Episode Transcript
[00:00:00] Speaker A: Good morning and welcome to the Lodestar podcast. News in brief, we are going to be bringing you all the latest supply chain news and giving you insight on what you might see coming up on the Lodestar. Now, as you may have noticed, we have moved to video format which is a very exciting change for us and yeah, we really hope you enjoy it. So without further ado, let me introduce my guests for this episode. Gavin Van Mahl and Alex Lenane. Hello to you both.
[00:00:25] Speaker B: Hello, Charlotte.
[00:00:25] Speaker C: Hi Charlotte.
[00:00:26] Speaker A: To kick off the episode we had quite a bit of interesting news towards the end of last week that the CEO of Zim's plans to buy all the shares of the company might be thwarted by a bid from Hapag Lloyd to buy Zim. This is, this is a huge story. I mean, does anyone have any thoughts on this?
[00:00:44] Speaker B: So, I mean it was, it's been widely circulated and it was actually talked about in their third quarter.
[00:00:51] Speaker B: Earnings call a couple of weeks ago that the.
[00:00:55] Speaker B: Eli Glickman who's the CEO was forming a sort of a consortium together with an Israeli shipping businessman called Rami Unger, who's best known for running a, a car carrying company that they had. The last we had heard of it and understood to be was that they had put together a bid to offer Zim shareholders $20 a share, which basically it valued the company at around $2.54 billion.
Which the surprising thing about this was that at the time, or rather when Zim then released its third quarter results, it was, it reported having $2.9 billion in cash reserves.
He was asked about it in the third quarter earnings call. In fact it was the first question he was asked about and he just said no comments, move on. But then we did hear a report right at the end of last week that, that perhaps Hapag Lloyd might have tabled a bid for Zim which would be a big takeover. We haven't seen any real.
[00:01:59] Speaker B: Sort of M and A big, big, big style M and A since. Let's get this right. I think it must have been Maersk acquiring Hamburg Sid a few years ago. That would have been the last big deal. We've seen a few bolt on acquisitions since then. There's a couple of things about this. It's difficult to know what you'd actually be acquiring because all of Zim's ships, almost its entire fleet is on long term lease. You're basically buying a load of mortgages effectively rather than assets.
[00:02:27] Speaker B: And what else is there to say? I mean, would you acquire a bit of goodwill what's that worth? I don't know.
There's some logic to it, but I. But given Zim's asset profile, I'm not sure, Charlotte, whether this is serious or not.
[00:02:45] Speaker A: Yeah, it's quite an interesting story because we've previously spoken about the consolidation happening in the freight forwarding industry, and someone said to me that it's either consolidation or be consolidated. So it seems like no sector in logistics is immune from this at the moment. Alex, last week you had some updates about the devastating floods in Southeast Asia and the impact this had on supply chains. I'm wondering if you've got any more updates for us.
[00:03:09] Speaker C: Yeah, well, yeah, it was a terrible story.
So Southeast Asian ports, I think, are sort of in recovery mode now. There was two weeks of probably historic kind of flooding, but operations seem to be returning to normal. So road freight in Southern Thailand in particular suffered big delays and some companies moved shipments to air freight instead, which caused a little surge in demand.
Indonesia's Belawan port in Sumatra, I hope I said that correctly, that's still heavily affected by flooding, apparently. And there's delayed vessel arrivals, limited transport access.
And Malaysia's port Plang as well, is facing congestion. There's birth delays, vessel bunching and, you know, a little more congestion there. Lumbo Port, I understand, is gradually resuming operations after a cyclone forced some terminal closures, which caused significant disruption, as you would expect.
But schedules are likely to take up to a week to return to normal levels. But largely ports and airports are working, but hinterland transport is affected, and there are some delays there.
And we should also acknowledge the tragedies that have happened in Southeast Asia. It's horrific.
[00:04:21] Speaker A: Yeah, it really is such a devastating story. So thank you for the updates on that. Onto some more cheery news, perhaps. And last week saw the release of the seafarers who were crew members of the MV Eternity Sea that was attacked by Houthis back in July. So they've been captive for a very long time.
