Episode Transcript
[00:00:06] Speaker A: Good morning and welcome to The Loadstar 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 some insight on what you might see on The Loadstar this week. Now, we've been getting into a bit of a rhythm with ocean freight rates. A few weeks ago, we saw stakeholders a little bit on the fence about whether rates had reached their peak and if we might see a possible plateau or maybe even some easing. But it's been pretty much established now. I think it's safe to say that rates are going to be rising, at least for a little while longer. So I'm coming straight to you, Gavin. I'm assuming that there's been another rate hike. Can you tell us how severe and which trades have been worse off?
[00:00:43] Speaker B: Yeah, sure. So the pattern has been that the first week of the month and the third week of the month are generally those that the carriers apply various peak season surcharges or set new fak rate levels. And what tends to happen is that the week following that, the rates rise by a double digit amount. And in the intervening weeks, where there's no extra surcharges added, the rates have been risen by mid single digit amount. So last week we had a mid single digit rate rise, and this week we are back into double digit rate territory. Drury's WCI and Zenita's XSI are both tracking each other very, very tightly at the moment. We've seen a 12% week on week increase in Asia US west coast rates. We saw 17% increase in Asia US east coast rates. The rate rises have leveled off slightly on the European trades, 10% increase to north Europe and a 7% week on week increase to Mediterranean ports. I did have a very interesting conversation with some freight forwarders and I think the sort of ceiling that people are now looking at is $15,000. Yeah, I mean, is that higher than it was during COVID Not quite, but it's certainly a region, though. Covid tipped up to the 20,000. But, you know, the forward bookings for July and August are looking quite strong still. So really this situation now is expected to extend into what is the traditional peak season with no real sign of any let up until golden week.
[00:02:16] Speaker A: Wow. Well, thank you. I mean, obviously another big story for this week. Probably the main story was that Maersk has taken its hat out. The ring for the DB Schenker biddeh are relatively scant.
[00:02:27] Speaker B: We talked to various sources on background, so I'm not going to attribute anything here, but it seems that during the due diligence process that Maersk didn't like the look of DB Schenker's IT system. I have to say, I've been asking other people about this and I mean, someone told me that they're operating off an old as 400 system which was first introduced by IBM in 1988. That's before I did my o levels. Right. I mean, that's when DB Schenker's current IT system was introduced. So that seems to be the root cause of it, was that they looked at what the integration project would have been had they taken over DB Schenker and decided that the price take, I think they were bidding around 15 billion us decided obviously it wasn't worth it. So you're talking. I would assume then that renewing, regenerating DB Schenker's IT system is going to be a multi billion dollar project. So the three remaining bidders running for it are Danish forwarded DSV Bari, which is the national shipping line of Saudi Arabia. And then lastly a private equity group, CVC, which owns Scan global Logistics, is doing a joint bid with the Abu Dhabi Investment Authority and the Singaporean wealth fund GIC. So, yeah, there's a long way for this story still to go. Now, Charlotte, you've been reporting on Maersk's soon to be erstwhile two M partner MSc and what it's been up to recently because, you know, everyone's interested, right?
[00:04:02] Speaker A: Yeah. Well, after its latest vessel delivery, MSc now holds a 20% share of the global container market industry in terms of capacity offered, which is a record in the liner industry. And it was really interesting because it now holds a market share equal to and even exceeding some of the major alliances. So according to last week's Alpha liner data, the alliance made up of, hmm Yang Ming and one after they lose Hapag Lloyd to the Gemini alliance, will hold about 11.6%. And the newly formed Gemini alliance with Maersk and Hapag Lloyd will hold 22% when it launches next year. So MSC holding 20% on its own means it technically has the capacity to operate a global network on its own. And Zeneta noted that even though it's currently in the 2M alliance with Maersk, this is on its way to disbandment currently. Alphaliner noted the irony in it being the delivery of the old Maersk vessel, formerly the AP Moller and now the MSC Nicole X. That pushed MSC over the threshold to reach its 20% market share milestone, which I found quite funny.
[00:05:07] Speaker B: Do you think that's X as in formally known as Twitter? Or is that x as in the roman numeral for ten?
[00:05:13] Speaker A: I mean, I would assume the latter.
[00:05:16] Speaker B: But it's interesting you say that. I mean, so effectively, what are we looking at? Said just before we, we started this recording that MSC's fleet capacity was 5 million May 2023. And it's now beginning July 2024. It's on the cusp of 6 million. Right? Yeah, but it just shows you the sort of the size of this company. You go back to the mid seventies when it started. They had one chip. They've had one chip. It's an extraordinary corporate tail. It really is.
