Episode Transcript
[00:00:00] Speaker A: Hello and welcome to the Lodestar podcast News in Brief, where as always, we are going to be rounding up last week's supply chain news. And coming up on this episode we are going to be taking a look at Hapag Lloyd's latest move in its bid for Israeli carrier Zim Ocean freight rates in the wake of another escalation surrounding Hormuz, a record breaking month for container movement, plus key takeaways from the EU CBEC E Commerce forum this week in Liege. Let's get straight into the episode.
My first guest for this episode is Lodestar Managing editor Gavin Van Mul. Hello Gav. Welcome back to the podcast.
[00:00:42] Speaker B: Hello Charlotte. It's very nice to be back.
[00:00:44] Speaker A: So to kick off from the news from last week, so we we've previously been talking quite a lot about port congestion and at the start of last week we had the kind of news that carriers are starting to respond to this and mitigate against any effects. So this was in one of the most congested ports of Shanghai, I believe.
[00:01:00] Speaker B: What are the detail to line the litigate at the moment? The sort of current waiting times at Shanghai are up to about 12 days and that's also a similar level for nearby Ningbo.
Story that we covered last week was that the Gemini Corporation is going to merge two of its Asian shuttle services. This is the AO4 and the A14, not to be confused with the trunk road leading into Felixstowe.
It's the AO4 and A14 shuttles which are sort of they're North China and Korea into the mainline services. So that's Dalian, Tianjin, Busan, those North Asian export origin ports, they're merging these two services and the net result of that is that they're dropping a call in Shanghai. So previously what would have happened is that volumes from Busan, Dalian, Ningbo, Tianjin would have been hubbed at Shanghai and joined or some of them would have been hubbed at Shanghai and joined the mainline Trans Pacific and Asia Europe services there.
Instead, those are all going to be hubbed at Tanjung Pelopas, which is Maersk's hub in Malaysia.
Just before we move on though, this is a story that we're working on right at the moment.
One thing about doing that of course is that it increases the risk.
And actually today we're covering a story that there was a cyber attack incident at Tangent Pelippus last week. So we're currently investigating that to see what the full extent of it was. But that's just one other factor to bear in Mind that the more that Mercen and Hapag consolidate at tangible penipast, which is great idea, it's a great port but obviously that increases the risk on that one particular node.
[00:02:53] Speaker A: Yeah, and I mean obviously for the Gemini partners the priority is that reliability, the schedule reliability, that's something that they pride themselves on. Speaking of the Gemini partners, Hapag Lloyd was in the news last week with a fresh look at its bid for Israeli carrier Zim. So what is the latest in this story?
[00:03:10] Speaker B: So there's been a lot of opposition to the.
As we expected there's been a lot of opposition to the deal that's mainly come from within the Israeli government, the Defense ministries, the transport ministries. There's also been opposition to it from the unions.
There aren't a great deal of details other than what I can tell you is that the government has given Hapag and its Israeli partner Finney, which is a sort of private equity consortium which, which would create the new Zim, the sort of Israeli Zim as it were. They've given them a 30 day extension to revise its offer. That's pretty much all that's been announced. So we wait, we will probably have further news end of September.
[00:03:52] Speaker A: I look forward to seeing what happens with, with this one.
One of the main stories from last week also and really from I mean the last six months to be honest. Last week we saw a huge conflict escalation surrounding the Strait of Hummus with many oil tank, both the US and Iran obviously for container shipping. This once again underscores that a return to normality there is far, far in the future.
But at the same time Suez routings are becoming more normalized. Costco is the latest carrier to shift some of their vessels back to a Suez routing. But mostly this is on the backhaul. So there's lots of kind of moving parts around here. But I mean despite it all container trade has remained resilient. According to the latest CTS data. That's container trade statistics record breaking months I believe what's happen.
[00:04:39] Speaker B: Yeah, July. So the data came out for July and total, total volume shipped globally was 17.3 million tu. And that was 25,000 tu above the previous record month which was May. So that's, that's the highest number ever in a single calendar month.
Very briefly, star performer as has, as you sort of alluded to was continues to be sub Saharan Africa with year to date imports up 14%. Europe also still very strong year to date up 6.1% on 2025. And there was an interesting one, interesting point was the Far east to North America trade, which in July grew, which has obviously been very sclerotic over the last year and a half or so since the tariffs.
