Episode Transcript
[00:00:00] Speaker A: Foreign and welcome to the Lodestar Podcast News in Brief. I'm your host Charlotte Goldstone. Thank you so much for joining me this week as we recap last week's supply chain news. This episode is sponsored by Etihad Cargo and Etihad Cargo know that it's never just an address, which is why they go beyond borders with their partners to ship valuable goods.
So to start this episode off, I need to say that last week was a very busy one. We don't have time to cover everything in detail and still keep it brief. So I'm going to give you a quick overview of some news items that you might have missed and if they interest you, then you can read the Full report on TheLoadStart.com There was a ship fire aboard the Zodiac Maritime operated vessel Morning Midas that was carrying lots of electric vehicles that were most likely the cause of the fire. Colombo Port is seeing a drop in tonnage due to the trade restrictions from escalating tension between India and Pakistan. Cma CGM are eyeing a multi billion euro investment program in Algeria and Indian aviation authorities have claimed Turkish Airlines is guilty of multiple lapses in regulatory compliance.
So as I said, all the details of those stories and many more can be found on theloadstar.com now to get into the main part of the episode, I am joined by Lodestar publisher Alex Linnane to chat about last week's trip to Munich for Air Cargo Europe and Transport logistics. So just briefly Alex, what did you think of the event and what did you find out were the hot topics right now?
[00:01:36] Speaker B: Yeah, I spend most time in the forwarding halls actually this time. Well I bounced between there and Air Cargo Europe which as you know is completely the opposite end of the vast space.
But in forwarding there was quite a lot of chat about DSV shedding its customers. In fact, you can read more about that on Lowstar Premium this week where we ran an article looking at how DHL and Kununaga will fare.
There was also a lot of chat about cargo wise and it's TMS and it's near monopolistic hold on the top forwarders.
Bit of gossip there and I had some really fascinating chats with Vestra and forwarders. I mean to be honest they were quite late night chats with much wine having been drunk so they were quite interesting. It was about the industry, about being taken over by DSV and it's worth watching the LO Star for more on what it's like to be taken over by DSV and it Was really interesting to see how companies were marketing themselves. There were some brilliantly cheeky ads from forwarders who are not being taken over, promising stability.
I saw loads of cool tech that was really impressive.
Weirdly, DSV Stan actually was probably the simplest. I had a little look around and I couldn't see any particularly impressive text being shown off, really just a demonstration of a ball flowing down some tubes, which I suspect was meant to mimic the supply chain. But yeah, theirs was quite simple.
Some stands were super friendly, others super unwelcoming, but most of all, what was so noticeable is the amount of money that is spent there. It's insane. I mean, really shocking. So I do hope it was worth it for everyone.
Anyway, you can read my comment on it and all the forwarder gossip on the Lodestar. Oh, I should also mention that I was on a panel on Green Hushing with Rinus logistics finner and handler sats organized by Meantime Communications and it was really interesting. We gave away tips on how you get news into publications and they talked about how difficult it was to be good environmentally, frankly, in the air cargo business.
But this was your first time in Munich, Charlotte, what did you think of it? How are your feet now? And what was your step count in the end?
[00:03:42] Speaker A: Oh my goodness, it was an exhausting event. I think my total step count in the end was about 6,60,000 steps, which I worked out was the equivalent of roughly walking a marathon. Maybe I should have tried to get a sponsor for that. Yeah, a very busy few days, lots of interviews, so nice to meet so many new people. But I can definitely see why it's a once every two years type of event.
[00:04:03] Speaker B: Yeah, definitely.
[00:04:04] Speaker A: Airlines seem very keen to expand in pharma, high tech and perishables and we're quite keen to get the message out that they are not focused on E commerce. South America and Europe seem to be the markets that are seeing increased demand. And air carriers also seem to be quite bullish about volumes for the second half of the year too. On the ocean side, Gemini is still maintaining its reliability and Hapag Lloyd expects that in the second half of the year there's going to be less growth than in the first half. I spoke to Rolf Habon Jensen, their CEO, and he did say that the real reliable indicators that we have for that demand are very, very few.
It's interesting because he also said that everybody predicts that volumes are going to fall off a cliff. He said that he's heard that prediction for five years and it's never happened.
[00:04:47] Speaker B: I saw A picture of you with thumbs up with Rolf Habern Janssen. That was very cool.
[00:04:51] Speaker A: It'd be nice. He's a lovely guy. Yeah. I was having this conversation with Gav. He seems to kind of stick out from the other ocean carrier CEOs. He's very personal, more approachable. Yeah, he's very happy to talk to the media, which is very nice.
[00:05:03] Speaker B: It was quite nice, wasn't it? To find out who's approachable and who's friendly and who's not.
[00:05:09] Speaker A: I'm now joined by Gavin Van Maal to talk a bit more about the demand on the ocean side. And Gav, you reported that carriers are still pushing capacity into the Trans Pacific. Can you talk a bit more about this, please?
