June 12, 2023 thatsymlog There are no comments

This year, due to the decline in sea freight rates, many rail cargoes have been transferred to sea transport, which is a challenge for the rail market. Some industry experts point to specific problems related to rail transport. The average rail delivery time from China to Malta is currently 14 days, to Budapest 20 days and to Duisburg 21 days. Demand from China to Europe remains stable and the number of slots is sufficient. Rail freight rates fell in some regions, such as Chongqing-Mala by USD 400 and Chongqing-Duisburg/Hamburg by USD 600 per FEU.

 

Sea freight

Sea freight rates for transporting containers from China to Europe are stable. However, market sources suggest that they may fall due to capacity inflows. Currently, shippers offer average spot rates of $1125/FEU and $846/TEU.

Drewr spot rates:

- Shanghai-Rotterdam: $1452/FEU, down 6% weekly and -85% yearly.

- Shanghai-Genoa: $2130/FEU, down 2% weekly and -81% yearly.

Suppressed demand and increased supply of ships upset the balance, leading carriers and shippers to compete at unreasonably low rates. It is widely doubted in the industry that this year will be the traditional peak season.

According to Alphaliner's latest forecast, global capacity supply is expected to grow by 8,3% this year, while demand is only expected to grow by 1,4%. In 2024, supply is expected to increase by 8,9% and demand by 2,2%. The pace of capacity growth over the next three years will be the highest ever recorded. Carriers are slowing sailings to reduce capacity, but if shipping speeds don't drop as expected, capacity gains could be even higher. In addition, there is a risk of lower demand than forecast if the global economy weakens further.

On the positive side, the reliability of global schedules is further improved. According to the research firm Sea Intelligence, the reliability of schedules in April 2023 increased by 1,7% compared to the previous month and by 29,9% compared to the previous year, reaching 64,2%. Moreover, the average delay for late arrivals of ships decreased in April this year. by 0,72 days and is now 4,34 days.

The latest forecast by the World Trade Organization indicates that trade in goods will only increase by 1,7% this year, compared to 2,7% in the previous year. In May 2023, Chinese exports totaled $283,5 billion, down 7,5% from the previous year, while imports totaled $217,69 billion, down 4,5%. Chinese exports to the EU fell by 7% and imports by 0,9%. In particular, Chinese imports from Germany fell by 3,8% and exports to Germany fell even further by 8,3%. As global trade declines, freight markets may remain weak for quite some time.

 

Container production

Drewry reports a significant drop in production of 20 FEU containers, which fell by 71% year-on-year from Q2022 2023 to Q1,06 306, from 000 million units to 91 units. China International Marine Containers (CIMC), one of China's largest container manufacturers, reported a 77% decline in profits in the first quarter of this year. Sales of standard containers fell by XNUMX% year-on-year due to insufficient demand.

 

Rail freight

The average rail delivery time from China to Malta is currently 14 days, to Budapest 20 days and to Duisburg 21 days. Overall, demand from China to Europe remains stable and the number of slots is sufficient. Rail freight rates fell in some regions, such as Chongqing-Mala by USD 400 and Chongqing-Duisburg/Hamburg by USD 600 per FEU.

While freight volumes from China to Russia have recently declined, the supply of rail capacity exceeds demand. On the other hand, the volume of cargoes to Central Asia increased, which resulted in a shortage of slots.

As one of the major departure stations, Xi'an has witnessed a significant increase in rail operations and cargo volumes. From January to May this year, Xi'an transported 2 trains with 122 tons of cargo, an increase of 2% ​​and 002% year-on-year, respectively. Of these, 000 trains ran between China and Europe (53,4 from China to Europe and 74,1 from Europe to China), while 1 trains ran between China and Central Asia (899 from China to Central Asia and 967 from Central Asia to China). In May this year In 932, the Xi'an terminal handled a total of 223 trains, an increase of 188% compared to the same period last year.

This year, due to the decline in sea freight rates, many rail cargoes have been transferred to sea transport, which is a challenge for the rail market. Some industry experts point to specific problems related to rail transport

(1) Operation and adaptation incompatible with the existing market mechanism:

For example, while the train used to carry 41 containers, this year it must carry at least 55 containers. However, the Małaszewicze station in Poland can only hold 41 containers, leading to waiting times for 14 containers to be regrouped upon arrival, and this causes inconvenience to some customers.

(2) Unstable departure frequency:

Some platforms sometimes increase or decrease the number of trains unexpectedly to meet the target number of journeys. This can cause delays and affect the long-term stability of rail services.

(3) Unstable freight rates:

Few platforms offer rates with long contract periods, and there have been cases where customers have been asked to increase their payment when goods were already in transit. Such practices significantly affect customer confidence.

(4) Unclear transportation conditions:

Customers were forced to change their transport model after booking because the goods did not meet the loading requirements, highlighting the lack of clarity about the transport conditions.

Fortunately, rail freight operators are constantly working to improve the quality of rail services. The railway remains a well-known means of transport between Eurasia. After successfully transporting cold chain meat by rail, regular trains are expected to handle deliveries of goods such as beef and chicken.

 

Road transport

Road transport has recently reached its fastest speed since the outbreak of the COVID-19 pandemic. The shortest transit time from Shenzhen, China to Italy is currently 18 days, following a route through Kazakhstan, Russia, Belarus, Poland and finally reaching Italy. Road transport costs are also at their lowest level since the COVID-19 pandemic.

Reloading and changing tractors at the Polish-Belarusian border was a common method of entry into the EU. However, from June 1. Poland has banned tractors and trailers registered in Belarus and Russia from passing through the Koroszczyn border crossing on the Belarusian-Polish border. As a result, the traffic at the border crossing in Koroszczyn decreased by almost half on the first day of the ban. Currently, most cargo can only be reloaded onto European semi-trailers or enter the EU via Lithuania and Latvia. There are expectations that Russia will also ban Polish trucks from crossing the country, which could lead to Polish hauliers requesting a ban on all EU trucks passing through Russia.

Due to these uncertainties, truck shipments from China to Europe remain low. In addition, customers prefer rail and sea because of lower rates, unless the cargo is urgent or cannot be shipped by rail or sea.

 

news

(1) Trade between China and Russia

According to statistics published by China's General Administration of Customs on June 7, trade between China and Russia from January to May 2023 reached USD 93,806 billion, representing an increase of 40,7% year-on-year. Chinese exports to Russia amounted to USD 42,947 billion, showing a significant increase of 75,6%, while Chinese imports from Russia amounted to USD 50,859 billion, with a growth rate of 20,4%.

In May alone. In 20,573, the volume of trade between China and Russia reached USD 9,268 billion, with Chinese exports amounting to USD 11,305 billion and Chinese imports from Russia USD XNUMX billion.

(2) Trade fair of Chinese exporters

Many Chinese traders now travel around the world to attend trade fairs. However, it is worth noting that many companies have mentioned that their participation is primarily driven by government subsidies. Without these subsidies, they would not participate in the fair.

(3) Takeovers

There have been several significant acquisitions in the logistics industry recently:

  1. On June 6, Kuehne+Nagel, the world's largest ocean freight forwarder, announced the acquisition of Morgan Cargo in South Africa.
  2. After announcing the acquisition of Southern Companies in the United States on May 23, global logistics giant Geodis this week revealed the acquisition of ITS International Transport & Shipping Ltd., a Swiss freight forwarder with 31 years of experience.
  3. Hellmann Worldwide Logistics, the world's 11th largest ocean freight forwarder, announced the acquisition of its partner PKZ Group.

These acquisitions indicate ongoing consolidation and expansion efforts in the logistics sector.