air freight

Peak season is upon air freight

Peak season is quickly coming upon the air freight industry. 

Forwarders are reporting limited capacity on Asia-US, with rates from Hong Kong into New York now hitting HK$36 per kg (US$4.58) on major carriers such as Cathay, Cargolux and Asiana. Los Angeles rates are marginally lower, hovering at between HK$30 and HK$35++.

“The air freight market is very busy in China and Asia,” said one Asia-based forwarder. “The rate is increasing every week. But space is still extremely tight, even with high rates.”

He said capacity ex-Hong Kong was particularly in demand, and bulky, loose or dense cargoes were struggling to find space – “It’s very busy.”

Forwarders have a three-day wait to fly cargo out of key hubs in Asia, he added.

Emirates is thought to be full already for the rest of the week, ex-Hong Kong.

Shanghai is also seeing strong demand, and there has been a rise in charter flights to the US, with charter rates increasing apace, and some destinations now not available.

Crucially, November 11, singles day, is coming up and forwarders are predicting higher demand from then through to the end of November.

One EU air freight forwarder said: “The market is going north quickly on air freight inbound flows from Asia. It’s the usual seasonal trend, but the market is tightening up.”

But, he added, he didn’t see the peak being as strong as last year.

“Last year was pretty special. But I reckon there will be some mega peaks and spikes in November,” he said.

“The transpacific market got really busy a week or so back and it is usually two weeks ahead of Europe. European carriers will go for the high dollar rates into the US – and then Europe rates will increase to win back the space. It’s market dynamics.”

Europe too is already seeing movement, but rates are said to be more unsettled, although rising, with some key tradelanes out of Shanghai already busy, with a four-day wait on ad hoc cargo.

Fuel prices are also on the rise, with many carriers raising surcharges, and all carriers out of Hong Kong will raise surcharges from Thursday.

The real question will be if airlines manage to profit significantly – and keep rates high by restricting capacity and selling as much ad hoc space as possible during the peak.

“As airlines went into blocked space agreement discussions this year, their view was that there was too much capacity contracted in 2017, and they didn’t get the results they wanted,” said Neel Jones Shah, head of air freight for Flexport. “So they kept it back this year.”

Another forwarder added: “There are a lot more capacity protection agreements this year that have been signed with the carriers. My gut feeling out of China is that it’s 50%  blocked space agreements and 50% the floating market – we are starting to get two market mechanisms, like you have in shipping.”

The other question is how e-commerce will affect the peak – and for how long.

Speaking at a CIFFA event two weeks ago, Jamie Porteous, chief commercial officer for Canada’s CargoJet, noted: “The peak is explosive, it takes off after Thursday and lasts to the end of January.

“It’s dominated by e-commerce. We have seen a real transition from single digit growth – we’ve now had double digit growth for ten quarters.”

Another UK forwarder added: “The cycle on e-commerce stops much later, people are ordering right up to Christmas. And there is a really early Chinese new year this year, so there will probably be a lot of air freight in January as the Chinese factories won’t have that long.”

Source: The Loadstar

christmas

Christmas bookings for sea freight need to be organised as soon as possible

Are you feeling festive yet?! Maybe not, but sea freight imports need to be organised soon to get them in time for Christmas! Time is of the essence.

Please contact a member of our team as we have very competitive rates for this month – email enquiries@supremefreight.com or call 02380 337778

We handle all types of cargo, including full container load (FCL), less container load (LCL) and NVOCC groupage shipments. We have long standing relationships with a global network of agents at all origin ports which means that we can offer you the best possible service. We have over 30 years experience in the shipping industry, and we can arrange all the necessary documentation to make sure that your goods are transported as seamlessly as possible.

Contact us as soon as possible with your needs so that we can make sure that you don’t miss out. Demand will see a massive increase at this time of year and we can help make sure that stress levels are kept to a minimum!

port terminal

Port terminals need to be more cost effective

Pressure is mounting on container ports to improve efficiency in terminal operations, as wholesale change in the shipping industry continues to increase competition and drive down revenue per box.