[00:05:21] Speaker C: Well, yeah, there's quite a lot to unpick here, Charlotte, but basically the bottom line is that all the capacity withdrawals that carriers made after the tariffs were announced and bookings dropped have been completely reversed and then some. I mean, June and July according to carrier schedules and the analysis by EC are at the moment looking like record breaking months in terms of capacity. The question is whether that capacity will actually continue to be provided as we move into June and July and certainly for June, now that we're here, it's certainly looking like it's going to be a record breaking month, whether that continues into July.
Certainly the forward schedules would suggest that it will do, but whether it actually does is a different question because the current 90 day pause on the tariffs come to an end on the 9th of July. Now, if he suddenly decides to put the tariffs back at where they were on April 2, then I think you're likely to see all that capacity withdrawn as quickly as it's being returned. Contained Trade Statistics released its numbers at the end of last week for April volumes. So this was the first chance we really got to see how the tariffs actually affected shipments. And my God, was it chaotic picture. I was there for hours scratching my head. But the bottom line again is that overall imports into the us, this is on all the trades, not just the Trans Pacific, everything declined 11.5% compared to April 2024.
CTS said that 10% of that, not 10% of 11.5%, but 10% of that decline it attributed to the tariffs. And it was worth trying to just recall because it's easy to forget how many twists and turns this story has had, but it's probably worth remembering the exact timeline on this. You know, so the tariffs Liberation Day, so called Liberation Day, was the 2nd of April. The tariffs came into force on the 5th of April, bookings out of Asia were said to be down 30 to 50% in the immediate aftermath of that.
Then on the 14th of April, so not even two weeks later we have this 90 day pause announced and then bookings surged again.
It's a proper roller coaster. And as I just to reiterate this, I think the really key period now is going to be what happens on 9th of July, which, what, it's a month away. So the whole thing could be thrown into disarray once more and that will coincide with the peak shipping season. I would suspect then in that case that people are going to try and ship as much as they can during June.
[00:08:04] Speaker A: Donald Trump definitely keeping US Supply chain journalists in a job.
But all of that capacity being injected into the Trans Pacific market led to reports that carriers were on the hunt for tonnage on the charter market. However, consultancy MV Ship Brokers said that while ship owners want to lock operators in for long periods, the liars are not willing to commit beyond two to three months, fearing that the Trump administration could reinstate the hefty tariffs on Chinese imports. Like you said, I'm assuming that this means that rates are rising again, Gav.
[00:08:34] Speaker C: Oh, are they ever. I mean we had a 57% recon week increase on Asia to US West coast shipments and 39% increase to the US East Coast. We did actually pretty accurately predict this last week. Call me the Orwell Oracle. I mean, I say the Orwell Oracle because obviously the Orwell is the river here in Ipswich and interestingly is where George Orwell took his name from because he was a fellow East Anglian, Eric Arthur Blair. So that's where shipping and literature combine. Right.
What we, what we said this time last week was that we noted that while there were sort of gentle double digit rises on the Trans Pacific and this is according to the World Container Index, the Shanghai Containerized Freight index, the S CFI was showing a 58% increase. Right. And that's what's happened this week. Further underlining this trend that we've noticed, we've talked about it over the past few months on this podcast, that there does seem to be a strong correlation between what the SEFI says one week and what the WCI shows the other week. We've talked previously as to why this might be the case.
So just staying on the Trans Pacific there. The two key factors are big demand, as we've just been talking about everyone trying to ship their stuff as shown by carriers not being able to find enough tonnage for it. And at the same time, very importantly, was the June 1st general rate increases which came into effect last Sunday.
Really, you put those two together and you've got a pretty toxic combination for anyone looking to ship cheaply.
So what does the SEFI show? Well, actually it shows an 8% increase to the US West coast and an 11% increase to the East Coast.
So on the basis of the sort of statistical probability that we're trying to establish, we think that this week rates will probably either be high single digits or very low double digit increases. We shall see how accurate I am this time next week. Probably more surprising was the plus 30% rises that we saw in the Asia Europe rates. I mean, for the past few weeks, most of the forwarders that I've spoken to have been pretty skeptical about carrier initiatives to increase rates such as FAA things. These, by the way, were also came into effect on the 1st of July, but they've had an effect this week. And everyone I've spoken to has said, yeah, they're seeing this 30% increase.
And I do think that this probably indicates that we're now starting to see the beginning of the peak season on the Europe Asia trades. The timing's about right for it to start happening given the Red Sea extended transit.
[00:11:26] Speaker A: Yeah. I did also read a Lone Star report that the Yang Ming chairman said in the company's AGM that the recent announcement of plans to build 20,000 TEU ships was aimed at increasing Yang Ming's presence on the Asiatic euro trades. And he explained that the legal battle surrounding President Trump's implementation of tariffs was obviously increasing the uncertainty and tension in the shipping market. And the carrier's focus on the Trans Pacific had to change. I mean, surely other carriers are looking at this market as well.