[00:05:49] Speaker A: I'm now joined for his podcast debut by lodestar editor Alex Whiteman. And Alex, you've been following the Federal Maritime Commission dispute between ocean carrier hmm and Samsung. Could you give a brief background to this case and the update that you reported on last week?
[00:06:06] Speaker C: Yeah, sure. So Samsung Electronics America has been pretty litigious in its use of the Ocean Shipping Reform act was brought in in 2022. They've lodged proceedings against Costco, SM Line and Zim. And then at the start of June, it lodged what's likely to be its largest complaint, claiming H and M imposed roughly 96,000 detention and demurrage charges. Samsung has claimed that these were erroneously imposed charges. The update was at the start of this week. Hmm decided to sort of turn the legal cannons on Samsung and filed a suit with the US District Court for California and is claiming, I think it's 13 million in unpaid shipping fees. So essentially, it's a sort of tit for tat situation where Samsung is saying they're charging us erroneously and hmm is asking for the money. And you've got two legal bodies that will be determining the outcome on this.
[00:07:16] Speaker A: Well, it'll be interesting to see that play out. Thank you, Alex. Now, there haven't been many breaking news air freight stories this week. Obviously, there's the usual reports that as ocean shipping becomes less reliable and the difference between ocean freight rates and air freight rate closes, we often see a bit of an uptake for air and of course, the ever present e commerce volumes. Both of these are promising a very busy summer for air freight. So not much to report other than that. But this is not going to stop me from bringing Alex Lennane on the podcast. Hi, Alex.
[00:07:44] Speaker D: Hi, Charlotte.
[00:07:45] Speaker A: Alex, I have to ask you about the rumoured Ceva Logistics restructuring that you reported on last week. What were the details there?
[00:07:53] Speaker D: Yeah. So CMA, CGM Group, which owns Ceiba Logistics announced that it was changing its organizational structure. Well, Ceva Logistics organisational structure, as it integrates Polaroid Logistics, which it just bought, it's going to introduce vertical alignment into its organization.
That, to my mind, is slightly sort of a side issue, because the real question is whether there'll be job losses. Now, very strangely, CMA pledged no job losses when it took over Bollore, which is such a strange thing for a company to do. But when you dig a little deeper, and we've been talking to sources inside the group, they're saying that, yeah, Bollore's management were promised the jobs and that managers would probably lose theirs. But what's happened now is that it's turned into apparently a very, very political, quite nasty atmosphere in Ceva logistics, with everybody fighting to retain their job.
We've got some good sources in that group, so we'll be able to tell you more about that next week as well.
[00:08:58] Speaker A: Thank you, Alex.
Well, now that last week is fully refreshed in your memory, I'm going to give you some insights on what you might see crop up in the news this week. We are, of course, still waiting for a decision from the Canada Industrial Relations board about whether the Canadian rail can be deemed as essential. It's been a while now since final submissions were received on the 14 June, and I'm sure a lot of stakeholders are quite stressed with this decision kind of hanging over their heads for almost a month now. So we can only hope that that decision is made this week. And if a decision is made, we'll either see the strike being called off, in which case not much report, or we could see a strike go ahead with only 72 hours notice, which would wreak havoc on north American supply chains that are reliant on Canadian rail. So you'll have to watch this space for that on Thursday and Friday. This week, German trade union Verdi will be entering into the fourth round of negotiations with the Central association of German seaport Operators. So at the end of the week, we'll know if an agreement has been reached, and again, if it has great news, not much to report. If not, then slightly worse news. We'll be seeing more strikes across key German ports such as Hamburg, Bremen, Bremerhaven and Emden. We've also just had a new government come into power in the UK, a labour government for the first time in 14 years. So we might start to see some plans come out to address logistics investment. I did an article last week summarising a recent episode of the main Loadstar podcast, where Logistics UK and associated British ports gave a sort of shopping list of what they would like to see the new government address. So go and check that out if you haven't already. And as we've now officially entered the second half of the year, I have no idea where that time's gone but we'll be starting to think about second quarter financial reports. This is likely going to come out a bit later in the month but do keep your eye out for that. Alex Lennane is still working on her piece about cargo payments because she is still waiting on that response from IATA, but that will hopefully be ready this week. And of course ongoing tension in the Red Sea will exacerbate any other supply chain bottlenecks that might pop up. We're already already seeing port congestion and low schedule reliability on the key trades from Asia, so that's likely going to be a theme that will just keep coming for a while. But you'll have to just keep checking The Loadstar and we will keep you updated with all of this information plus much more this week. Thank you and I'll see you next time.