According to Mark Welles, Navis vice president and general manager Asia Pacific, terminal operators are “aggressively attacking their cost base and figuring out ways to use some of their tools to do more with less”.

This includes using automation to drive incremental changes that improve operational efficiency, whether waterside or at the terminal gate.

“Terminals are making the small or large changes they need to keep their businesses moving ahead against the challenges from consolidation on the carrier side,”

“Some terminals are handling more volume, but in some markets the revenue per teu is decreasing – or certainly not increasing the way it used to – so they’re having to manage their business in a different way.

“That efficiency drive has two parts: one is to be the better service provider [than regional port competitors]; but also to reduce your costs, which therefore either gives you more flexibility on the commercial side, or it means you’re a more profitable business,” he added.

Mr Welles was speaking after a visit to the Qingdao New Qianwan Container Terminal (QQCTN), which uses Navis N4, the port software specialist’s flagship terminal operating system (TOS).

“Full automation is working well for them and helping to set the stage for what’s possible in China and Asia, in terms of the success they’ve had,” he explained.

Navis has worked with ports to implement around 120 software “go-lives” at terminals around the world over the past two years. The port of Tianjin managed to install N4 at six terminals in less than 12 months, a feat Mr Welles described as “almost unheard of”.

The importance of a well-functioning TOS was brought into sharp focus by the IT failure experienced recently at Felixstowe. The botched installation of an in-house TOS led to prolonged operational interruptions and subsequent diverted vessel calls. The resulting supply chain disruption – which was at first contained to UK ports – has now spread to northern Europe.

It appears Hutchison, the Hong Kong port group that runs Felixstowe, was bucking a trend with the decision to develop its own TOS.

“It’s fair to say, from a macro-level, over the past five years we’ve seen more and more of the regional and global terminal groups partnering with an experienced solutions provider to ‘buy don’t build’,” said Mr Welles.

He claims ports generally prefer suppliers that provide turnkey solutions for the full spectrum of systems and equipment required for each aspect of terminal operations.

Source: The Loadstar

maersk

MSC, CMA CGM Present Plans for Fuel Surcharges

Following the footsteps of Maersk Line, the Swiss and French container shipping giants MSC and CMA CGM have unveiled their intention to introduce a new fuel adjustment surcharge ahead of the 2020 sulphur cap.

Mediterranean Shipping Company plans to introduce a new Global Fuel Surcharge as of January 1, 2019. The company expects its operating costs to increase significantly in preparation for the 2020 low-sulphur fuel regime.

MSC said that the cost of the various changes to the fleet and its fuel supply is in excess of USD 2 billion per year, the same as with Maersk Line.

“The new MSC Global Fuel Surcharge will replace existing bunker surcharge mechanisms and will reflect a combination of fuel prices at bunkering ports around the world and specific line costs such as transit times, fuel efficiency and other trade-related factors.”

Separately, CMA CGM informed that it decided to favor the use of 0.5% fuel oil for its fleet, and to invest significantly by using LNG to power some of its future container ships, and by ordering several scrubbers for its ships.

The company said that all these measures represent a major additional cost estimated, based on current conditions, at an average of 160 USD / TEU. The additional cost will be taken into account through the application or adjustment of fuel surcharges on a trade-by-trade basis, CMA CGM explained.

“The implementation of this new regulation, which represents a major environmental advance for our sector, will affect all players in the shipping industry. In line with its commitments, the group will comply with the regulation issued by the IMO as from 1 January 2020. In this context, we will inevitably have to review our sales policy regarding fuel surcharges,” Mathieu Friedberg, Senior Vice President Commercial Agencies Network, said.

The new International Maritime Organization (IMO) Low Sulphur Regulation will be effective from 1 January 2020 and will require all shipping companies to reduce their sulphur emissions by 85%.

