Episode Transcript
[00:00:06] Speaker A: Good morning and welcome to the Lodestar podcast news in brief, where as always, we're going to be recapping the main events from last week's supply chain news and giving you an insight on what you might see on the Lodestar this week. And to join me this week, I am very lucky to have on maritime consultant Mike Wackett. Hi, Mike.
[00:00:23] Speaker B: Hi there, Charlotte. Great to be back on, on the lowest on news channels, I mean, lots of things going on.
[00:00:30] Speaker A: Yeah. Great to have you back. So I wanted to ask you, seeing as you are the expert, what are ocean freight rates doing at the moment?
[00:00:37] Speaker B: It's a mixed bag, actually, Sean. What we've got we're seeing on Asia to Europe, we're seeing those rates starting to come under pressure. Looking WCI for last week, that was down 4% 7429 per 40 foot, but that's still a massive 340% higher than a year ago. So they've got a long way to go. But people I'm talking to saying that rates are coming down each week on the carriers I think are now having to discount because of that early peak season shrimp loaded surge. That now means that there's going to be quite a long slack season. Conversely, on the transpacific, rates were up last week. The US east coast are up 1% less, 157% up on the year ago. And for the west coast, which is going to come under a lot of pressure, I think they're up 2%, 196% higher than the year ago. And then we're seeing on the atlantic rate there from Europe to the US east coast just stable. Say I've just under 2000, but I think they will come under pressure as people try to get their cargo in before any trouble happens. On the US east coast, another big.
[00:02:00] Speaker A: Factor that affects the market is capacity. So how are things looking on that side? Carriers finding it easy to access available tonnage or easier than the Charleston markets.
[00:02:11] Speaker B: All signs is hopefully sold out. The non operating containership really having a field day and they've pretty much secured long time charters to all of their fleet, so there's just nothing around. And also soaking up all these new build ships that have come in. Of course that could all change as we go into the slack quarters, the winter season.
[00:02:37] Speaker A: Something else that you mentioned and something that I'm sure is on the forefront of shippers minds is the looming IlA strike. And this is starting to worry people a bit with the fast approaching 1 October deadline. But you wrote this week that carriers might not be as worried. Why is that?
[00:02:53] Speaker B: Basically because they always do well when there's disruption. The Red Sea crisis has turned their fortunes around again. Panama canal disruptions help rates to void up rates on the trans Pacific as well. So wherever there's a disruption, wherever there's congestion, capacity comes under pressure and hence rates go up.
[00:03:18] Speaker A: So they're going to be secretly rubbing their hands behind closed doors?
[00:03:22] Speaker B: Absolutely. Privately, although they would not admit to that. But everybody I talked to said, yes, we can't wait.
[00:03:29] Speaker C: Right.
[00:03:29] Speaker A: And talking of carrier profits, Zim released its second half results last week. What's this year been like for them so far?
[00:03:36] Speaker B: Very good. I mean, it's really pleased investors. Then I sort of regard them as minor entrepreneurs. I mean, they actually look to where they can make money and then go for it. And whenever you think they're down, they bounce back up.
Prior to the Red Sea crisis, which is rather ironic, of course, because as caused by the routers, they look to be under pressure with a long term charter capacities and some new ships coming, expensive new ships coming on charter for them, of course, they've been able to clean up. And as they said on their results message, that was a strategic decision to increase the company's spot market exposure. So effectively, what they've done is to go after spot cargoes and their average rate in the second quarter was $1,700 a tu, which compares to most 1250, because Norisk, of course, had around about 70% of their business under contract. So whilst the spots market is buoyant, then Zim is buoyant and they're really quite bullish for the rest of the year. That remains to be seen, of course.
[00:04:51] Speaker A: Thank you so much, Mike, you've been great. So perhaps the biggest news from last week was the rail strike in Canada breaking out on Thursday. This was a strike slash lockout, so the rail operators, Canadian national and Canadian Pacific Kansas City, locked out its employees, part of the TCRC union. But at the same time, the TCRC union employees were on strike and this began on Thursday. But on Friday, the canadian labour minister stepped in to end the rail strike and he ordered the two affected carriers to resume operations, forcing them into binding arbitration with the Teamsters union to resolve the dispute. Now, the labour minister said that he assumed trains would be running in a few days. However, the Teamsters union responded, saying that it would review the referral and consult legal counsel to determine the next steps. The union said despite claiming to value and honour the collective bargaining process, the federal government quickly used its authority to suspend it mere hours after an employer imposed work stoppage. This action mirrors their earlier interference this year where they used the CIRB to stifle the bargaining for months. So now the rail negotiations are yet again in the hands of the Canada Industrial Relations Board or the CIRB. They had meetings on Friday last this is an ongoing story, and we also.