Obviously, this is great news that they've now been allowed to return home. Gav, do you think that this is a positive indication that we might get some more returns to the Suez Canal in the near future?
[00:04:52] Speaker C: Yeah.
[00:04:53] Speaker B: It's not negative, is it?
So.
[00:04:57] Speaker B: It'S. Is it a positive? Yes, it could. Yeah, yeah, yeah. Undoubtedly it's a positive thing. I mean, there's a. You know, there's a. It's going to be a really long way to go until people feel the confidence of going back to the Red Sea. Shall we? Yeah.
[00:05:08] Speaker A: And you had Another story last week that suggests carriers are becoming slightly more comfortable with this.
[00:05:14] Speaker B: Yes, it's baby steps. But what we have had last week was.
So this is the way it went. So we. It's been well known that that CMA CGM French carrier has been experimenting with doing selected transit through the Suez Canal, particularly on, on, on backhaul voyages on some of its, particularly on its, its Asia Mediterranean services.
[00:05:39] Speaker B: And last week its customers here in Europe were sent an advisory by OCL which is a member in the Ocean alliance with CMA CGM which informed them that the LL4 Asia North Europe Service, that's known as the N, the N, the new four by the Ocean alliance, but actually the CMA CGM customs would know it as the file one that that will actually begin transiting its backhaul routes on a regular basis. That is that every ship departing Europe to go back to Asia will now go through the Suez Canal on that service. So now we basically have one Asia North Europe service and one Asian Mediterranean Services, which is the Mex service or the MED one as the Ocean alliance knows it. These are now going to be doing regular backhaul voyages with the net effect that.
[00:06:39] Speaker B: The carriers are going to be able to reduce the number of ships on those service from 15 to 14.
[00:06:47] Speaker B: And it reduces the round trip voyage time by from like 100 by a week, basically from 105 days to 98 days. Now whether this actually means a full scale return, it doesn't. Right. Because this is still very much backhaul traffic. It is also to be noted that it is only on services that are completely staffed with CMA CGM vessels and they continue to receive an escort from the French Navy on those backhaul things. So you know, that makes an attack on those ships less likely. There is another aspect of it which was pointed out to us in a conversation with James Hookham from the Global Shippers Forum who mentioned that, you know, on these backhaul trips there's no question of any of the cargo being linked to Israel at all because they're simply going back to Asia.
We ourselves are asking whether there was any exposure to European exporters who are shipping on those vessels to Asia. I mean they're called backhaul. Most of the loaded cargo is out of Asia to Europe, but there is still some stuff going back the other way. So we were sort of interested in what the liability there was, but really it's what we learned from that was that the, the principles and we've talked about this before, we've Said, you know, that these ships, they're not going to go through the Suez Canal westbound because they're carrying $20 billion worth of cargo. But it appears to us that really the real determining factor is whether the vessel and the. Whether the vessel and the machinery on the ship itself will be insured. We would thus also expect, given the nature of this backhaul thing, given that it's all CMA CGM vessels, that the same decision will probably be made with the File 3 service, which is another Asia North European Ocean alliance stream that's deployed fully with CNA vessels.
[00:08:43] Speaker A: Yeah, one thing that I'm going to be looking at next week is an insurance angle and kind of trying to figure out what insurers are offering and perhaps how these costs might get passed down. I think one thing that we were interested in is the difference between insurance on the front haul and the back haul, seeing if there's any difference there. So you will have to wait and see what is in my article next week if that interests you.
And while we're talking about route revisions, you had a story last week that MSC had made some changes on its transatlantic network yet again. I think this is something that we spoke about in the last episode, that they had been adding more capacity to transatlantic. So what's happened this time?
[00:09:16] Speaker B: Well, this is. So this is particularly on. This is a sort of. We've zeroed in on the Mediterranean to Canada trade. So MSC has reorganized its medium Canada.
The service is called the Canada Express, and it basically inserted a whole load of extra calls at quite minor Spanish ports.
Vigo, Hijon, Bilbao, these sort of Atlantic Spanish ports.
