Episode Transcript
[00:00:00] Speaker A: Hello and welcome to the Lodestar Podcast News in Brief, where we are going to be rounding up all the main points of last week's supply chain news. Coming up in this episode we are going to be looking at the supply chain fallout of recent conflict escalation in the Middle east, the latest tariff developments and all of the hot topic from TPM 2026.
And before we get into the news from last week, I just want to do a quick call to action. If there is anyone listening who thinks they might be available at some point during the week to hop on a quick call and chat about the week's news, we would love to have you on the podcast. I'd quite like to give my regular guests Gav and Alex a little break. So if you think that there's any particular stories that you'd like to have a comment on, then please do get in touch. Charlotteheloadstar.com and without further ado, I'm going to introduce my first guest for the episode. I'm joined by Alex Linnane. Hello Alex.
[00:00:55] Speaker B: Hello Charlotte.
[00:00:56] Speaker A: And a bit later on we'll be joined by Gavin Van Mael to talk about TPM 2026, but we're giving him a bit more of a break this week because I'm assuming he might be a bit jet lagged. He's just come back from la. So of course the major news from last week was the escalation of conflict in the Middle East. This is of course an extremely horrific and very scary situation for everyone in the region. So our thoughts are with you all, but we are going to be speaking about this purely from a supply chain perspective. Obviously the biggest impact was the closure of the Strait of Hormuz announced by the Iranian government, which meant that there was a wave of suspensions and cancellations of services from lots of different carriers, plus of course a multitude of work war risk surcharges or variants imposed. Container vessels about to transit had to make a U turn and many vessels were stuck and unable to leave and of course seafarers as well. This is expected to cause congestion at ports near the Gulf that were accessible or transshipment ports such as Port Klang, Singapore and Tanjung. Pelopus. Lionelitka noted that the disruptions arising from the reconfiguration of the Strait of Hummus related services would affect up to 10% of the global fleet and said that there would be obviously increased port congestion, tightening vessel supply and container equipment shortages. I think these things always go in a vicious cycle when there's some sort of major disruption and that is obviously going to push both freight rates and charter rates up in the short term. Alex, what has the impact been on air freight?
[00:02:20] Speaker B: Well, significant I would say.
As we all now know, the Gulf carriers are particularly affected by this.
Qatar for example I think hasn't resumed flights yet at the time of recording. There's bits and pieces of flights coming out trying to remove people mostly. I think the Latest data from AVN says that capacity, global cargo capacity is actually down 40%, which is huge.
And according to WiseTech, four in every nine air freight shipments on cargowise have been disrupted, which is about 45% of its customers.
So the interesting thing I think will be this week because Asian factories only just opened last week and goods haven't started coming out of them yet. They start coming out this week so that's really going to be tight for shippers.
We're already starting to see talk of reroutings.
So we've got Taiwan, Korea, Japan are now becoming alternative gateways.
Emirates which also warn customers about a force majeure event. So brace yourselves for that.
They're flying point to point services using European hubs like Amsterdam, Liege, Frankfurt and so forth and then trucking through Europe.
We are hearing that trucking is going to be quite an important part of the next few weeks in terms of air freight.
And forwarders are telling me that shippers are also looking at sea air options, charter flights, anything to try and avoid the bottlenecks.
And there is an expectation that some ocean might convert to air. So yeah, there's a lot going on in air freight right now.
[00:04:00] Speaker A: Yeah, that force majeure point is quite interesting. I was speaking to a lawyer and they were saying basically because force majeure is a clause in a contract, that means that either party doesn't have to fulfill the contract because of an unforeseen event, which is usually like the Black Swan events, I think they're labeled in contracts as acts of God, things like that, that can't be predicted. So I was speaking to a shipping lawyer and they were saying that force majeure isn't applicable here because this has been kind of a long time coming. I mean there's been attacks in the red Sea since 2023. We've seen ocean carriers reroute their network because of this. And she was saying when it's inbuilt in your network then it's not an unforeseen event. Obviously the strait of homose closure is separate to that, but it still was brewing for A while. So yeah, maybe get some legal advice if your service provider has claimed force majeure. Anyway, back to air. Alex, is it too soon to see a knock on impact on rates? What's, what's happened here?
[00:04:52] Speaker B: It's not too soon. No, it's happened. I spoke to a forwarder in Asia today and they said that rates had already gone up 10 to 15%. They're expecting it to get higher next week.