Great one, one of my favorites. Yeah, so that was up, that was, that showed relative strength in July in terms of volumes was up 4.2%, but the price index was up 46.5% year on year. So that really shows the strength of the peak season is now being shown in the CTS figures.
[00:05:56] Speaker A: Yeah, I mean, obviously that was for July and we're now in September.
But what are the latest freight rate movements? Do you have any exact kind of figures from, I mean, the Drury World Container Index or the Zenith?
[00:06:07] Speaker B: Yeah, I mean it's really been the same story since sort of since August. I mean, I think we called the peak of the Asia Europe trade sometime in July and actually we were sort of right on that. The, the, the Asia Europe rates edged down again this week, sort of down 2, 3%, that sort of thing. To the North Europe and the Med, The Trans Pacific has, has continued pricing remains elevated. Ford as I've talked to, expect them to remain elevated for the rest of September. The WCO WCI was up sort of 2% to the West Coast, 1% to the East coast last week. So according to Zenitha data, the Far east to the US East coast is still above $10,000 per 40 foot.
And to both the east coast and the west coast, the spot rates are like 300% over 300% higher today than they were when the conflict began in this Strait of Hormuz. So yeah, you can sort of see the effect there. It's been a long, elongated peak season for the U.S. trades.
And although as we were just looking at that CTS data, although the demand hasn't been overwhelmingly strong, there has been pretty strong capacity management from carriers. So effectively the peak season on the Trans Pacific this year has been characterized by pretty strong capacity management by the carriers which have kept the rates up and it's been a good earner for
[00:07:49] Speaker A: them and probably something that we're going to continue to see going into Golden Week, I guess.
[00:07:53] Speaker B: Yeah, well, I mean, Golden Week is if you haven't. I mean, Golden Week's only three weeks away now.
[00:07:58] Speaker A: Okay. Well, Gav, thank you so much for joining me this week. It's been great to chat.
[00:08:02] Speaker B: Thank you very much, Charlotte. Pleasure as always.
[00:08:05] Speaker A: My next guest for this episode is vice president and head of sales and marketing at rotate, Jonathan Mellink. Hi Jonathan, it's great to have you Back on the podcast.
[00:08:12] Speaker C: Hey Charlotte, thank you for having me. Great to be back.
[00:08:15] Speaker A: Yeah, I mean, so we've just spent the week together in Liege, obviously now we're chatting on video call. But we were just at the EU CBEC E Commerce Forum and as I'm sure it's clear by the name of the event, it was all about E commerce and a lot of the discussion there centered on the impact of the 1st of July changes to Customs fees for low value parcels entering the eu.
So firstly, Jonathan, can you give me a kind of overview based on rotate data of where we're currently at with E commerce volumes in the EU compared to the last few years that we've seen of quite phenomenal growth, really. And I mean, is this something that you think people predicted?
[00:08:49] Speaker C: Yeah, so what we've seen is we've really seen a ramp up in the last 12 months of EU e commerce, also in the follow up of the US changes to de minimis rules. So we've really seen a humongous change into where E commerce goes. And of course first of July we saw an impact of the duty rules that the EU implemented and we actually see in the data already quite a big impact. So we see a 24%, almost a quarter of all E commerce volumes were lost in that first month. This is actually quite in line. Also what we see on the capacity side. So we also see a reduction of 28% of capacity as well on that end.
Did we predict this? I think most people did. So there's a little bit of front loading which increased the pre July numbers a bit.
So we saw quite a bit of volume growth in the months ahead.
But of course this changes the business model and changes the logistics around E commerce. And I think most people did see this coming.
If you look at what we, what we saw, what we expected to happen, but didn't really see coming at this stage. For example, things like capacity distribution.
[00:10:04] Speaker A: Right, okay. Well, I mean something that your CEO Ryan Key Raz was speaking about at the forum was how there's been winners and losers out of this regulatory change.
Because obviously there was this massive drop in volumes, but it kind of was unevenly distributed around the eu. So which airports have seen the better side of things and which ones have kind of lost out?