Sulphur content in the fuel used for international shipping will have to be limited globally to 0.5%, compared with the current standard of 3.5%, in order to minimize the emissions.

However, Shippers have joined forwarders in condemning Maersk’s plan, pointing out that as the charge is per box, those shipping west with higher charges will end up paying for more collectively than they need to, to compensate for empties returning east. As  a result, the most profitable routes will enjoy higher-than-average surcharges.

In addition, Maersk is introducing the scheme a year before the higher fuel prices come in.

“Asking customers to contribute to new environmental costs is to be expected, but this charge lacks transparency; no data is available to let customers work out how the charge has been calculated,” said James Hookham, secretary general  of the Global Shippers’ Forum.

“Given historical experiences with surcharges, shippers are naturally suspicious over something shipping lines say is ‘fair, transparent and clear’.

“GSF will be taking this piece of financial engineering apart piece by piece, as we suspect this has more to do with rate restoration than environmental conservation.”

He added that Maersk could have chosen to fit scrubbers on all its ships, triggering a one-off expense, as some of its rivals are doing.

“For shippers, this is a better option than paying sulphur surcharges indefinitely.”

But he added that the unilateral manner in which Maersk introduced the change had also upset its customers.

“What also disappoints shippers is the lack of negotiation about the timing and the structure of the charge. It would have been better if Maersk had discussed its plans with individual customers in the course of confidential contract reviews, rather than just publishing something that wouldn’t be out of place in the puzzles section of your daily newspaper.

“We suspect that other shipping lines will be tempted to follow suit, but it would surely be of concern to competition authorities around the world if the same formula were to be used by other shipping lines, especially in the same Alliance.

“GSF would encourage Maersk to consult with customers and reconsider the strategy. These new charges may be all about low-sulphur fuel, but they still stink to us!”

Last week forwarders also revealed their anger over the “very major increases”.

“Rises of this magnitude are unjustified, and could be construed as blatant profiteering by shipping lines determined to exploit the situation,” said BIFA director general Robert Keen.

Source: The Loadstar / World Maritime News

port of felixstowe

UK haulage crisis is tightening

Shippers are facing an anxious wait as the crisis in the UK haulage sector tightens its grip.

CMA CGM subsidiary ANL has announced a six-day delay on export collections due to a reduction in haulage availability, and HMM revising its policy.

ANL told customers the next available collection at major ports, including Felixstowe, London Gateway and Southampton, would be 17 September.

It said the reduction in haulage availability was linked to “continued issues” at Felixstowe, and rail engineering.

The delay also affects the UK ports of Immingham, Liverpool, Teesport and Tilbury, with one source noting that it was not only exports being affected.

“Clearly delays are being suffered on import collections, which apart from giving problems to the supply chain, will also increase costs linked to rent and demurrage,”

HMM has issued new rules on UK haulage, telling customers that, from 1 October, shippers must undertake all export collections and import deliveries at “their own risk”.

It blames UK haulage for the policy change.

The carrier said: “The UK road haulage market continues to face ongoing challenges as a result of road congestion, a general shortage of vehicle, driver and rail availability, plus increased cargo volumes.

“The problem is exacerbated by other external factors impacting haulage productivity such as port congestion and vessel diversions.

“Reliability and punctuality of all export collections and import deliveries has been impacted and these issues are likely to continue as many are ongoing or long-term rather than seasonal.”

Furthermore, the carrier said, it had reserved the right to be up to 90 minutes late, while still expecting any containers arriving within that period to be loaded or unloaded.

“We will give no consideration of extended free time or additional costs,” said the carrier. “Wasted journey costs will apply for any container arriving within this 90-minute period which is rejected for loading or unloading.”

To facilitate improved service and free up resource availability, HMM said it welcomed “any opportunities” to unload or deliver at night.

