News

Fracht Australia Logistics News - June 2024

28/5/2024

AROUND THE WORLD 

• RAIL STRIKE LOOMING IN CANADA.   A possible freight rail strike in Canada is not likely to begin before mid-July, according to rail carrier Canadian Pacific Kansas City (CPKC).  The ongoing uncertainties over the looming strike make it hard for Canadian chemical, fertilizer and other industrial producers, in particular exporters, to prepare for a work stoppage. After employees at freight rail carriers CPKC and Canadian National (CN) earlier in May voted for a strike as early as 22 May.  The matter was referred to the Canada Industrial Relations Board (CIRB), a tribunal charged with keeping industrial peace in Canada.  A legal strike cannot occur until the CIRB makes a decision.   In a statement, CPKC said that while it remains unclear how long it will take for the CIRB to issue a decision, “based on precedent, it is unlikely the parties will be in a position to initiate a legal strike or lockout before mid-July or later”.   Teamsters Canada Rail Conference (TCRC) said that it would have to give 72-hours notice before starting a strike, meaning that the earliest date for a strike to begin is at least 72 hours after the CIRB makes its decision.
• IMPORTS AND EXPORTS SHOWING RISING TRENDS. Latest figures from London-based Container Trade Statistics show global volumes grew to around 15,560,078 TEU (Twenty Foot Equivalent Unit) in March 2024, a steep rise from February’s 13,396,864 TEU and confirming first quarter recovery reports from leading container carriers. For Australasia and Oceania export volumes continued the steady rise seen since January, reaching 277,233 TEU in March compared to 234,337 in February and 206,191 in January. This year is also well up on last March’s 246,176 TEU. Imports for March 2024 were also up, to 361,330 TEU. This compares to 327,359 TEU in February and 357,643 in January. March 2023 saw 329,745 TEU, so this year’s looking much rosier for imports too.
• SEABORNE LIVE SHEEP EXPORTS BANNED IN 2028. The Federal Government will ban all live sheep exports by sea from 1 May 2028 in a move already condemned by the National Farmers Federation, the WA Government, the National Party and more but welcomed by animal rights groups. The Minister for Agriculture, Fisheries and Forestry, Senator Murray Watt, announced the decision in Perth on 11 May together with the government response to the report of an independent panel, appointed to consult with stakeholders to provide advice on how and when the government should phase out live sheep exports by sea. 

