More pain for shippers 🤕 + Air cargo booming 🚀

SHIPPING NEWS

Soaring Costs and Limited Capacity Worsen Shipping Woes

Amid escalating freight rates, a persistent shortage of container slots on vessels departing from China is expected to continue, with industry insiders pointing out that global shipping faces ongoing capacity challenges without a foreseeable solution in the near term.

The situation is further exacerbated by disruptions in the Red Sea, primarily due to regional conflicts affecting maritime routes. Additionally, shipping rates from China to both Europe and the U.S. have seen significant increases. The price to ship a 20-foot container from Shanghai to Europe has risen by approximately 20% in the last month, now costing around $7,000, while some rates to the U.S. as reported in last weeks newsletter have hit as high as $10,000.

The demand for shipping has significantly increased in recent weeks and is likely to remain high. This surge in costs is driven by Chinese manufacturers, who are rushing to book shipping slots for their products, including toys, leather shoes, and festive lights, destined for overseas markets. With the onset of higher tariffs on Chinese goods by the U.S. and continued geopolitical risks in the Red Sea, exporters are preemptively sending out goods to accommodate the holiday demand from Western consumers.

In response to these challenges, companies are guiding clients towards multimodal transportation strategies, integrating rail and trucking services to circumvent the shipping bottlenecks. Meanwhile, the Shanghai Containerized Freight Index, a key indicator of shipping rates, has climbed 12.6% to a level of 3,044.77, marking its first breach of the 3,000-point threshold since August 2022, signaling sustained pressure on global logistics networks.

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VIDEO OF THE WEEK

The Scary Job of Cleaning Multi-Billion $ Ships Underwater

Cleaning ship hulls is crucial for maritime maintenance, focusing on removing biological fouling like barnacles and algae. This process, often conducted by divers or in dry docks, is expensive but vital for reducing drag, improving fuel efficiency, and minimizing environmental impact.

GLOBAL TRADE SNIPPETS

Air cargo heading for double-digit growth in 2024. Booming e-commerce volumes are propelling the air cargo industry towards a double-digit percentage increase in demand this year.

Container shortage is shipping’s Achilles’ heel. Surging freight rates have myriad complex causes but one is shockingly simple: Ships in China are running low on empty containers to carry goods. Unfortunately it’s impossible to immediately fill the shortfall and, once again, the container lines are cashing in.

Maersk’s new fuel surcharge turns heads. While local shippers appear to be still digesting news of Maersk Line’s new fuel surcharge mechanism, customers overseas have given it a mixed reception.

Russia avoids sanctions with new ship-to-ship oil transfers in mediterranean. Following a clampdown in Greece, ship-to-ship transfers of Russian oil have moved further west in the Mediterranean, just off the eastern end of Morocco's coast.

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LOGISTICS NEWS

Bids For DB Schenker Down To Four Large Players

Deutsche Bahn, the government-operated railway of Germany, has narrowed down the list of potential buyers for its logistics unit, Schenker. The contenders now in the final stage include the consortium of major industry players such as Maersk, DSV, Bahri, and CVC, alongside investment firms ADIA and GIC.

Deutsche Bahn is targeting the receipt of the final bids by July, according to sources close to the proceedings. Comments were sought from the involved companies; however, representatives from DSV, CVC, ADIA, GIC, and Maersk opted not to comment. There has also been no response from Bahri, the national carrier of Saudi Arabia.

The company's spokesperson shared insights into the selection process: "Following a detailed review of the initial proposals, which were non-binding, we have identified the groups that will proceed to the next stage of our divestment process." The spokesperson added, "These groups will have the chance to submit their definitive offers during the next detailed review phase. The sale process is moving forward as expected."

Previous discussions suggested that the offers received last week varied, with some exceeding 15 billion euros and others close to 14 billion euros. The sale is intended to help Deutsche Bahn reduce its considerable debt load of approximately 34 billion euros. The firm anticipates finalizing a deal by the end of the year, aiming to complete the transaction by 2025. Schenker currently boasts a workforce of over 70,000 employees spread across roughly 130 countries, including 15,000 in Germany.

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