News

Fracht Australia News - December 2022

29/11/2022

Another challenging year is coming to an end! There certainly are some positive signs developing towards the end of the year. However, while we have seen some improvements in respect to space capacity for air and sea freight, the return of more airlines to the Australian market, as well as some reductions in ocean freight rates from and to certain areas, a lot of challenges remain, and will most likely carry through well into 2023 and possibly beyond. 

The Fracht Group has been able to end this year in very good shape and we are very confident that thanks to our global network of offices, agility and very experienced and well-trained staff, we will be in a fantastic position to continue supporting our loyal existing and new clients navigate the current logistics landscape. With this last issue of our newsletter for 2022, we would like to say THANK YOU to all our valued clients, suppliers and offices in Australia and around the world for the excellent support and assistance. We wish you all a very MERRY CHRISTMAS, and a successful, healthy and happy NEW YEAR. 

As has become our tradition in recent years we will donate to charity instead of sending Christmas Cards.  Again, this year we will donate AUD 1,700.00 to the Children’s Medical Research Institute who are the organisers of the Jeans for Genes Day fundraising campaign.  CMRI is an independent organisation with over 170 scientists committed to finding treatments and cures for serious conditions affecting kids. They aim to make the incurable curable. 1 in 20 kids, that's 12 born every minute worldwide, faces a birth defect or genetic disease, and each one needs our help. Donations such as ours will allow CMRI to devote themselves to finding the genetic basis of these conditions, whether it's cancer, epilepsy, or something rarer. From those discoveries, CMRI aim to develop new treatments that achieve better results with fewer side effects.  

AROUND THE WORLD 

• CHINA – EUROPE RAIL VOLUMES are on the rise. According to China Railway, there were 12,000 train trips between January and September, with volumes increasing to 1.18m TEU (Twenty-Foot Equivalent Units), up 8% year on year. By comparison, throughput for the first eight months was 1.02m TEU. The volume growth marks a steady turnaround since the initial shock of the war in Ukraine and subsequent western boycott of Russian supply chains.
• TRADE DEALS WITH INDIA AND THE UNITED KINGDOM have passed parliament. Australian exporters, businesses, workers and consumers will soon be able to reap the opportunities and benefits of more open trade with India and the United Kingdom. The ECTA and A-UKFTA will enter into force after the respective parties have completed their domestic requirements.
• TRUCKERS BLOCKADE SOUTH KOREAN CONTAINER PORTS in a new strike over wages. Access to South Korea’s two busiest container ports, Busan and Gwangyang has been blocked, causing box traffic to fall to 40% of normal levels. The blockades are due to 25,000 truckers, members of the Cargo Truckers Solidarity Union, going on strike again, demanding a minimum wage system to manage the relentless increase in fuel prices.
• PROTESTS AT CHINA LOCKDOWN SPREAD, with supply chains looking vulnerable again. A fire which killed 10 people in Urumqi, capital of the western Xinjian region, appears to have triggered the widespread unrest, and strong-arm reprisals from the authorities, with protesters blaming COVID restrictions for delaying the response to the tragedy by emergency services. Similar protests broke out over the weekend in cities including Shanghai, Beijing Guangzhou, Wuhan and Chengdu. Newly imposed COVID restrictions are likely to impact the supply chain with lockdowns in Beijing, Wuhan, Chongqing, and a “work from home” recommendation in Shenzhen being put in place. 