SEAFREIGHT NEWS 

• ONE REPORTS 2023 PROFIT COLLAPSE due to rates decline, but volumes were up. Japanese container line Ocean Network Express (ONE) has provided the first indication of the financial boost from the Red Sea crisis to carriers, as it released its 2023 annual report, which crucially also includes the first quarter of this calendar year. It said that, while the overall market continued to demonstrate sluggish demand on the key transpacific and Asia-Europe trades, against a backdrop of structural overcapacity stemming from the industry’s massive newbuilding program, the Red Sea crisis was likely to provide an unexpected earnings bump that will see the carrier surpass 2023’s profit. “For the full-year forecast for 2024, profit is expected to be around $1billion,a slight increase on the previous year, as the current economic and geopolitical environment are expected to continue for the time being.” the line said.
• Q1 BETTER THAN EXPECTED FOR MAERSK. Stronger-than-expected demand and continuing disruption from the Red Sea crisis produced a better-than-expected return for AP Møller Maersk in the first quarter, supported by increased profitability in its terminals division. Groupwide revenues in Q1 declined 13% year on year, to finish at $12.4 billion, while quarterly EBIT came in at $177 million, compared with $2.3 billion in Q1 23 – its overall margin declining from 16.4% last year, to 1.4% in the first quarter of this year. However, it was a much-improved performance on the previous quarter and represented an improved outlook from three months ago.
• SHIPPER FRUSTRATION as spot rates rise alongside demand, and cargo is rolled. A strengthening demand scenario on the Asia-European trades appears to have caught carriers and forwarders by surprise, and tightening space has increased the chances of shipments moving under long-term contracts being rolled. Maersk CEO Vincent Clerc suggested that European importers had now entered a period of restocking. Maersk saw a 9% growth in volumes into Europe during the period. Spot rates on Drewry’s World Container Index’s (WCI) Shanghai-Rotterdam leg saw 2% week-on-week growth, and in reality, many shippers may already be paying more to avoid rollovers.
• WALLENIUS WILHELMSEN HAS REPORTED “STRONG PERFORMANCE” for the first quarter of 2024, despite Red Sea diversions and one of its ships being trapped by the Baltimore bridge collapse. The PCTC (Pure Car and Truck Carrier) and roll on / roll off operator posted an EBITDA of US$438 million in the first quarter, a 10% increase from US$396 million in Q1 2023. Its Q1 net profit of US$185 million was a 7% increase on the US$173 million in the same period past year. Total revenue was unchanged year-on-year, with US$1.25 billion posted in the first quarter of both 2023 and 2024.
• JAPAN’S NYK GROUP SAW PROFITS FALL for all major divisions in fiscal 2023 (ending 31 March 2024), but revenues and net profit came in as the third highest ever achieved. Group revenues were JPY2,387.2 billion (down JPY228.8 billion) while net income was JPY228.6 billion (down JPY783.9 billion). NYK notes this is in comparison with the record year for both, 2022.
• HAPAG-LLOYD RESULTS show ‘significant swings’ creating uncertainty in the market. Despite seeing first-quarter carryings increase 6.8% to 3 million TEU, German carrier Hapag-Lloyd saw revenues and earnings decrease year-on-year due to lower average freight rates, which declined in the first quarter of 2023. As a result, revenues fell 24% to $4.26 billion while Ebit was slashed by 83.5% to €365 million, compared to the first quarter Ebit of €1.47 billion in 2023.
• AAL TO GET ADDITIONAL NEWBUILDINGS. AAL Shipping has confirmed two additional 32,000 DWT Super-B heavy lift multi-purpose ships ordered by parent Schoeller Holdings will join its fleet. The Super-B’s are 179.9 x 30 metres with a draft of 15.5 metres and the two extra vessels, to be named AAL Newcastle and AAL Mumbai, will have their lifting capacity increased to 800 tonnes thanks to an upgrading of crane capacity to 400 tonnes for each of the three on board cranes. 

AIRFREIGHT NEWS 

• INDIA’S AIR CARGO MARKET FLYING AS VOLUMES HIT RECORD HIGH. India’s air cargo market is proving a lucrative bet for freighter operators and other supply chain stakeholders as volumes rebound after Covid. Shipments in and out of Indian airports were up 7% year on year, to 3.4 million tonnes in fiscal year 2023-24 that ended in March. Countrywide volumes hit an all-time high in March, to some 330,000 tonnes, up from 293,000 tonnes in February.
• SURGING OCEAN WAVES SENDING RIPPLES INTO AIRFREIGHT. Disruption has also boosted sea-air transhipments via the Middle East and Indian sub-continent. WorldACD said “strong demand and the disruptions to container shipping in the region caused by the attacks on ships in the Red Sea continue to stimulate very strong air cargo demand from the MESA region.”
• CARGOLUX IS ON THE PROWL FOR ANOTHER 747 FREIGHTER. The freighter operator’s new Boeing 777F fleet won’t begin to deliver, at best, until the end of 2027, but chief executive Richard Forson – normally cautious when it comes to capacity – thinks its 30-strong current 747 fleet may not be sufficient in the meantime.  

OCEANIA PORTS 

• WESTERN AUSTRALIA PORTS SHARE IN NEW FUNDS.  The Western Australian government has allocated $373 million in new funding in the 2024-25 State Budget for projects at the state’s ports, involving significant maintenance and upgrades. The government says the additional funds for the state’s major ports between Broome and Esperance will provide ongoing capacity for forecast growth in imports and exports.
• AUCKLAND SCORES A TRI. Proposals to sell or lease the Port of Auckland have been terminated following the signing of a tripartite agreement between Port of Auckland, port owner Auckland City Council and the Maritime Union of New Zealand.  Port of Auckland will contribute NZ$1.1 billion in profits to Auckland Council over the next 10 years, which exceeds the projected net returns from investing the proceeds of a port lease by NZ$172 million. 

CUSTOMER SERVICE 

If you would like further information about any of the above items, please contact one of our friendly Fracht Team members at fracht@frachtsyd.com.au