Episode Transcript
[00:00:06] Speaker A: Good morning and welcome to the Lodestar podcast News in Brief, where 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 Lodestar this week. We're going to kick off this episode with some shameless self promotion on Monday. Last week the Lodestar team went to the Seahorse Freight Journalism Awards. The Lodestar team picked up three awards and one runner up.
[00:00:29] Speaker B: Well done everybody. Very happy with that. And people next year come along, meet all the journalists. It's a great opportunity.
[00:00:35] Speaker A: It really was. It was a great night. Thank you very much to all the organizers. And now onto the news from last week. Alex, as this is a very hot topic at the moment with the new incoming president to the US being especially worried about imports and the de minimis being too high, you wrote a really interesting story and found out that reducing the de minimis might not actually help with these concerns. What did you discover there?
[00:00:56] Speaker B: Well, yeah, there was a really interesting speech from a former CBP Customs Border Protection officer. He pointed out that changing some of the rules will have next to no effect on E commerce and border security. So for example, fentanyl, which is one of the things that everyone wants to stop getting into the US Is coming in in passenger vehicles from Mexico mostly. So it's not really an E commerce or de minimis issue. So any changes you make to that isn't going to make any impact. He says that what would really change the dial is if you gave the CBP more staff. He says they're understaffed, the tune of nearly 5,000 people. Yeah. And they also need better advanced data and new technologies to help them speed up. So new tariff rules, lowering the de minimis, none of that is going to make any difference to anything. So really worth reading that it'd be.
[00:01:48] Speaker A: Interesting to see if they do make those changes. Now our most read stories from last week were by far and away the strike news from both the US and India. So we'll start with the US because I'm sure everyone is familiar with that by now. The International Longshoremen's association are planning a strike along the US east and Gulf coast ports come January if they cannot sort out a new contract with their employers. The US MX.
[00:02:10] Speaker B: Is that the 15th of January?
[00:02:12] Speaker A: Yes, I think so. And last week the parties gave us a glimpse of how the negotiations were going, which by the way is just not good at all. And now it seems that most people think a strike is Inevitable. They've sorted out the wage issue, but the big thing they can't get past is automation. The ILA put out a statement last week saying that automated and semi automated terminals jeopardize jobs, put the future of the workforce at risk and threaten national security. It seems quite extreme. The USMX then put out a statement saying that modernization and investment in new tech are core priorities required to successfully bargain a new master contract with the ila. And they said that it's also going to allow them to move more containers through the terminals, which means more money because of the increased cargo. So then I don't know if they're going to pass this on to their workers or what, but that was their argument. So, yeah, at the moment it seems like neither side wants to budge, really.
[00:03:02] Speaker B: I mean, one of the things they're particularly concerned about is automation less jobs. But a cynic might point out that the ILA makes its money from the number of members it has. So fewer members actually means fewer money for the ILA and its leadership. But that's only a cynical point of view. I'm sure that's not what they're worried about.
[00:03:19] Speaker A: Well, we are coming out with a series on automation at ports.
[00:03:23] Speaker B: We are from, from the 16th of December. If you go to thelowstar.com, you'll find all the issues about automation imports covered.
[00:03:30] Speaker A: Now there's also worries of a strike in a different part of the world. At the end of last week, dock workers at government controlled ports in India, of which there are 12, notified employers of their intention to strike indefinitely from 17 December if their demands are not met by 15 December, which is Sunday. Unsurprisingly, this dispute is about wages, but also about retirement and pension schemes. One of the busiest government owned ports ports in India is Chennai. So if this ceases operations, it's obviously going to have huge ripples across the supply chain. I spoke to some forwarders and other stakeholders who said that it's likely that shippers will try and move cargo through non government owned ports, which of course is then going to mean huge backlogs and delays at those ports as a sudden rush of cargo volumes comes through. It can also be expected that some may opt to use air freight in the case of more time sensitive cargo if a strike does actually happen. Moving on to air freight with that very nice segue. Alex, you wrote last week that airlines are increasingly embracing a wider variety of cargo booking platforms.
[00:04:31] Speaker B: Yeah, I mean, this came at the same time as Neil van der Waal From Zenita was talking about the peak season and how the market had really matured. He was talking about how manageable the peak season was. But it came at the same time as Cargo Lux, which is one of the last to hold out on online booking platforms, said it was finally deciding to join three of the main ones. And it just occurred to me, I wonder if this also is a sign of some market maturity in airfreight. I also interviewed Finnair Cargo and they said they love the booking platforms and it just feels like this now is part of how the airfreight industry buys and sells its capacity.
