Container rates continue to plummet 📉👀

Author

Ben Thompson
September 28, 2023

Today’s newsletter is brought to you by EasyCargo. Efficiently plan and load containers to maximize space and reduce shipping costs.

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In today’s email:

  • Down We Go: ⚓ Asia-North Europe rates drop below $1000 per FEU.

  • 2 Can Play that Game: 🌮 Mexico follows China’s blueprint to grow exports.

  • Further Together : 🤝 Waabi and Uber Freight join forces to tackle autonomous trucking

OCEAN RATES

Asia-Europe Container Shipping Under Pressure

While the recent dip in trans-Pacific spot rates has garnered attention due to double-digital falls over the past month, Europe's shipping industry is grappling with greater challenges. The Asia-Europe trade, vital to container shipping operators has come under significant strain.

Freightos recently highlighted a divergence in the shipping industry's fortunes: while trans-Pacific spot rates still exceed 2019 levels, carriers struggle in the Asia-Europe lanes. The Freightos Baltic Daily Index revealed that China-North Europe spot rates have plunged below $1k USD per forty-foot equivalent unit (FEU) – the lowest since the commencement of FBX index reporting.

Exacerbating Europe's challenges, the Ukraine-Russia war has affected container shipping. The conflict has stifled Europe's domestic and external demand, intensified inflation, and doused consumer sentiment, as detailed by the Swiss National Bank. Europe's economic dynamics in turn are affecting spot rates which, after a brief surge in August, have receded. The FBX China-North Europe assessment plummeted to $996 per FEU this month.

Furthermore, the Asia-Europe lane is wrestling with weak demand and unprecedented capacity growth. The rapid capacity growth in global container-ship capacity the fastest ever recorded, is predicted to persist for another two years. A surge in Megamax deliveries – vessels tailored for Asia-Europe with a capacity of 23,000-24,000 TEUs – is intensifying the situation. With most terminals unequipped to manage these behemoths outside of Asia-Europe routes, the shipping pressure in the region is mounting.

Asia-Europe rates are approaching their 2015-2016 lows, a period marked by a relentless price war amongst container lines. Such a dip had led to significant financial upheavals, including the bankruptcy of South Korea's Hanjin.

Unlike the 2015-2016 crisis, ocean carriers are currently buoyed by substantial cash reserves, a legacy of their windfalls during the COVID-driven boom. This financial cushion might offer the resilience needed to navigate the tumultuous waters of Asia-Europe rates for the time being.

PRESENTED BY EASYCARGO 

Smart & Efficient Container Load Planning

EasyCargo, container and truck loading software, allows shippers to maximize the utilization of shipping containers, save time spent on load planning, and reduce shipping costs to remain competitive in today's forever-changing market.

Load-plan results are displayed using an interactive 3D visualizer. Cargo items can easily be added, moved, and rotated while reports can be generated and shared with 3rd parties. Also, Excel files can be uploaded into EasyCargo to generate container-loading visualizations. For even more streamlined load planning, EasyCargo can be integrated with TMS, WMS, or ERP through API.

The software covers loading plans for all containers, flatbed trailers, pallets, and more so that anyone can create accurate shipment visualizations within minutes.

VIDEO OF THE WEEK

How Mexico is Becoming the New China

Amid the US-China trade war, pandemic disruptions, and the Russia-Ukraine crisis, global trade is transforming. As China's growth leads to rising wages, Mexico emerges as an alternative manufacturing hub with unique geographical advantages although challenges like corruption persist. This video explores these shifts and their implications.

INNOVATION NEWS

Waabi and Uber Freight Partner for Autonomous Trucking Revolution

Waabi, a leader in autonomous driving technology has announced a groundbreaking partnership with Uber Freight. This collaboration aims to usher in a new era for the logistics industry by accelerating the deployment of AI-powered autonomous trucks at a remarkable scale.

At the heart of this alliance is the integration of Waabi's cutting-edge technology, the Waabi Driver, with Uber Freight's extensive logistics platform. This creates an unparalleled "driver-as-a-service" solution, empowering carriers to deploy the Waabi Driver, optimizing capacity for shippers, and adding significant value across the entire supply chain.

This symbiotic relationship offers carriers a comprehensive infrastructure, ensuring the seamless deployment, management, and maintenance of their autonomous vehicles. With plans to dispatch billions of miles of Waabi Driver capacity over the next decade on the Uber Freight network, this venture promises a transformative impact on shippers and carriers alike.

Already, these autonomous trucks have begun operating on the Uber Freight network, focusing on routes between Dallas and Houston. This early adoption provides invaluable insights and introduces the logistics sector to the future of supply chain operations.

Autonomous trucks present an immense opportunity for the logistics sector, promising improved asset utilization, enhanced road safety, reduced carbon footprint, and betterment of drivers' lives. However, realizing these benefits requires seamless integration into a large-scale freight network. This partnership offers a holistic model for this integration.

The Waabi Driver is a generative AI-powered technology, capable of learning and adapting to new road situations. Supported by Waabi World, an advanced simulation system, the technology ensures safety and scalability by exposing the Waabi Driver to an array of driving scenarios.

With challenges such as inefficiencies in supply chains, driver shortages, and rising safety concerns, this collaboration couldn't be timelier. Autonomous trucks could be the solution to these issues, ensuring safety, reducing emissions, and potentially even boosting job growth.

SHIPWRECK OF THE WEEK ⚓️☠️ 

The wreck of the general cargo ship William Cory below Boscaswell Cliffs, near Pendeen Watch in 1910.

The William Cory was on passage from Oulu, Finland, bound for Newport, Wales, with a cargo of timber pit props. On 5th September 1910 the ship was steaming in fog when it struck outlying rocks off Bottallack Head, putting a hole in the forward hull when.. Click here to view the wrecked Cargo Ship

 

GLOBAL TRADE SNIPPETS

First Paperless Shipment Sent From UK in ‘Landmark’ Moment For International Trade. The news comes following last week’s implementation of the UK’s Electronic Trade Documents Act. The shipment saw Fort Vale, a manufacturing firm based in Burnley, send a valve to Singapore.

China Industrial Profits Jump Sharply as Economy Stabilizes. Industrial profits increased 17.2% from a year earlier, according to data published by the National Bureau of Statistics on Wednesday. The increase in August was the first monthly growth since the second half of last year

Digital Yuan Picks Up Steam With Nearly 490,000 Vendors. China’s Changsha now accepts digital yuan payments, the city’s government has claimed as the nation’s central bank digital currency pilot continues.

RECOMMENDED READS 📖

The Silk Roads: A New History of the World: Frankopan realigns our understanding of the world, pointing us eastward. It was on the Silk Roads that East and West first encountered each other through trade and conquest, leading to the spread of ideas, cultures and religions. From the rise and fall of empires to the spread of Buddhism and the advent of Christianity and Islam, right up to the great wars of the twentieth century.

Traction: How Any Startup Can Achieve Explosive Customer Growth. For every startup that grows to the point where it can go public or be profitably acquired, hundreds of others sputter and die. Smart entrepreneurs know that the key to success isn't the originality of your offering, the brilliance of your team, or how much money you raise. It's how consistently you can grow and acquire new customers.

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