[00:09:48] Speaker B: And, and, and added an extra ship into the, into the rotation. So in five, six to ship six. And then we looked at whether that was going to be an increase in capacity because obviously the week before that we'd been looking at how MSC had been quite sharply increasing its capacity offering on the transatlantic. We had that discussion about, you know, it seemed to be a way of protecting earnings on other trades.
So as a sort of echo of that, this week MSC's rejigged this Canada Express service. Interestingly, it's actually the capacity effect has been sort of net, or there hasn't been a capacity increase because they actually reduced the vessel sizes. So in terms of capacity, it's roughly about the same. However, it is also the case that CMA CGM.
[00:10:41] Speaker B: And some of its Ocean alliance partners, I think it's Costco and WSCL and also the Japanese carrier one, a similar. We had a Mediterranean US east coast service called the Amerigo service. And from the end of November they included a call at Halifax. And so that has actually. And these are much larger vessels. These like vessels up at sort of 6,800 TEU, which, which are about 50% larger than anything else on a transatlantic service that's calling it Halifax. So the net effect of all of this is actually quite a substantial increase incapacity for Canadian importers of Mediterranean goods with the MSC move, the MSC reorganization and the introduction of a Halifax call on CMA's Amerigo service.
[00:11:33] Speaker C: Right.
[00:11:33] Speaker A: I had a, I had a really interesting conversation with a shipper last week as well. While we're talking about network revisions and nothing's been confirmed or announced yet, but they were saying that in contracting talks that they were having, the premier alliance carriers were quite worried about their on time performance. I guess shippers had kicked off a little bit, especially now with the Gemini being so reliable.
And apparently a lot of these delays are coming from the European ports in their network. They named me Rotterdam and Antwerp, but there are obviously others. We've spoken about this extensively in previous episodes, but apparently they might be looking to perhaps cut Rotterdam out of some of their Asia to Europe services.
As I said, nothing's been confirmed yet, but the source did seem to indicate that they might be looking at the hub and spoke model that has been popularized by Gemini. We will have to wait and see what happens there. Obviously they did say that they need to get a move on. I think their exact phrase was they need to get their skates on if they want shippers to sign contracts this year. Because obviously you want to know where your cargo is stopping if you're going to sign the contract. So that's perhaps one to watch.
Also in route revisions, we saw Ocean Network Express introduce a direct call from Kai MEP in Vietnam to the US east coast, which could indicate them kind of supplying that demand that's been heightened since all the tariffs on China from the US and obviously the increase in the China plus one strategies from companies. Vietnam has been a big beneficiary of that. But of course these tariffs could be changing very soon.
At the moment, obviously we know that it is with the Supreme Court, but Alex, you reported last week that some shippers might be trying to get ahead of the Supreme Court decision and have already started applying for refunds. What is going on?
[00:13:24] Speaker C: Yeah, well, I think. Was it the last podcast or the one before we talked about the US customers and border protection needing to recruit more agents this time? I think I'm going to say that they need to recruit more lawyers. I've been through and there's been more than 30 cases filed against CBP in the past month about the IEEPA tariffs. Now the one that's caught the attention is Costco because it's a big name.
They are looking for a full refund on any IEPA tariffs, depending on what the Supreme Court says. Obviously. Now the CBP had begun to liquidate the duty payments and what this means is once they're liquidated you can't apply for a refund and that would prevent everyone from getting refunds. So Costco has asked the CBP to delay liquidating these duty payments, but the CBP has denied it. So what does that mean? I think it means that it's going to be really difficult to get refunds is what I'm thinking now. Oscar Debott from DHL Global Forwarding, he put it in terms of credit notes that you might get. He was wondering if that was a possibility.
[00:14:32] Speaker C: And he also doesn't believe it will be the end of tariffs even if the Supreme Court rules against the IEPA tariffs, sorry, IE IEEPA tariffs.
[00:14:43] Speaker C: So I don't nothing as ever is clear, but it looks to me like it's going to be very difficult to get a refund and it's also highly likely that it will be tariffs in some way, shape or form even after the Supreme Court judgment. But again, we're going to have to wait and see. I'm sorry to say that again.