The issues surrounding haulage were leading to shippers being dealt a “double-whammy”.

“They are being hit twice, as not only are they not getting shipment, but they are also being charged for their goods being left quayside,” said the forwarder.

“And anyone who doubts there is an issue need only look at the number of new enquiries we have had, and how, predominantly, they have all been linked to haulage – this is a major issue.”

The forwarder said the problems, which started with Felixstowe’s failure to successfully migrate to its new IT system, were spreading. Many shipments destined for the UK’s largest box port have been rerouted to London Gateway and Southampton.

“You are seeing how Southampton is being more and more affected by issues because of all the rerouting that has occurred,” added the source.

“It is still possible to get containers delivered at short notice, but the hauliers are ramping up the prices, so they have the incentive.”

Source: The Loadstar

port of Southampton,

As peak season approaches so could crisis point

One forwarder told The Loadstar all UK ports had been affected by problems ranging from driver shortages and rail failures to issues arising from M&A activity.

Advance road bookings now require up to 10 days lead time.

“We are seeing failures on some 20% of the boxes we handle; that’s thousands of boxes, and from what we are hearing some of our competitors have it worse,” said the forwarder.

The port of Felixstowe has borne the brunt of the industry’s ire, thanks to the delays and congestion resulting from its efforts to integrate a new IT system. Last week, OOCL and CMA CGM announced they were withdrawing services and redirecting them to other UK gateways.

MSC has now announced it will divert its India/Pakistan-Europe IPAK service to London Gateway from next week.

“People are now actively avoiding Felixstowe, because of its IT issues, and redirecting services into regional ports,” the forwarder continued. “Liverpool generally does not experience any issues but even there we are seeing delays and backlogs.”

However, another forwarding source noted that while the port of Liverpool had experienced some issues, they had been relatively short-lived. He said “a few” larger ships had been diverted from southern ports into Liverpool, affecting operations for a “couple of days”.

He added: “Drivers were waiting up to eight hours to collect a container, but only in a certain area of the port – which did create some unrest.

“It didn’t take long to get back up to speed, with us collecting five to six containers per day, delivering to our warehouse, unloading and returning the empty with one driver.”

For the wider industry however, another forwarder told The Loadstar, the core issue was a lack of haulage – a view that appears to be supported by carriers demanding seven to 10 days advance booking. Those that fail to book this far in advance have been unable to get access to haulage space.

“If expectation for booking is 10 days, whereas previously the entire turnaround could be completed in three days, that tells you there isn’t the haulage capacity,” said the forwarder.

“This causes its own problems, with ‘pay and play’ taking effect and hauliers only working for the highest rates. Those unwilling to pay? Tough, the hauliers will find work elsewhere.”

Alongside the lack of available road haulage, the UK is also suffering from limited rail capacity, and with peak season approaching it is likely to get worse.

We request that you please contact us at your earliest convenience to secure your bookings.

The port of Southampton is at the moment experiencing delays which mean it can take 10-14 days to get an available space rather than the usual 2 or 3.  Planning in advance is of upmost importance.

Haulage capacity seems to have dropped quite significantly and this needs to be taken into account when planning for the next few months.

Please contact us for further information or if you require any help or assistance. We will keep you updated of any developments.

Source: The Loadstar

Beast from the East

We are now entering storm and typhoon season…

Typhoons and tropical storms have already hit Asia during July and August which have had a serious impact on port operations.

This in turn means that we may experience delays caused by the inclement weather.

The number of vessels arriving into port is likely to be disrupted with ports closing because of poor weather conditions.  Port closures will therefore lead to longer waiting times and delays.

We will keep you updated of any developments and if you have any questions or concerns please contact us at your earliest convenience.

Singapore port

Singapore is ranked as the best shipping centre for 5th consecutive year

Singapore has topped the 2018 International Shipping Centre Development (ISCD) Index as the world’s best shipping centre for the fifth year in a row, beating cities including Hong Kong, Shanghai and London.