SEAFREIGHT NEWS 

• NO JOY FOR CARRIERS as spot rates look set to drop below pre-pandemic levels. Container spot rates on the Asia-Europe and transpacific trade lanes are on course to dip below pre-pandemic levels before the end of the year, however carrier’s operating costs are significantly higher than they were in 2019, which could force more exposed lines back into the red in the first quarter of 2023.
• MSC MEDITERRANEAN SHIPPING COMPANY looks to add more 8,000 TEU utility vessels as its fleet ambitions grow. According to Alphaliner, MSC is said to be in talks with several Asian shipyards for construction of an “unknown number” of 8,000 TEU LNG dual-fuel-powered ships. An order for just three 8,000 TEU vessels would take MSC’s order book above an astonishing 2m TEU of newbuild capacity. Putting this in context, the orders for the new builds alone would represent the fifth largest container shipping line in the world.
• OCEAN RATES STILL COLLAPSING. Ocean carriers are continuing to blank consecutive head haul sailings from China to North Europe and the US west coast as they attempt to slow the erosion of the container spot rates. Asia to USWC is of particular concern for the lines, with rates on the route having collapsed from the highs of $20k per 40’ Container, plus premium surcharges, a year ago.
• RORO BOOKINGS LOOK TO BE IMPOSSIBLE UNTIL Q2 2023. Carriers are battling too little capacity amid a boost in demand to carry freight. Already, major RORO operators, including NYK, Wallenius Wilhelmsen and Hoegh have suspended bookings until the middle to end of January, and with no end in sight for the demand surge, forwarders looking to book cargo have been told that Q2 is looking more likely for shipments out of Europe to the Middle and Far East Markets.
• HAPAG-LLOYD’s PROFITS MORE THAN DOUBLES in the first nine months of 2022, being up 120% on the same period last year, while its TEU volumes increased by less than 0.1%. Group profit reached US$14.7 billion over the first three quarters of 2022, up from US$ 6.6 billion posted at the same period in 2021.
• TOO MANY CONTAINERS – The global shipping industry is facing a new problem – too many containers. While there was a shortage of containers at the height of the COVID Pandemic, the global economy is now facing the opposite problem, which causes issues at container depots who struggle to accommodate all the containers.
• FAILURE OF LITHIUM-ION BATTERIES poses a larger safety threat to the maritime supply chain than the industry realises, claims a new whitepaper, issued by insurers TT Club and UK P&I Club and scientific consultant Brookes Bell, which highlights the risks of transporting the batteries by sea. Insurers expect production and transport of lithium–ion batteries to rise rapidly in the coming years due to demand for “green power” for a range of products. However, authors of the whitepaper believe the maritime supply chain is largely unaware of the hazards and “potentially catastrophic” consequences of battery failure at sea.
• OOCL (ORIENT OVERSEAS CONTAINER LINE) orders methanol-capable containerships. OOCL said that the “green fuel technologies in these vessels were a significant milestone in its decarbonisation journey”. The Hong Kong – headquartered company expects delivery of these new ships to start from the third quarter of 2026. 

AIRFREIGHT NEWS 

• IATA REPORTS SOFTER AIR CARGO DEMAND IN SEPTEMBER. Global demand fell 10.6% from figures reported in September 2021 but continues to track at near pre-pandemic levels    (-3.6%). Asia-Pacific showed a decline of 10.7% in September 2022 compared to the same month in 2021. This was a decline in performance compared to August (-8.3%). IATA said the latest global goods trade figures showed a 5.2% expansion in August, which it considers a positive sign for the global economy, however expects this expansion to primarily benefit maritime cargo, with only a small boost to air cargo.
• CATHAY PACIFIC INCREASES INTERNATIONAL CARGO FLIGHTS between Hong Kong and Melbourne. The airline plans to expand its Hong Kong to Melbourne service from four to seven flights each week, beginning in December.
• PASSENGERS ARE BACK – but cargo still boosts results at LUFTHANSA. Passengers – and consequently belly space – are back, according to Lufthansa’s financial results. Last year, in the nine months to September, cargo produced about half of the revenues of passengers, while this year, logistics turnover accounts for about 22% of the combined passenger / cargo revenue. 

AUSTRALIAN PORTS 

• PORT OF NEWCASTLE CRANES LOAD FIRST CONTAINERSHIP. Port of Newcastle has, for the first time, used its two new mobile harbour cranes to load a containership. The Liebherr LH 550 mobile harbour cranes were purchased in July this year and were formally commissioned in late August. Port of Newcastle’s announcement follows the passing of a bill through the lower and upper houses of the NSW Parliament that would lift the cap on container throughput at Port of Newcastle.
• ENGINEERING CONSULTING FIRM WSP AUSTRALIA has been awarded the contract to lead the Supply Chain Integrated Design project for the new terminal at Westport. Westport is an initiative of the Western Australian government and involves investigating, planning, and building a port in Kwinana, south of Fremantle.
• NSW PORTS has been awarded Silver Partner status from Sustainability Advantage in recognition of its environmental achievements and decarbonisation efforts. “Sustainability is essential not only to our business, but to the success of the industries and communities with which we work”, said NSW Ports CEO Marika Calfas.

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