I had a quick look at the freightos fax terminal and yeah, you can see that rates particularly on routes to Europe and around the Middle east understandably are really spiking. The Trans Pacific hasn't. I can't see any change on the Trans Pacific as yet but I imagine there will be some changes and you've also got things like higher fuel prices, longer routings, presumably scheduling delays and so forth. So yeah, I think it's going to
[00:05:31] Speaker A: get pretty pricey on the ocean side I think. As you mentioned, factories are now opening. After Chinese New Year, the Drury World container index increased 3% but they attributed this to an increase on the Trans Pacific trade. So spot rates from Shanghai to Los Angeles increased 10% and those on the Shanghai New York route increased 7%. But at the same time spot rates on Asia Europe trades they said, well, were under pressure.
So rates on Shanghai to Rotterdam fell 2% and Shanghai Genoa increased just 1%.
One way that we could see rate increases is through these surcharges as I mentioned previously, but also through insurance. It's now a higher risk environment but also more likely to see delays and cancellations which also need to be covered against.
I think Gavin Van Ma was talking to me earlier about a discrepancy in the rates versus what he was hearing from forwarders versus what's been reported by the indexes. But we will get into that a bit.
Alex, fuel is another factor that might have a knock on effect on rates. Have we seen any impact there so far?
[00:06:35] Speaker B: Well, one of the things we looked into was that Qatar had announced a suspension of LNG production and exports and it accounts for about 20% of the market now. There's a lot of LNG dual fueled ships out there, but so we asked all the shipping lines and they don't seem phased at all. So that's not an issue.
Globally, oil prices have gone up about 9% so far at the time of recording.
Asia has seen the bulk of those rises.
There was an interesting little note from Transport Intelligence that suggested that operators review their BAF provisions in carrier contracts. Consider forward bunker purchasing at current prices and start telling customers exactly what's going on. Now, they ended with this quite alarming sentence which was this disruption is unlikely to be brief or shallow. So wait for it. I think it's going higher.
Wow.
[00:07:29] Speaker A: Yeah, there's already been a bit of fear mongering here in the UK with petrol shortages. I haven't seen any queues of petrol stations yet, but perhaps to come. Moving on to another major topic of last week, but one that was put on the back burner a bit in terms of headlines, that is, of course, tariffs. Last week we finally got a bit more clarity on the IPA refund process. So what is the latest here, Alex?
[00:07:52] Speaker B: So, yeah, the US Court of International Trade has ordered the CBP to liquidate affected entries without the tariffs and reliquidate those not yet final, which effectively just pushes the refund process further forward. It's also for all companies, not just those with court cases.
And Pete Mento, who is like the God of refunds really, he works for Baker Tilly. Now, he has suggested that it could all take a very long time and that the government doesn't want to pay out. So anything it can do to prevent it, it might well do.
We're also hearing not about refunds, but about tariffs in general.
Forwarders are saying that they're expecting there to be some front loading before the 150 day ending of the 10% tariff in July. It's expected to go up to 15%, so there could be a rush of cargo, early July, end of June, something like that. So just to add a bit more complexity in there for everyone, thanks, Alex.
[00:08:50] Speaker A: Is. Is God of God of Refunds his official, official job title?
[00:08:55] Speaker B: Well, I think he.
But to me, yeah, if you want to know about refunds, he seems to be the guy.
[00:09:00] Speaker A: Well, I'm gonna bring Gav into the conversation now because Gav, I assume that tariffs and geopolitics were both major themes of tpm. I'm not going to keep you long because I'm sure you're a bit jet lagged, but can you give us first of all some of the highlights of the event, please? How was it?
[00:09:15] Speaker C: It was. It was. Well, it was overshadowed by Iran, I think. And TPM seems to be this weird.
It seems to have developed over the last few weird. It's like a harbinger of world changing events. You know, the 2020, the 2020 TPM was cancelled at the last minute due to Covid, which we only found out about when we arrived in Los Angeles that year.
The first one after that the 2022 TPM was preceded by Russia invading Ukraine about three days beforehand.
2024 TPM we obviously had like.
Was it 25? God, I don't know. In 2025 TPM we had USTR and tariffs coming up and all that stuff. And then this year we arrive and we discovered that the US and Israel have started attacking Iran. And you know, I think that sort of.
That kind of slightly knocked the conference off its course a bit, as you would expect it to do. I mean I was, you know, the number of people who were doing sessions and would sort of say, oh right, ignore this slide. Sorry, I wrote this thing two days ago and obviously everything else has changed. It would be a slide referring to like Red Sea transits resuming or something like that, which most of these slides said, oh yeah, we can expect the Red Sea to start resuming soon. In fact, Lars Jensen had a slide which just said this slide is Memo to self, Lars, stop updating this slide. There's no point.