[00:15:01] Speaker A: Gavin, do you have any thoughts on this?
[00:15:04] Speaker B: Well, I mean not a great deal, but I have, I have. Sorry, no, I did, I did receive, I had an interesting communication from someone in the US who, who's talking about they think that the DOJ or the Department of Justice is going to really start cracking down what they term tariff EVAs from 2026. And they foresee quite a lot of cases of DOJ and CBP starting with smaller companies, but quite possibly going up into larger corporations as well looking for any evidence of tariff evasion. So it's looking like a very combative period.
[00:15:42] Speaker A: Yeah, it certainly seems like quite a stressful period for all involved.
Onto something else. Last week that caused a bit of a stir. There's been lots of talk about logistics tech company wisetech and cloud based software cargo wise. Alex, what is the situation and why are people so annoyed?
[00:16:01] Speaker C: I'm sure everyone listening to podcast knows what it is, but essentially it's the big software used by a lot of the major forwarders and over the Years people have complained that it's very, very expensive. So that's the background.
[00:16:16] Speaker C: The sort of hoo ha this week is that, oh sorry, last week in fact was that although WiseTech apparently told customers about a month before that it was changing the way it charges and a few other sort of facilities that it has. Apparently it did so pretty much during Thanksgiving dinner which obviously had the Americans pretty upset.
One SECO manager put on LinkedIn that it was like something from Black Mirror and yeah, that wasn't a good thing and it sort of upgraded functionality without their approval. So it's kind of like, I think it's kind of like airline bundling.
So what the low cost carriers did when they started out was unbundle the fares. So you can pick I want a meal and I want to choose a seat and all that kind of thing. It's kind of like the opposite of that. So there's, there's now no host or seat fees but it's transaction based billing. But on top of that you get all the services whether you like them or not. And there's a whole host of like AI things that are added now but you have to have them, you don't, you can't not pay for them. Is is my point here. And there's a lot of AI frills in this value pack it's called.
[00:17:28] Speaker C: I, I don't know, no one knows has worked out yet I think whether it's going to make it more expensive or less expensive for them. I think most people think it's going to be more expensive but actually I've got a, I've got a chat with an insider on this in a dale too. So hopefully you'll be able to read on the load even more about the whole cargo wise upset in the market.
[00:17:51] Speaker A: Yeah, I saw a lot of angry LinkedIn posts about that last week, so definitely more to come on this. We had a very good article from litigation attorney Adam Clermont in the Lodestar Premium. Speaking of Alex, is there anything else on the Lodestar Premium that caught your attention last week?
[00:18:08] Speaker C: Well, yes, Lodestar Premium is a pretty mouthy outlet frankly and I say that as being part of it. So it's had a difficult relationship with Flexport over the years. Premium likes to look at Shopify's numbers to find out if it can see anything about what's going on at Flexport because Flexport is a private company, doesn't need to release anything.
We're now sort of at the name calling stage.
Flexport called Ali Pasetti Mr. Spaghetti. We're now going back apparently with Mr. Pac man on San Amanda's. I don't know, it's. They, they, they like fighting Premium flexible. Anyway, it's very worth reading it. It's quite funny, all of it, to be honest.
And I think they're all sort of big and ugly enough to get over this.
Other things on premium. Another exclusive on the changes at CEIBA Logistics. Are we going to see another big M and A deal in forwarding?
Worth reading about that. There was also, of course, more on the Union Pacific and Norfolk Southern merger.
Um, so, yeah, quite funny this week. Probably worth a read.
[00:19:14] Speaker A: Thank you so much for that roundup. Alex and Gav, I'm coming over to you now for the final roundup of the episode. And that is of course the rate roundup. We do it every week. Um, we've recently been reporting on the fact that rates are very, very low and some people have even thrown around the term rock bottom. So what happened last week? Did they go up, down, stay the same? Where are we?
[00:19:33] Speaker B: Okay, so rock bottom refers to.
[00:19:39] Speaker C: That.
