Thursday Sep 19, 2024
Thursday Sep 19, 2024
Monday, 24 November 2014 00:00 - - {{hitsCtrl.values.hits}}
Meanwhile, 3D printing, which has been in existence for about a decade, can manufacture anything from jewellery and furniture to dental products and part for the nuclear industry. Both have yet to be fully exploited, but they have the potential to transform the way supply chains and deliveries are managed. There is no shortage of projects being tried. Internet and ecommerce pioneers Google and Amazon have tested drones for short range deliveries, while Deutsche Post DHL has been testing a ‘parcel copter’ for delivering urgent goods such as pharmaceuticals, although the logistics group says it has no plans to introduce a regular service. It’s not just logistics and ecommerce companies that can benefit from the use of drones. Manufacturers are also looking at the possibilities for moving parts around and so on. Drones offer enormous potential to release assets as companies would no longer need to rely on trucking capacity, for example. There are opportunities to reduce labour costs and even the possibility of increasing environmental benefits. Getting trucks off the road and reducing carbon emissions is likely to prove attractive to companies.
For manufacturing or business-to-business, spare parts would no longer have to be manufactured centrally and distributed: they could be printed locally. So this has the potential to threaten every logistics provider. Perhaps 3PL (third-party logistics) companies could merge with 3D printer services to produce parts at local service centres and then deliver them the last mile with drones.
Container freight rates fall by 21%
Last week’s Shanghai Containerised Freight index shows that prices between Asian and European ports fell 20.5%, or $ 241, to $ 934 per TEU. Following the partial success of general rate increases implemented on 1 November, rates were as high as $ 1,312 which means that they have fallen by as much as 40.5% in just two weeks. Regular Containers Freight Weekly commentator Richard Ward also warned of worrying reports that indicate that rates as low as $ 1,600 and $ 1,700 per FEU are available suggesting that this week’s SCFI will offer little comfort. He also noted that as a result of last week’s declines, Asia-Europe rates have now fallen for 33 out of the last 45 weeks. Just as worrying though there has not been any sustained organic increase during the course of 2014, with meaningful increases only being attributed to GRIs, he said.
Unsurprisingly there have been additional GRI announcements on the route of around $ 800 per TEU effective from 1-15 December, depending on carrier, he said. Whether demand will be strong enough to support such an increase is still unclear and it could easily aspire that the increase will be pushed back to coincide with pre-Chinese New Year cargo. Meanwhile, from Asia to the Mediterranean, rates also slipped $ 178, or 14% to $ 1,127 per TEU.
Worldwide container trades increase by 5%
In the period January-September 2014, global full TEU volumes increased by 5.0% year-on-year to 101.8 million TEU as per container Trades Statistics (CTS). While inter-continental trade rose by a decent 3.5%, intra-regional volumes were even up 8.8% to 30.4 million TEU. Exports container trade increased from all but one of the seven trade areas, the exception being North America whose worldwide box exports fell by 2.5% to 10.2 million TEU. Highest growth came from the combined Middle East/Indian Sub Continent region: 9.3% to 5.5 million TEU. After the Far East (34.5 million TEU), most full boxes (13.6 million TEU) were loaded in European/Mediterranean ports to their overseas destinations.
Maersk ahead of other shipping lines
Maersk Line produced its best quarterly result since mid 2010 in the three months to the end of September, with a net operating profit of $ 685 million as the gap over its industry peers continued to widen. The latest result represents an increase of 24% or $ 131 million on the 2013 third quarter figure of $ 554 million and was also well ahead of this year’s second quarter net profit of $ 547 million. The earnings numbers also show a huge turnaround from early 2012 when Maersk Line lost $ 599 million in the opening three months.
In what is traditionally the busiest part of the year for container shipping, the Danish line nevertheless estimates that its earnings before interest and tax margin over main competitors in the latest quarter increased to 8.5% points, well ahead of its goal of a five point gap. The return on invested capital soared to 13.5% from 10.9% a year ago and 10.8% in the 2014 second quarter. This was the eighth consecutive quarter in which Maersk had beaten its target of a five point margin above the industry average said AP Moller Maersk Chief Executive Nils Andersen. Speaking to Lloyd’s List shortly after the results were announced, Andersen attributed the performance to actions taken two years ago. “The big trick for us, apart from all the cost savings we have done, was back in 2012 and the decision to get rid of a lot of capacity that we did not need to be very realistic about our growth ambitions and to not invest in capacity in order to grow faster than the market.”
Warehouse space down by 40%
The volume of warehouse space rented and purchased in Moscow and its environs in the first 09 months of this year was almost 40% lower than in the same period in 2013, according to a report by property consultancy Jones Lang LaSalle (JLL). Plummeting demand is in sharp contrast to the glut of warehouses that have come on to the market in the Moscow area so far this year. The volume of new supply in 2014 could reach 1.6 million sqm, JLL estimates.
One possible consequence of the nascent recession in Russia could be that SME shippers are choosing to outsource their storage and logistics in order to reduce costs, it adds. According to France’s FM Logistic, one of the ‘western’ pioneers to enter the sector in Russia, the slump in Moscow’s warehousing market has led to logistics companies turning their attention to the country’s regions in search of growth.
Congestion in USA, driving sea to air
Ship delays in Southern California have worsened in the past 48 hours as more vessels arrived from Asia only to find berths already occupied. By late afternoon on Tuesday last week, 14 ships were at anchor outside Los Angeles and Long Beach, according to the Marine Exchange of Southern California. Of those, 12 were containerships, an increase of four from the Monday figure. The situation has been getting progressively worse over the past month as a combination of factors including a compressed of peak season, chassis shortages and larger ships created gridlock in the country’s largest port complex.
Ships at anchor included the 5,500 TEU APL Holland, 11,310 TEU MSC Francesca, 4,250 TEU YM Efficiency, 5,900 TEU OOCL Kuala Lumpur, 8,450 TEU Ever Learned and 4,800 TEU NYK Meteor. Most are waiting to enter Los Angeles, with only three of the containerships heading into Long Beach. Two bulk carriers are also anchored outside the harbour. Another six containerships were due to arrive, of which four should be able to berth and two will anchor and eight more are scheduled to arrive, of which one is expected to go to anchor.
US West Coast port congestion is driving significant sea to air freight conversion, boosting an already strong transpacific air freight peak season. Air freight executives told Lloyd’s Loading List that while Asia-Europe demand had seen a certain seasonal uptick but no real peak, the transpacific market had been exceptionally strong. Following several months of strong transpacific demand as a resurgent US economy and consumer confidence buoyed the US import market, extra seasonal demand from a number of customers has been bolstered by shippers concerned about the increasingly congested and uncertain west-coast ports situation and turning to air to ensure products are in place to meet pre-Christmas deadlines.
The writer a Maritime Economist is a Chartered Fellow (Logistics Transport), Chartered Shipbroker (UK), Chartered Marketer (UK) and a University of Oxford Business Alumni. He is also a Fellow of NORAD/JICA and Harvard Business School (EEP).
