Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:06] Speaker B: And welcome to the Lodestar Podcast. News in Brief we are going to be rounding up last week's supply chain news and giving you the scoop on what you might see on the Lodestar this week. And before I start, this episode is sponsored by Avery Aviation Software. Avery Aviation Software powers digital transformation in air cargo from booking to billing and everything in between. Streamline your operations with one smart platform A few quick news items to kick off this Last week saw warnings for US truckers of heightened risk of cargo theft across the 4th of July weekend due to opportunistic thieves taking advantage of business closures, and the most targeted states were set to be Texas, California and Illinois. We also reported on the second largest claim lodged against a single carrier by a single shipper filed with the US Federal Maritime Commission.
This was, of course, discount retailer Dollar General's $14.7 million claim against Yang Ming for failing to meet minimum capacity commitments. More to come on this case as it progresses. US President Donald Trump posted on Truth Social that the US had agreed a 20% tariff on all Vietnamese exports to the US and a 40% tariff on any trans shipping. What is classified as trans shipping is yet to be clarified. DSP Director of Customs and Trade Services Pete Mento said this will likely indicate an increase in inspection of Vietnamese goods exported to the U.S. so he said, reach out to your vendors in Vietnam and let them know that their goods will likely be under additional scrutiny. Trump also stated that Vietnam would allow US Goods to be imported duty free.
But details of all of this have not been yet made official by a White House executive order. And so of course anything can change. I mean, to be honest, even when it is written as a White House executive order, it is still subject to change, as you well know by now. So I'm now joined by Gavin Van Mahle to talk in a bit more detail about two hot topics right now, schedule reliability and European port congestion. Gav, last week we saw yet more concerns about European port congestion as various railworks and weather issues meant delays at Hamburg and Bremerhaven ports in Germany. Rotterdam terminals were also under considerable pressure, caused by ship delays, restructuring within alliances, strikes, staff shortages, ongoing construction works, crane breakdowns, you name it. It is all going on in Rotterdam. And this is an issue that just does not seem to be getting better and nearly all ports in Europe are at full utilization.
So gav, what impact, if any, did this have on the latest schedule reliability figures?
[00:02:48] Speaker A: Current port congestion? Not very much at all according to the figures. But then you know, to Quote Winston Churchill, as we all want to do on this podcast. There are lies, damn lies and statistics.
Look, first of all, there is a time lag, right? See, Intelligence's line of reliability report covers April May. So the congestion that we're reporting on today isn't reflected in that report. We begin to see a sort of gap between anecdotal evidence and what the data's telling us. The congestion in the period covered by the report appears to have worsened since then. But congestion can also be really nebulous and can affect different parts of the container supply chain in different ways. It can even affect the same carrier in one port in different ways.
Take one, you know, Ocean Network Express, the Japanese carriers.
As an example, one's just begun publishing a weekly list of its vessels in port. And beside each vessel it's given a number as to how many hours that vessel has waited to be berthed or not. So here's just like one example. Okay. By the way, this isn't reflective of poor operators performance or anything at all. So I'm going to go to Algeciras, the TTI terminal in Algeciras, operated by, hmm, one's partner in the Premier Alliance.
Now, one had in this week had six ships at this TTI terminal in Algecirias.
Two of these ships had no hours waiting at all. They berthed immediately on arrival. Another ship had to wait for 13 and a half hours.
Another ship on a transatlantic voyage had to wait 59 hours. There was another ship on the Far East Mediterranean service had to wait 83 and a half hours.
And then finally another ship that had to wait 80 hours. In the space of a few days, one carrier has got six of its vessels in the port, four of which are subject to varying delays, two of which are subject to none. So as I say, port congestion, it can rear its head very quickly and sometimes vessels can arrive at a heavily congested port, unload their goods and depart completely on schedule.
[00:05:02] Speaker B: Yeah, that difference in the waiting times is really interesting.