[00:05:10] Speaker A: And you also had a really interesting story about Chapman Freeborn, about some managerial shifts going on there. What did you find out?
[00:05:16] Speaker B: Oh, I really enjoyed doing this. So we'd noticed that over the past couple of years, quite a lot of managers were leaving Chapman Freeborn, and of course there's natural attrition and all the rest of it, but when you've got quite a lot like that, and some of which were leaving quite quickly after having been appointed only five months earlier, we thought it was quite interesting. So we spoke to Chapman and they said that, you know, they were sold to Avia Solutions Group and since then there's been a heavier focus on ensuring that everyone there as productive as they possibly can be. But then some of the managers that had left told us that Avia Solutions groups very, very strong on passengers, not so strong on cargo. They were a bit sort of overly excited by the pandemic revenues and profits and they'd set in targets that were really very high that people couldn't actually achieve. I mean, it's worth a read. Again, sorry to sort of push my own stuff, but honestly, I just thought it was a really interesting article. Anyone interested in Chapman have a read of that one?
[00:06:14] Speaker A: And what about effort rates last week? Was there any movement there?
[00:06:18] Speaker B: There was some movement. They seem to have hit their peak. Everyone's feeling that they've hit their peak. A Chinese forwarder told me last week that it's pretty busy and now about two thirds of the capacity coming out of China is taken up by E Commerce, whereas early in the year it was about one third. And so freighter operators are using that to sign up next year's contracts at high rates. So block space agreements are up to $1.40 more than they were last year out of China. He seemed a little annoyed by that.
In the short term, rates are probably going to decline over Christmas and then likely bounce back in Jan a little bit in advance of Chinese New year, which is on the 28th of January. Plus, as we know, there are one or two other things going on in January that could impact air freight.
So Gavin isn't here this week for ridiculous reasons. Charlotte, so you've been following ocean freight rates instead. What have you found out there?
[00:07:16] Speaker A: Oh yes, thrilled to be passed on this job in Gavin's absence. Last episode we spoke about whether rate increases would stick and last year carriers did in fact see their early December general rate increase stick. Spot rates into both North Europe and Mediterranean ports saw double digit increases last week. So Drewry's World Container Index had a reading of $4,775 per 40 foot for its Shanghai Rotterdam leg, which is an $800 per container hike. So that's 19% increase on the week.
[00:07:47] Speaker B: Oh, that's really significant. Wow.
[00:07:49] Speaker A: And shippers on the Shanghai Genoa leg found themselves paying another $1,000 per box after rates jumped 22% week on week to $5,496 per 40 foot. Zenita's Asia to Europe leg was also up 21.5% to $4,970 per 40 foot. So good news for carriers, bad news for spot market shippers. And that kind of echoes what you spoke about on the main Lodestar podcast last week with Senators Peter sand, that the 2024 winners are those charging the rates and the losers seem to be the shippers forced pay them.
[00:08:27] Speaker B: Oh, I feel bad for Gav after he's been spending the last couple of weeks going nothing's going on in rates. One day he's not here, the rates have actually done something well done. I know that's a horrible story to have to do.
[00:08:38] Speaker A: Well, finally we'll end on some good news. Danish carrier Maersk has put in an order for 20 new builds, adding to around 300,000 TEU capacity as part of its fleet renewal program. And these are set for delivery between 2028 and 2030 in line with its commitment to decarbonization. And so these vessels are going to have dual fuel engines and Maersk said that the intent is to operate them on the lower emission fuel. So these new buildings aren't going to add to Maersk's total fleet capacity. They're just going to replace the less efficient vessels.
[00:09:08] Speaker B: A nice little environmental boost for the end of the podcast, definitely.
[00:09:18] Speaker A: So now you are hopefully all up to date with last week's supply chain news. Here's what you might see on the Lodestar this week. So we've got some more webinars Coming up this week, Flexport is doing a webinar on the complexities of shipping humanitarian aid, which is obviously a very hot topic at the moment with the sheer amount of global conflicts going on. And they're also doing a North America Freight market update, so there might be a story come from one of those or both of those. I will be doing a write up of my recent interview with perishable forwarder ShippelFresh on what shippers are looking for from ocean carriers to make modal shift easier for them. And we are hopefully going to be hearing some updates from the possible strike in India. Remembering that dockworker unions has said they will be announcing an indefinite strike if the government failed to implement wage revisions before this Sunday, so negotiations will likely be taking place this week. We will keep you updated. And just on that, we may also get some more back and forth from the ILA and the usmx. Both parties seem pretty set in their stances, so it's going to be interesting to see if there's a budge on either side as we get closer to the January deadline. Thank you so much for joining me this week and I'll see you next episode.