The index, which was published by the Baltic Exchange and Chinese news agency Xinhua, ranks 43 of the largest ports and cities in the world and serves as a guide for investors and governments on the most important shipping hubs.

Four of the top 10 ports are located in the Asia-Pacific region and three of them ranked in the top four spots. Singapore reached the highest place, thanks to its participation in the Maritime Silk Road initiative, which aims to strengthen connectivity and cooperation between Eurasian countries. Within this framework, customs procedures in Singapore, Hong Kong and the United Arab Emirates all performed efficiently.

Hong Kong overtook London to take second place for the first time in five years, while Shanghai was ranked as the fourth best shipping centre, thanks to its modern shipping logistics and services systems, as well as the development of its regional shipping counterparts.

“These shipping centres capitalise on their locations in developed shipping markets to provide comprehensive shipping services with abundant logistics and transportation support,” the study said. “Playing the role of international shipping hubs servicing a myriad of maritime trade routes and air flights, their development is buoyed by financial momentum from international economies and trades.”

Some of the major European centres dropped in the ranking due to the region’s overall weak economy: London fell one place to third; Hamburg came in seventh; and Athens was replaced by Busan in the tenth spot.

Rotterdam, however, gained two places to reach sixth, thanks to its improved operating efficiency and advancements in data gathering, artificial intelligence and other technology applications.

London retained first place (ahead of Singapore) as best centre for shipping services, a category that evaluates ports based on services covering ship broking, ship engineering, shipping business, ship repair, as well as maritime legal services and shipping finance services. The UK capital was also the centre with the highest number of maritime arbitrators, at 400, well ahead of Singapore in second place with 50-60.

Baltic Exchange CEO Mark Jackson said: “This report underlines the constant competition and innovation taking place in cities around the world to attract maritime related businesses. Location is an important ingredient for success in the shipping industry and plays an important part in meeting the latest challenges.”

Source: ShipTechnology.com

cosco

Mega Containership Equipped with ABB Turbochargers

China’s newest and largest container ship has ABB turbochargers installed to help to ensure optimal performance and fuel efficiency. 

The flagship in Cosco Shipping Line’s Universe mega containership series, the 21,000+ TEU COSCO Shipping Universe, was delivered in June 2018 by Chinese shipbbuilder Jiangnan Shipyard (Group) Co. Ltd. The vessel is equipped with three ABB A180-L two-stroke turbochargers to match the diesel main engine and four ABB TPL67-C33 4-stroke turbochargers to match four auxiliary engines.

Cosco, the largest container shipping operator in Asia and fourth largest globally, already has hundreds of ABB turbochargers in operation across its fleet and has also selected the equipment for all main and auxiliary engines across the six new 21,000+ TEU vessels being delivered by 2019.

At a capacity of 21,237 TEU, COSCO Shipping Universe has eclipsed the record for China’s largest containership set weeks prior by a different Cosco Lines vessel, the Cosco Shipping Virgo. The pioneering vessel has an overall length of 399.9 meters and an overall height of 72 meters, with a deadweight of 198,000 tons and a traveling speed of 22 knots. Cosco Shipping Universe is planned to serve in the route from the Far East to Northwest Europe.

Oliver Riemenschneider, Managing Director, ABB Turbocharging, said, “The ABB turbochargers on Cosco Shipping Universe will support maximum performance and fuel efficiency, in addition to contributing to Cosco Shipping Lines pursuing green shipping practices for long-term success. We foresee the ABB turbochargers on the forthcoming mega containerships in the Universe series will contribute similar viable operational gains.”

According to the manufacturer, key benefits for ABB’s A100 series include compliance with IMO Tier II and Tier III emission limits; reduced fuel consumption; high operational flexibility, reliability and availability; long intervals between inspections, routine maintenance and overhauls; absolute operational safety with rigorous testing and reduced engine room noise.

