airport worldwide.

Contact us now to take advantage of this great offer! Call 02380 337778 or email enquiries@supremefreight.com 

 

 

Southampton freight terminal expansion

Southampton’s freight terminal plans further expansion

The planned expansion of Southampton’s container terminal will help cement it’s reputation as one of the fastest, most productive freight terminals in the UK.

With the mega vessels arriving in Southampton getting bigger and bigger, Southampton’s freight terminal are scaling up to match. DP World Southampton are investing heavily in new equipment, land and quayside cranes. This increase in capacity is great news for the local freight industry, and will only help to improve the speed and productivity of the Southampton Terminal, which is already widely regarded as one of the best in the country.

The terminal recently acquired an additional 11.2 acres of land at the north east edge of the terminal, creating 640 extra ground spaces to store containers and bringing the size of the terminal to almost 100 hectares.

As well as creating more container capacity, the 11.2 acres supports operations at SCT 5 – the freight terminal’s newest and largest deep-water berth, which opened in March 2014. The new land behind this berth enables shorter run distances for straddle carriers taking containers to and from the stack, improving productivity overall.

Nick Loader, Chief Executive Officer, DP World Southampton, said:

“Container ships are getting bigger all the time. The 11.2 acres of new land will allow us to increase the utilisation of SCT 5. It will also help us to be much more efficient so that DP World Southampton can continue to load and unload vessels faster than any other container terminal in the UK. Our customers tell us that we are the most productive terminal in the UK and we intend to stay that way.”

The terminal operator’s expansion plans also include:

• Investment in 17 new straddle carriers, being manufactured by Kalmar in Poland, to replace older equipment and bring DP World Southampton’s fleet more up to date.

• The purchase of a two additional new super post-panamax cranes scheduled for delivery in early 2018.

The size of container ships importing and exporting goods around the world has nearly doubled in just under 10 years. The world’s largest container ships regularly call at DP World Southampton including the MSC Diana at 19,462 TEU. However, there are already 21,000 TEU vessels on order for delivery during 2017.

The growth of the Southampton freight terminal will help to future proof it for dealing efficiently with increasingly larger vessels, which is great news for Supreme Freight as one of the major freight forwarding companies in the area.

Feel free to get in touch to see how this could effect your freight requirements.

Southampton ABP

ABP announces £50m investment in the port of Southampton

In September Associated British Ports (ABP) unveiled it plans to invest £50m in the port of Southampton on the English south coast. The major investment comes after the port has already benefitted from £32m in ABP investment over the past five years and will support the port’s continued growth over two phases.

ABP said that Southampton is the UK’s biggest port for vehicle handling, and that the expansion of its vehicle handling facilities will increase the port’s export capacity. In 2015 in excess of 900,000 vehicles passed through the port, of which 520,000 were for export.

James Cooper, chief executive of ABP said: “Southampton is the UK’s number one port for exports, handling exports worth some £40bn and it is the UK’s number one for vehicle exports.The port is a critical part of the supply chain for the British automotive industry, providing essential access to global markets.Our investment will build on this critical role and support our customers’ drive to continue to grow their exports well into the future.”

The first phase of £25m investment will see two new vehicle handling facilities built with a combined capacity of 7,600 vehicles to be stored en route from UK manufacturers for export worldwide.

An additional two facilities will be developed during the second phase of investment – a further £25m. In total the funding from ABP is expected to increase Southampton’s capacity by 15,000 vehicle spaces; bringing the total number of vehicle handling facilities in the port to nine and the total number of vehicles it can accommodate to 55,000.

The move has been welcomed by international trade secretary Liam Fox. Mr Fox said: “This investment is positive news not just for Southampton, but for our world-class automotive industry as a whole. Southampton is a key route for British brands to access international markets and this investment will allow exporters to take advantage of the global demand for British-made vehicles.”

Hanjin

Shockwaves across global trade networks as Hanjin Shipping collapses

Hanjin Shipping, the seventh-largest container shipment firm in the world collapsed in late August after its creditors stopped providing funding and it was forced to request court receivership.

Over $14bn in cargo was left stranded at sea, and shocked global trade networks were faced with unprecedented disruption. Container ships in transit at the time the news broke were forced to remain at sea for up to a week to avoid cargo being seized at the docks by creditors.

While some ships were seized, ports all over the world were forced to deny service to Hanjin ships because agents refused to unload cargo because they feared they would not be paid. The company had no option but to pay for unloading, which has continued into October.

Cho Yang-ho, the chairman of its parent company, Hanjin Group told a court hearing in early October that the Korean firm had reached the point at which it was no longer able compete sustainably against its global competitors in receipt of financial support from their governments.

He said: “What pains me the most is that due to the court receivership many ship crews were in the middle of international waters like orphans. I am very sorry and pained to have created a logistics crisis, but we did everything we could.”

The firm is currently compiling a plan for rehabilitation which it is expected to submit to a Seoul court before the end of the year. However, industry experts anticipate that in spite of its best efforts, the carrier will be liquidated in what will be the largest bankruptcy in the industry’s history.