[00:05:05] Speaker A: Yeah, I thought so.
[00:05:07] Speaker B: But now I want to chat about ocean freight rates as I always do. I love talking about ocean freight rates. I reported on some Alpha Liner data that MSC has yet again put in an order for more ships, this time for six vessels of 22,000 TEU, reiterating their market leader position in terms of size, but on rates. Some analysis from Data company Apply stated that MSC has said succeeded in establishing itself as the market reference and trendsetter. And it said that although MSC has not yet opted to start a price war and take prices down to a level below its competitors break even levels apply forecasts that this could change in the second half of the year. They said, particularly if we find ourselves with a hungry wolf scenario with fewer containers available for loading in Asia as a result of the trade war and the general economic and geopolitical conditions. And they said that a fall in freight rates looks plausible in the second half. Gav, you also reported that the chaos on the Trans Pacific and subsequent overcapacity could be a big factor of a rate plummet. So what were the details here and where do we currently stand with rates?
[00:06:16] Speaker A: I think where we stand with rates, just as a general comment is we stand on the verge of a freight rate war, I think it's, it's inevitable given the amount of capacity coming into the market in terms of what happened in the very recent history. Last week rates on the World Container Index drawn up by Drury were down by another 15% on the Asia North America west coast which means that they've lost 55% in just three weeks. There were a number of general rate increases on the 1st of July, that was last Sunday. They clearly completely failed to stick and there's loads of overcapacity which will come to in in just a second. But just sticking purely on the pricing on the Trans Pacific, should be noted that they are still 17% above where they were at the beginning of May. The structural thing against this of course is, or the backdrop as people call it is capacity's in a mess. Sailings are being blanked and then reinstalled and then blanked again. I've got to give some credit to some fine work from our friends at the Yeezy line of database for this and thank them for helping me in my research that we've had new service announcements from Chinese carrier Heyday Shipping. I think it's heed or Heyday H E D E that they're going to launch their third Trans Pacific service. Emirate Shipping Line is taking over from Swire to operate a Vietnam US service. And these came on top of Gemini launching a new TP9 string. And then you've got Costco and Rocl with a service called the C3 product which was originally part of the Ocean alliance and then wasn't part of the Ocean alliance. And then it might have been part of the Ocean Lines but now it's very much seems to be a Costco OCL sort of standalone service. I would like to make one point about what I've noticed about these services, the new ones that are being introduced. Firstly, they're still largely propelled by the niche carriers, Gemini and Costco notwithstanding. But secondly, and this is true of all of them, is that they're not really the sort of traditional shipping services that I'm used to seeing. Right. When someone launches a new service between Asia and North America, what you generally have is anywhere between four and six ports in Asia as a string and then going across the Pacific and then calling at two, three, maybe four North American ports. Three American and one of the Canadian ones.
These are very much sort of express type services, although they're not at express speed. But there are either one or two Asian ports and then going to one North American port and typically it's either LA or Long Beach. I don't know. I mean, the way that these sort of services are designed, they could be classified as sweeper services designed to sweep up cargoes that might have missed the various tariff deadlines or trying to miss them in the case of the 9 August deadline on the China US tariff pause or something. That's really only just struck me. Perhaps they're a shape of services to come once the US Trade Representative starts imposing on Chinese operators and Chinese built ships, which is due to come in force in November. So, yeah, one to watch and to.
[00:09:30] Speaker B: Finish the ocean freight section. You had quite an interesting story about HHLA's annual general meeting at the end of the week. What happened there?
[00:09:39] Speaker A: So this is courtesy of dbz, which is a very good German trade newspaper based in Hamburg, basically the controlling shareholder of hlhla, which just to remind listeners is the leading German stevedor in Hamburg and controls a couple of other ports in Europe. Hhla, as you may recall, was subject to a takeover bid last year and the result of this was that a company which is very confusingly called the Port of Hamburg.
Deep breath, because I'm going to try and pronounce a really hard German word.