[00:11:53] Speaker C: GAV yeah, the first thing to worth remembering on that is that there aren't actually many ports in the US that can handle a 20,000 TE ship. In general, the crane outreach isn't big enough for it. Now, I'm sure that that will change in coming years, but the reality is that if you've got a ULCV, you know, anything sort of 18,002 U higher biggest at the moment on the water is 24,000.
Hitherto the only place you could really deploy them were between Asia and Europe.
But there are other trades opening up as well. Charlotte, we run an analysis on the Asia West Africa trade. Not by no means is this a headline. This is almost the definition of a secondary trade, but MSC is deploying. My last count it was 8 24,000 T U L C fees which is basically tripling the size of the previous vessels that it had deployed on. It's called the Asia Africa Express, the AFL service. A really interesting development because we've never seen such a large capacity increase on a secondary trade. Now it's worth sort of mentioning that the full West African ports that this service calls them, all the terminals in those are owned and controlled by MSC and it has spent the last few years really ramping up the capacity of these terminals to handle big ships. So it's a very interesting move. And you know, the rates are strong and the volumes are up on this trade. I mean it's not the size of the Trans Pacific, but if you look at the potential in places like West Africa, right, for really rapid economic development, it's very high. The rate from Shanghai to lagos is around $4,000 a 40 foot which, which basically makes the third most expensive trade after the Asia US East coast and Asia west coast trades. And the volumes are strong. I mean the CTS volumes for April from the Far east to sub Saharan Africa were up 11.4%.
Pretty interesting developments there. Likely also to see a similar thing on Asia Latin America. Spurt by port developments such as cosco, we've built a new terminal at Chancai in Peru. And lastly, carriers will continue to need to think about where they position their Chinese built ships because this USTR proposed fee on Chinese this is coming in in October whether we like it or not. We just don't know what the level of the fees are going to be. So if I might just leave our listeners with A quote from CTS's commentary this week as we move further into 2025, it'll be crucial to monitor smaller trade lanes that could become the missing piece in global trade patterns as the markets adjust to new dynamics.
[00:14:36] Speaker A: To go back to air freight now. But first, I'd just like to remind everyone that this episode is sponsored by Etihad Cargo. At Etihad Cargo, every shipment represents more than just a destination. It is a connection, a promise and a responsibility.
That is why Etihad Cargo works closely with its global partners to ensure that your valuable cargo is delivered with care, consistency and confidence. With an extensive network and expert handling at every stage, Etihad Cargo goes beyond borders to meet your needs and exceed your expectations.
So let's have a chat about air freight rates now. May seems to have been a very weird one with rates and tonnages up and down and all over the place as Trump changed his tariffs and de minimis rules zooming in from the week of 26 May to 1 June, the full market average worldwide rates rose 3% on the previous week, led by a 3% rise from the Asia Pacific where average spot rates rose 4%. That is according to World ACD who reported a volatile month of global demand as clearly the last week in May shows a spike in demand after the de minimis charges and tariffs were softened. But if you look at the start of the month, the rates and volumes were on a downward trend obviously as demand was hit by the high tariffs and de minimis charges. And of course there will now be new changes. The 50% charge on imports of steel and aluminium came in last week. Definitely one to watch there Alex. I want to finish the episode by giving our listeners a preview of what the Lodestar Premium focused on last week. If you would be so kind as to give us a roundup.
[00:16:12] Speaker B: Yeah, sure. We ran an exclusive story on some big management changes at C.H. robinson, plus an analysis of ScanGlobal which I have to say it did come up quite a lot in my chats at Munich, particularly at scanglobal Logistics. Brilliant party for which I thank them. But yes, it had been raised and there was analysis of Prologis and of the electric vehicle market and main freight which and I quote was once a gem then on the grill now being served as a coal dish. So plenty to get stuck into there. Anyway, thanks Alex. Thanks Charlotte.
[00:16:50] Speaker A: So now we have rounded up the chaos that was last week's supply chain news. Here is what you might see on the Lodestar this week. Well, we still have lots more insight to come from Transport, logistic and Air Cargo Europe interviews from Nippon Express, Hapag, Lloyd, Maersk, daxa, Flexport and many more. There is a Drury webinar on MSC's Hutchinson Ports acquisition on Thursday so we will be attending and we will have a report there for you. We will also be starting to think about Multimodal, the UK based supply chain exhibition which is happening next week. So if you will be attending the show in Birmingham then please do get in touch. And similarly TOK Europe is on at the same time. That's next week and Lodestar Managing Editor Gavin Van Maal will be there in Rotterdam, so please reach out to him on gavinetheldstar.com if you want to chat. Thank you so much for joining me and I will see you next week.