[00:19:39] Speaker B: Refers to backhaul rates from Europe to Asia, which I was having a conversation with Senators Peter sand about.
[00:19:48] Speaker B: And actually it was in the context of what we talked about earlier about the return through sewers of the CMA CGM vessels and whether that might have an impact on lowering rates. And Peter made point that they can't really go any lower. In fact, since September, if you take out terminal handling charges, some Asia Europe rates have been below zero. Effectively the carriers are paying you to take their cargo anyway. But by the way, they did actually rise 1% this week. So there we go to the heady Heights of $460 for a 40 foot from Rotterdam to Shanghai. But on the Headhall routes it was all changed again, right? So we had, we had Gris on the Trans Pacific, we had a load of fak, a new FAK rate levels on the Asia Europe trades and all the four main indices. The four main deep sea routes that we look at in this review, which is Asian North, Europe, Asia Med, US West coast and US East Coast. From Asia up 4% into Europe, 15% into the Med. So still strong demand on, on both of those Asia Europe trades. It's kind of defying what we see amongst us on the streets. You know, I mean, I, I look at shop closures and stuff, but there you go. And up 8% to the US West coast from Asia and up 6% to the US East Coast. I think it's fair to say. That almost all of these increases, I mean I did just mention demand. Almost all of these increases that we've seen this week are the result of carrier led price increases. And certainly on the Trans Pacific trade to the US west coast there were reports of almost immediate discounting, you know, in the past couple of days. There will be further new gris coming up on the 15th of December. New FAK rates on Asia Europe trade also slated for 15th of December.
It's interesting to see that most of these rate levels that they try and push through, they're not actually particularly big. It's more like sort of nudge upwards.
[00:21:49] Speaker B: Rather than the kind of shock and awe tactics that we've seen sometimes in the past. So that indicates a kind of, you know, carriers really want to keep the price levels sort of where they are at the moment rather than, it's a, it's a, it's a strategy to sort rates eroding rather than to significantly hike prices because I don't think the market could, could, could withstand that. And interestingly, just on the one other deep sea trade we've mentioned earlier, transatlantic, they declined a couple of percentage points this week. That's, that's still, they're still hovering around $1600 a 40 foot, which is, which is you know, 10, 20% off the kind of market average, the long term market average of around two grand.
So, so yeah, it was a good week for the carriers. We will see whether it continues for the rest of the month.
[00:22:38] Speaker A: Well, yes, we will definitely be keeping a close eye on that and bringing you all the updates on the Lodestar podcast and of course through our editorial coverage. Now, looking to next week as well. Do either of you have anything else on your radar? I've already mentioned that I'm going to be looking at the insurance side of the Suez returns.
[00:22:55] Speaker C: I do, I'm hoping to look at the Koonagal job cuts and how that's going.
We've had quite a lot of chat with various people who found themselves on the wrong end of that.
So I'm just waiting for some comment from Kunana Nagal itself.
I've actually got some personal congestion in terms of the number of stories I've still got to get out. So I'm hoping to get quite a few interviews out in the next week.
[00:23:20] Speaker C: And I will be looking at air freight forecasts for next year and the impact that changes to E commerce may have on the capacity situation.
And just finally a little plug. I'll be doing part of a webinar for Demurco which will be out on Wednesday about 20, 26. And one of the questions is what the rates were going to be. And if I find out the answer to that, I will certainly let you know.
[00:23:44] Speaker A: Well, this video podcast is very good practice for your webinar. I look forward to tuning into that. What about you, Gav?
[00:23:50] Speaker B: I guess it's going to just be looking at Zim. That seems to be what my. Yeah, yeah. It's going to be sim. And we'll be continuing to look at the how the annual contract negotiations are going on, the Asia, Europe trades. That'll be that'll be the shipping coverage, I should think.
[00:24:05] Speaker A: Thank you both so much for joining me this episode. It's been a pleasure to speak to you as always.
[00:24:09] Speaker C: To you as well, Charlotte.
[00:24:10] Speaker B: Thank you very much.
[00:24:11] Speaker A: And thank you all for tuning in. We will see you next episode.