[00:10:21] Speaker B: I don't think that was right, but.
[00:10:23] Speaker A: I just wanted to try and get. I don't think it was right either. I just wanted to try and sort of distinguish it from the Port of Hamburger. No, I appreciate, um, but basically this company controls 90.4% of HHLA's shares. The company itself is 50.1% owned by Hamburg City and 49.9% by MSC.
In June, it proposed to cut the dividend from €16 cents to €10 cents, thus saving around 5 million euros in payouts, including around €200,000 in payouts to the minority shareholders who represent the remaining 9.6% of HHLA stock.
And it was these minority shareholders who appear to be really angry about the dividend cut, calling the board spineless. And I have to admit that I sort of failed to pick this up. But they were also angry about the silence surrounding the forthcoming departure of and Angela Tith, who is the current CEO of the company and she's just one and a half years into a five year contract and yet it was announced earlier this week that she'd be leaving at the end of the year.
She said she was departing based on. I'm doing air quotes. Mutual understanding.
Well, why don't you just tell us you weren't wanted. One shareholder demanded of her during the meeting. We can probably guess why, right? I mean, it also transpired at the meeting that she's. Her severance pay for leaving the company is going to be 1.58 million euros. And. And in any case, before she departs, she's likely to earn around another million euros in as salary and bonus. So I don't know, under those sort of terms, one normally departs.
[00:12:10] Speaker B: Yeah, I think I'd leave too if I was being.
[00:12:12] Speaker A: Yeah, yeah.
Probably not say too much about it, apart from where's the car showroom?
[00:12:17] Speaker B: Thank you very much, Gav.
[00:12:19] Speaker A: All right, Cheers now.
[00:12:20] Speaker B: And now let's turn to Alex Linane for a look at the air freight market. But before we dive into that, I want to remind you that this episode is sponsored by Avery Aviation Software. Avery delivers end to end digital solutions for the air cargo industry, helping airlines, GSSAs, forwarders, air charter brokers, OBC providers and more to automate everything from quoting and booking to tracking and invoicing. Trusted by some of the biggest names in aviation, Avery's customizable platform boosts efficiency, visibility and control.
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Back to the air freight news now, Alex, what's been happening?
[00:13:03] Speaker C: Well, to be honest, it's really quiet out there, Charlotte. There've been quite a lot of holidays around the world. Not least, of course, Independence Day in the us, which according to your story on Friday will face either no fireworks or very expensive fireworks because 99% of them are sourced from China.
Anyway, I digress. It's been very quiet and both rates and volumes in air have been pretty flat.
There's one exception. A forwarder in Shanghai just told me he's seen rate rises, but less due to demand, more due to flight cancellations in the Middle east, which then led to pent up demand.
And now the Middle east carriers are pretty busy with the backlog, which of course has lowered capacity elsewhere, but that's only temporary and to be honest, the outlook for the rest of the year is somewhat bleak for all parties.
The low rates aren't even helping shippers because they're seeing low consumer demand, so they're not flying much. As Anessa said, it thought the second half would be challenging without much in the way of a peak, which is what some forwarders have told us too. Actually, one suggests that it's worth watching the ocean market for signals, but as you've already heard in this podcast, ocean is now a bit of a tale of two regions and therefore making it quite hard to predict anything Other big news in air freight last week was the big beautiful bill in the US which was passed and we'll see the end of all minimus exemptions to the US in June 2027, which actually is quite good in the sense that it will give the market some time to work out the pricing behind E Commerce, the impact that that's going to have on air freight markets in terms of volume and capacity.
So having that kind of warning period is quite refreshing after the last six months.
But mostly, I'd say the air freight market's been characterised as quite patchy. It's mostly soft, but you've got capacity flitting to various markets where there is some sort of bump in demand.