So there we go. That was it. We're wondering what next year will bring. I suspect it's going to be the Four Horsemen of the Apocalypse have just been spotted before TPM 2027. There we go.
[00:11:04] Speaker A: Do we think S P Global will do it on purpose so people attend the event and have lots to talk about?
[00:11:08] Speaker C: Well, if they did, that would. That would show they've got extraordinary geopolitical power, wouldn't it?
[00:11:14] Speaker A: I mean, yeah, it be incredible. Did anyone talk about anything else or was it basically just geopolitics?
[00:11:20] Speaker C: No, there was some absolutely great sessions.
You've mentioned refunds and ia. There was really good double session on the Union Pacific Northern Southern merger which has its critics and its supporters. We had Jeremy Nixon from one. It was his swan song appearance. That's there. Jens Drew from Helman. Great presentation on. On how they're looking at AI and. And the challenges of changing.
Changing the. Changing the. The company to address it. Great sessions and over capacity, port congestion. I mean basically, you know, you could.
The full list of. Of issues were addressed. It was just that it's very difficult to sort of concentrate them and focus your mind when you've got Iran going on at the same time.
And I, and I. And I do think there was. There was a. Certainly on the first day.
I mean the organizers said that there was. It was similar numbers to last year, if not more. I have no reason not to believe them.
But it felt quieter along the sort of corridors of tpm. You know that bit you're moving in between the conference sessions and, and into the exhibition stuff. And I, my own pet theory about that was I think quite a lot of people just had to go and work rather than tend to conference. You know, they're doing calls with their agents in the Middle east or their staff there or they're, you know, they're trying to work out the air freight problem. Yeah. Which is, which is really immediate.
So, so yeah, that was the sort of feeling I got from that.
[00:12:51] Speaker A: I mean do you think anyone got any contracting done? I mean that's what the aim of tpm, isn't it? It's so is it so Trans Pacific shippers can get their contracts negotiated? Do you think anyone actually was able to do this? I mean, I've heard that they're being pushed back quite a bit.
[00:13:06] Speaker C: Yeah, yeah, yeah, yeah, that that's exactly what was. What was being said. I mean the Asia Europe ones continue to be put into bay and the TP ones definitely push back.
Definitely had some sources telling me they revealing some of the new offers that being given to Trans Pacific shippers and their forwarders post the Iran conflict. And I mean very broadly if you look at today's spot rate on the Trans Pacific, which you alluded, which from the people I talk to at tpm, the Trans Pacific for is actually quite a bit below today's WCI rate. So, so at that point. So in the last couple of days the common transpacific spot freight rate was about sixteen hundred dollars according to those that I were talking to.
And they're the offers over the last couple of days for contracted volumes in 2026 now being at. Made at sort of two and a half thousand dollars for the west coast and three and a half thousand dollars for the east coast, which is a good sort of thousand dollars above the current spot rates.
So you know, there's. Yeah, that's the sort of discrepancy that, that you mentioned earlier.
I should actually say my favorite speech, I mean speech of the law was given by Hisham Al Omisi. I think I pronounced that right, but I probably haven't. Who gave a really, really fascinating insight into the Houthis which in the context of everything that's going on in Iran is, was really interesting. If you don't mind, I'm just going to take one minute to sort of relate what was what he was talking about. But, but basically we. So typically we tend to think of the Houthis as like Iranian proxies. Yeah. In the same bracket that we put Hezbollah. But what he was saying was that actually they've spent the last decade like developing their own factories. So they're not being made, you know, a lot of their weapons aren't being made in Iran, they're being made locally. They set up their own factories, they're sourcing the materials and components from that from all over the place, from Russia, from China, from other countries.
They're actually.
Their technological prowess has got to the stage where they've actually reconditioned a couple of, of Yemeni jet fighter planes that they caught during the things. They're actually operating those as well.
And basically this sort of 10 year drive towards sort of achieving operational independence has meant that it's also been accompanied by a kind of.
Hang on, sorry. It's been accompanied by basically the Houthis have won. They've really established very firm control over about 40% of the country.
And the leadership has become established to the extent that you're starting to see different factions being created within it.
So what you've got is a kind of hawks dove scenario, although that's funny way of putting it. But you all rather, as he put it, you've got sort of hardliners who believe that they should just start launching their rockets and drones and what have you at American military assets and Israel straight away.