[00:10:22] Speaker C: Yeah, yeah, indeed. So there's quite a, there's a, there's quite a couple of airports that have also seen, indeed, as you mentioned, seen the better side of things. So think of Cologne has seen the better things. There's quite a couple airports in the in the UK that have seen the better side of things because of potentially reroutings.
On the less better side of things. We see airports like Budapest, Liege, but also Amsterdam being quite heavily impacted by these potential duty or by the duties. And we see a shift of capacity due to these types of things happening. On the origin side, it's a sort of similar story. We see the E commerce gateways being heavily impacted, but in less so we see for example PVG in Hong Kong remain strong even though they see some reductions across the board as well.
[00:11:11] Speaker A: Yeah, it's quite interesting because I was speaking to Liege airport and before I went to this event we were kind of looking at how different airports were collecting the revenues. And I think some airports were taking quite a big fee up front. And this is something that the guys at Liege airport were telling me was happening in Brussels, in, in Belgium. They were taking I think like quite a big guarantee from these sellers. And obviously some companies didn't have the money to give this big upfront guarantee. So that was hurting the volumes at specific airports. But I think the guys at Liege were saying that it's changed there now and that people were paying slightly differently, so that's helped their volumes. You mentioned that there's been this capacity cut, but overall kind of how much are we talking, how much capacity has been removed from the European market because of this demand reduction and is it being distributed elsewhere?
[00:11:53] Speaker C: Yeah, great question. So overall we see a capacity reduction. So if you look at direct Europe, Asia freighter capacity, we see about 20, 28% lost. It's quite significant. So you really need to think about like 120 flights a week. So that is not nothing. We really see that it's concentrated at a couple of the bigger carriers that were operating on this lane.
We would have expected that this would be quite easily redistributed across the lanes across the world. However, and it's actually quite a surprise to us at this stage, we actually don't see that. So actually at this stage we see that there's a reduction in number of flight hours. So utilization is dropping specifically in the older 747 conversions that are now being parked effectively and just flown less. So this is actually something that we haven't seen in the period before this. We've seen a continuous super high utilization across the board for all types of freighters. And this is actually one of the first times in a while that we've seen these reductions. It just means that people are operating less and not necessarily redistributing them to other lanes.
[00:12:58] Speaker A: It's interesting just how things change so quickly in this industry. It does feel like, I mean like not that long ago people were getting really stressed about using these older aircrafts because demand was outpacing capacity so much. I mean looking forward to the next 12 months if you can predict such a thing. What is rotate forecasting for total air cargo demand growth and why?
[00:13:18] Speaker C: Yeah, yeah. So I think there's two, two sort of sides of the upcoming 12 months. So there's of course the total forecast. So rotate sits at around plus 3% for the upcoming 12 months.
This also aligns with what we hear in the industry, especially after having launched our sort of our sentiment index, the rotate sentiment index. We also see many people say like we are expecting anything between 2 to 6% up, just not, not nothing. I also think that there's an interesting perspective to think a little bit about what is happening with E Commerce. So we just set E Commerce is down into Europe. But if you look at other areas where we've seen the de minimis increase or duty increases like Brazil or the U.S. we do see a just gradual catch up again in 12 months. So actually there's quite a lot of people who believe that E Commerce will restore to a certain level. Whether that's the same level as today remains to be seen, but we do. There's quite a lot of people in the industry who do believe a restoration.
That coupled with just overall strong demand growth in certain segments. For think of for example cloud which remains an incredibly strong sector that is driving a lot of additional demand. But also more traditional sectors such as for example perishables and salmon are doing really, really well.
And that continues to be a very strong, very consistent growth pattern in those types of commodities across the world. So overall we're not expecting anything humongous. I mean plus 3% is not plus 10 or plus 20. But there is a growth outlook out there and we're not, we don't believe that we're heading into negative territory.
[00:14:47] Speaker A: Jonathan, thank you so much for joining me and for g all of your insight from the rotate data. I really appreciate your help.
[00:14:52] Speaker C: Happy to help. Thanks for having me.
[00:14:54] Speaker A: That is all we have time for on today's episode. A huge thank you to Gavin and Jonathan for helping me recap the news and a huge thank you to you all for listening or watching. If you are on YouTube, please like share, subscribe, comment and please join us next week for another episode of News in Brief.