[00:06:09] Speaker D: Reported last week that Bangladesh's Chittagong port is still struggling with congestion, and this is to do with the recent political upheaval that brought businesses across the country to a standstill last month, and it's still ongoing. We reported that container lines serving Bangladesh supply chains are trying to clear up the cargo backlogs at Chittagong port by deploying additional vessels.
However, chairman of India's apparel Export Promotion Council, Sudhur Sekri, said that in the long term, buyers are going to be skeptical of being overly dependent on Bangladesh. And Bangladesh has been one of the countries that has been gaining traction as a supply chain hub while the world tries to deploy the China one strategies amid growing trade wars. So definitely one to keep an eye on there and fingers crossed that things return to normality in Bangladesh very soon.
[00:07:07] Speaker A: So now you are back up to.
[00:07:09] Speaker C: Speed with last week's supply chain news. Here's what you might see crop up in the Lodestar this week.
[00:07:14] Speaker A: Well, the rail strike in Canada was obviously the big story of last week. And even though Canada's federal labour minister referred rail negotiations to the Canada Industrial Relations Board for binding arbitration, any decision by the International Relations Board on resuming the rail service could take days, weeks or even months. No one really knows. Meanwhile, the picket lines for the strike remain in place. The TCRC union indicated that they wanted to make submissions to challenge the minister's direction. Another case management conference was scheduled for Friday last week to hear further submissions by the parties, so we can expect some news to come from that this week. The longer that the rail network remains disrupted, the more ripple effects we're going to see across the supply chain into the coming weeks. We're going to see yard congestion get worse at the canadian ports and because of this dwell, times are going to increase. Container ships will then be diverting to oldenhouse alternative ports, which might include Los Angeles, Long Beach, Oakland and Seattle, among others. So congestion is probably going to get worse in those places as well as the extra capacity comes in. We will of course be reporting on any updates of the new Canada Industrial Relations Board procedure, arbitration news, and any knock on effects of the rail strikes as they unfold.
[00:08:26] Speaker C: Now, speaking of strikes, we do also have to keep an eye out for the pending strikes at ports in India set for Wednesday. Dock worker unions have threatened to stage an indefinite strike across ports in India from the 28 August, according to sources, though the indian government has advised dock worker unions of a revised wage hike proposal that it said it's open to implementing. So we may or may not see a strike break out in India on Wednesday. And then on top of this, as part of the ongoing negotiations for port workers in Germany, the central association of German Seaport operators submitted its final offer to the german trade union Verdi last month, and that contained two different variants for them to choose between or deny them both. Verdi's federal tariff commission had meetings on Thursday and Friday last week to decide on how to proceed based on the feedback that they got from the Verdi members. So we will be hearing the outcome of that very soon and if no deal is agreed, then we might see strikes across ports in Germany. So obviously a lot of strike action all across the world, and I mean, if they all coincide, then this is going to have huge supply chain repercussions such as poor congestion and delays that will then be exacerbated by the Red Sea diversions. So a lot going on and we will of course keep you updated this week. But in non strike news, I'm going to be attending a presentation from the International Road Transport Union about how fuel prices are going to be changing in the future with factors such as the road transport sector entering the EU emissions trading scheme in 2027, different national taxes and crude oil prices remaining highly volatile. So I'll be writing up a report.
[00:10:06] Speaker D: Based on what I learned from that.
[00:10:07] Speaker C: I also did a really interesting interview last week with jury's port and terminal insight editor Eleanor Hadland on port congestion and what the industry can do to mitigate this. So a write up of that will also be coming very, very soon. And there are, of course, always going to be things that you can't predict or plan for, but keep an eye on the loadstar and we will keep you updated on everything you need to know. Thank you for joining me and I'll see you next week.