And then you've got more sort of. He called them parasites, which. But what he was actually talking about sort of strategic thinkers within the Houthi leadership who are thinking, who want to see, want to wait and see what happens to Iran, because they believe that if this current conflict heralds the demise of Iran, it actually will create a power vacuum in sort of hardline power vacuum in the region that will allow the Houthis to step into that and become the de facto authority or the de facto leader of what they call the axis of resistance.
And in that context, because he noted that the sort of end goal of the Houthis, it's not just controlling Yemen, but he said they are intending on regional domination, so.
So how the Houthis respond in reaction to the Iran conflict is by no means certain.
And it was. Yeah, yeah, yeah, that was a really, really good session. So, well, well done to Mark Shakology and the JOC for putting that one together.
[00:17:41] Speaker A: Yeah, it sounds like there's lots of interesting takeaways from the event, which of course you can read all about on theloadstart.com and in case anyone's got FOMO from not being in Long beach last week, here is a little highlight reel put together by the Lodestar team who were in attendance there.
[00:17:57] Speaker C: Come check this.
[00:18:04] Speaker A: Come check this, Alex. We were not at tpm, but via the wonders of modern technology, we were able to catch a few of the panels there. There was one panel in particular with Wise Tech CEO Zub been Arpu. Was there anything there that caught your attention?
[00:18:28] Speaker B: Yeah, I mean, first of all, thanks to technology for not making me go on a long haul flight and I could listen to it quite comfortably from the comfort of my own home. But yeah, it was super interesting. It was meant to be about build versus buy, but the Zubanapu from wisetech said that actually it should have been about build versus or sorry, AI versus buy.
He made the point that really coding now is all done by AI. You don't really need coders anymore. And so in theory, everybody can do it. The difficulty with creating a platform that might rival something like cargowise is the vast amounts of stuff that isn't just about coding. There's the commercialization, there's regulatory requirements, there's customer relationships. I mean, he made it sound and it is very difficult.
So coding and AI is not the only answer to getting another TMS out there. But yeah, it was a really good panel, really enjoyed it and I'm sure we'll manage to get some more out of that this week in the Lodestar.
[00:19:27] Speaker A: So he's just warning against anyone who, who dares compete with them. It's a lot harder than it looks.
And a final bit of news that came out of last week was from the International Air Cargo association, that is Tiaka. They announced in their annual media day briefing that the Director General, Glyn Hughes, was stepping down from his role.
[00:19:47] Speaker B: Yeah, I mean it's, it's, it's super sad. He's been such an important part of the air cargo market. If anything, he's like grandfather makes him sound a bit old, but he's a. Yeah, he's a very, very key, significant person and he tells a lot of crap jokes as well. And we're all going to miss that.
I think what's interesting is he hasn't given an actual date of which he's going and they've opened up the, you know, the. Who's going to join as Director General. I think that's going to be absolutely fascinating. I would love to see who's applying for this and I hope it was someone. I hope it's someone a bit different this time.
Yeah, I hope it's someone a bit different this time. Maybe, maybe not a middle aged white male, could be anyone. But that's what's going to be really interesting. But yeah, we're going to miss him hugely and I hope he hangs around. I imagine. I imagine he won't properly retire. He doesn't seem like the sort of man he'll stop to be honest. We'll see.
[00:20:43] Speaker A: Yeah, it's really sad because I thought he was going to announce that he had taken a different position but he did just say it was a retirement. So we are going to miss him at the events.
[00:20:52] Speaker B: I think he might end up being a consultant or something like that. He knows too much. Or he'll write a tell all book which I will be first in line to get.
[00:21:01] Speaker A: Or maybe he could just come back to each of the events and do like a little stand up routine before the day's programming starts. That would be good.
Alex, what was on Premium last week to round out the episode?
[00:21:15] Speaker B: Well, we had results from DHL and Koonanagle and there was a sort of deep dive into who's bigger, so that's quite amusing. There are some exclusive information on changes at msc, a look at force majeure which obviously has come up quite a lot this week, and a look at how the Norfolk Southern Union Pacific merger is going to force CSX and BNSF into each other's arms somewhat and more obviously. There's always a lot there.
[00:21:46] Speaker A: Alec, thank you so much for your help this week. Really appreciate it. Thanks Charlotte and of course thank you all for listening or watching. If you are watching on YouTube, please like share, comment, subscribe all of that good stuff and we will see you next week.