The TPL-C series, respectively, is designed to meet growing market demand for greater power, efficiency and long operational life, ABB said. In addition to its fuel savings and low emissions capabilities, the TPL-C series boasts a modular design with minimized spare parts for easy installation and service.

ABB Turbocharging also provides servicing support for all ABB turbochargers in use across the Cosco Shipping Lines fleet. The firm provides access to 24/7 servicing, 365 days a year, and guaranteed 98 percent spare parts availability.

Source: Marinelink.com

fuel increase

Why are fuel prices increasing?

Fuel prices are on the increase again, which is liable to have a considerable impact on the freight industry.

Fuel is now at its highest cost since 2014, and the main reasons for this are the war in Syria, Iranian tensions and biofuel for renewable energy increases.

As a result, pump prices and bunkering have increased and fuel surcharges are now coming into effect. Shipping lines are raising freight costs as the rising oil price lands them with spiralling fuel bills. This is likely to result in the the cost of imported goods rising.

Maersk, the world’s largest shipping business, has joined rival Mediterranean Shipping Co (MSC) in slapping a surcharge on freight costs to offset its own rising costs. MSC has also introduced a similar measure, telling customers the situation was an “emergency and no longer sustainable”. Maersk has also stated it would stop working with Iran as a consequence of the US introducing sanctions on the country, ending the its nascent business there.

Explaining the prices rises, MSC added: “Fuel prices are up more than 30pc this year, and almost 70pc since last June. [Ship fuel] prices in Europe exceeded $442 per metric ton last week. Crude oil is hovering around $80 a barrel — the highest since 2014.”

Warning its customers of higher charges, Maersk said the increase in ship fuel prices was “significantly higher than expected”, hitting $440 per ton.

Almost 90pc of the world’s good trade travels by sea, and the higher fuel costs are ultimately likely to be passed on to consumers, with other shipping lines following suit.

Since 2009, the price of a ton of bunker fuel from Asia to the US West and East and Gulf coasts has on average been 5.7 times greater than the price of a barrel of Brent crude oil. Assuming that multiplier and the IHS Markit forecast holds, the average cost for bunker fuel in 2017 should come to $330 per ton. Such an increase would raise the current BAF for 20-foot containers to $292 from $238 and to $324 from $264 for 40-foot boxes to the West Coast, according to the BAF surcharge calculator of the Transpacific Stabilization Agreement. To the East Coast, the BAF would rise to $537 from $473 for 20-footers and from $525 to $597 for 40-footers.

In order to address the trend in increasing fuel costs over the last decade, most shipping companies began restructuring their operations to create fuel efficiencies:

  • Consolidated services through multi-carrier alliances.
  • Consolidated routes to serve more locations with fewer ships.
  • Improved monitoring of hull and propeller conditions to reduce resistance and improve efficiency.

These actions have helped carriers reduce fuel consumption, and consequently, their fuel costs. However the challenge of rising fuel prices in 2018 is even greater than ever and the outlook is challenging for shipping companies and freight forwarders alike.

To add to the pressure, analysts predict that there is the possibility that shipping fuel costs could rise by as much as a quarter in 2020 when new rules limiting sulphur kick in. Today Emission Control Areas restrict the Sulphur Limit for fuel oil used by ships but the Emission Control areas are restricted to coastal areas in Europe and the US and Canada. Under the new global cap the reduced Sulphur Limit is imposed in all global waters. The predicted cost increase will come as the change to ultra low sulphur fuel oil comes at a much higher cost based on todays market.

Beyond rising costs, higher bunker prices are problematic for container lines because of the delay between when fuel prices rise and when the container lines are able to pass those increases off to customers. This means container lines must spend billions of dollars on more expensive fuel without necessarily having the funding needed to offset the increase, according to maritime analyst SeaIntel.

Source: Telegraph / pfe-express.com / JOC.com