One thing we covered last week was the US cherry season, which is traditionally really strong for air freight, but it was marred by poor weather resulting in a poor crop, and it also saw a downturn in demand from Asia. Even with lower volumes, though, there were some struggles to get capacity because freighter operators have sort of turned their backs on the Trans Pacific, as we know.
And then in other air car guy news, the rather suave Tom Owen from Cathay Pacific is moving on to another Swire Group company towards the end of the year. He's been quite a regular face on the circuit in the past few years as Cathay has been out and about trying to wrestle back its position in the market after its troubled Covid times. I think he'll be missed and I hope the next person also brings Cathay out into the market as much as he did.
[00:15:37] Speaker B: You have listed quite a few news items there, but like you said at the beginning, it has in general been a fairly quiet air freight market, but as I understand it, the forwarding market is a bit more of an interesting place to be. What did you report last week?
[00:15:51] Speaker C: Yeah, the forwarding market's always fun In Munich, many forwarders said that they were going to continue to buy in growth. And we're hearing quite a few things in the market at the moment too, which we will confirm as soon as we can. But there is certainly some movement.
Most of the logistics M and A deals are going to be sort of strategic corporate deals, but private equity is expected to account for about one fifth of the deals in transport and logistics this year.
Anyway, if you want to know who is buying whom, keep an eye out on the Lodestar. But as a little flag, there is one Danish company we are currently hearing quite a few things about.
[00:16:24] Speaker B: I know that the Lodestar Premium is always quite quick on these forwarding exclusives. So what was on the Lodestar Premium last week?
[00:16:32] Speaker C: Of course, as ever, it ran various exclusives including news on top management changes in the forwarding sector.
It also pointed out that it's preview season for equity analysts who apparently have concerns over C.H. robinson's forwarding arm. While DHL seems to have split analyst opinions overall, it was said in Premium, the transport and logistics sector isn't very much liked by investors at this critical economic juncture, which I think we all know why.
And there was also a supportive article on DSV CEO Jens Lund, who has faced something of a backlash in the Danish media.
The gist of it was you might not want to have dinner with him, but you might want to invest in a company he leads. So there you go, that's dsv.
[00:17:16] Speaker B: Thanks Alex.
[00:17:16] Speaker C: Thanks Charlotte.
[00:17:24] Speaker B: So now you are all caught up on last week's supply chain happenings. Here is what you might see on the load start this week. Obviously we are approaching the 9th of July Liberation Day reciprocal tariff reassessment.
So we are expecting lots of news about new trade deals and tariff levels.
Last week the US walked away from digital tax negotiations with Canada, which means that retaliatory tariffs could be back on the table. Say that 10 times fast. Retaliatory tariffs back on the table.
But the US and China agreed on a framework to ease tariffs on critical rare earth minerals, especially those powering electrical vehicles, batteries and defense tech. So that is perhaps a good sign. The Port of Hamburg rail terminal will be closed between the 4th and 7th of July. But Maersk said it expects to see the impacts of a rail closure between the 2nd and 9th as things take time to wind down and then wind back up again. And according to German media DVZ rail access to the western terminals will be closed from 11th of July to the 15th of July. So that is one that will also have an impact.
The closure is related to a construction project involving building a tunnel and structure for the motorway under the port railway tracks. It's expected that a lot of this cargo that's impacted will instead go to Bremerhaven, so we will likely again see continuing worsening congestion at these two ports emerging this week. Container Trade Statistics will be releasing their numbers for May, which will be really interesting because it will give us a window into what happened on the Trans Pacific during that month. And for anyone interested, the Seahorse Freight association is having its summer party in London at the Doggetts Coat and Badge Pub on Tuesday this week. This event brings together logistics journalists and supply chain professionals over drinks and a barbecue. What is not to love? So do make sure to register for that if you are in London this week.
And unfortunately there will be no news in brief next week, but we will be back as usual on the 21st of July. A big thank you to Avery Aviation Software for sponsoring this episode and a big thank you to you for listening in. Have a good week and I'll see you next time.
