Episode Transcript
[00:00:06] Speaker A: Good morning everyone and welcome back to the Lodestar Podcast. News in brief or welcome if it's your first time listening to the podcast. Thank you so much for joining me. 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. Now, to start this week, I'm just going to recap a few news items that we're not going to delve into, but they're probably still worth mentioning so There was some speculation that ocean carrier Evergreen would shift its calls at Malaysia's port of Tanjung Pelopus to Singapore. The rumors began late last month after Evergreen agreed to set up a terminal in Singapore through a joint venture with terminal operator PSA Singapore to open for business by the year's end. But at the moment the Taiwanese operator is remaining tight lipped about this rumor and it hasn't revealed anything, but definitely one to keep an eye out. Obviously that would be a big loss for the port of Tanjung Pelippus. Also in port news, Alpha Liner reported that a potential deal that would have seen cma, CGM and German port operator Eurogate jointly develop a new terminal in Hamburg had collapsed because it was reported that the parties couldn't agree. By the end of last week, Eurogate denied the speculation to German news outlet DVZ and it said it's currently negotiating the western expansion exclusively with the port authority hpa, not with any shipping companies. So yeah, we'll keep an eye on how that one develops. Now moving on to air freight, I went to the IATA media Day cargo presentation last week and they noted that I think a lot of people thought that Q3 this year would be the air freight peak season, but they said that their data showed October demand was quite unexceptional was the word they used. They said that actually we are currently experiencing a very strong Q4 that will likely turn into a record peak season, but they said that the truth will lie in the November and December data. I'll be intrigued to see how that unfolds. And in line with this much better than initially expected demand, IATA has doubled its annual cargo ton kilometer growth forecast for 2024 to a remarkable was the word they used 11.8% and that would be an all time high in air cargo demand. And I think kind of everyone knows by now that it's this E commerce and also the shift from Seat Air. They did note that this was not all route and it was mainly just coming out of Asia to the E commerce, like I said. But I'm also joined now by Alex Lenane. And Alex, you wrote some stories last week about how air freight stakeholders are responding to and benefiting from this growth. In particular Air India and Atleige Airport. Can you sum this up, please?
[00:02:38] Speaker B: Thanks, Charlotte. Yes, well, Air India is betting big. It's now for orders for something like 550 aircraft in an $80 billion order book. It's pretty significant. It's owned by Tata Group now. So it looks as if Air India, which has underperformed for some time, might be back in business. But it's not just Air India. There's other carriers in India also looking at growth there. Indigo, for example, had a 17% increase in tonnage last year. Part of that growth will of course come from E commerce. But Boeing said recently India's air car they volumes have the potential to quadruple within 20 years. So it's going to become a pretty interesting market.
And Europe. And Liege, the airport announced yet another record as more and more airlines flock to it because it's pretty customers friendly and cargo friendly. The number of airlines flying there has grown by 20% this year. So it's now got 49 freighter operators using it regularly. And we had heard that Liege was something of a closed shop, very difficult for forwarders, even the big ones, to set up there. And the incumbents I understand were fairly happy to keep them out. But now there's some 60 logistics companies based there, so it looks as if it's finally opening up. And just one little extra thing on E Commerce. Shein, the Chinese E commerce platform, their London IPO is now under scrutiny from the financial regulator in the UK as it's double checking its supply chains and allegations of forced labor. So although none of this will stop the flow of E commerce, I'm sure it could be just another little flying the ointment for it.
[00:04:18] Speaker A: Well, while we're on the topic of air freight, we should also mention that Jus van Der will be leaving Schiphol as head of cargo in February and he's had quite a turbulence in there. He didn't really have it easy. Alex, what are the details?
[00:04:31] Speaker B: He didn't have it easy? No. So Joost was appointed on the back of leading the unions to fight back against Schiphol Schipphol then kind of thought they'd rather have him in the tent than out of the tent. I've always gotten quite well with him, but he's very single minded and he can be a little abrasive when promoting his causes. And sure enough, there were several personality crashes at Schiphol.
And his methods for trying to deal with the slot reductions and so on were not warmly welcomed by the Dutch Air Carver community, which is both very strong and very opinionated. It kind of started when he was first appointed. I interviewed him at Transport Logistic in Munich just after he started there, and he said that Schipper would have to reconsider whether it wanted to continue in the flower business. Now, those are kind of treacherous words for the Dutch air cargo community, and it didn't go down very well at all, apparently. He also got quite pilloried in the Dutch media and on his announcement of leaving Schipholk.
He did put some blame on the media, but it'd be interesting to see what he does next. And I do wish him well.
[00:05:43] Speaker A: Well, speaking of managerial changes, you also reported that Seiko Logistics has put in a new leadership team. Why did it make these changes?
[00:05:50] Speaker B: It's all been very weird coming out of seaco, to be honest. In September, they made an announcement about recapitalization.
They said the ongoing freight recession had been a problem for them and every other company. We asked for more details and they told us they'd announced more shortly. That turned out to be last week when CK said that it had recapitalized, now had new owners, and that the management team was changing. I've asked numerous times exactly who the new owners are, but despite CK promising to call me, they haven't. Their PR did, however, find the time to tell me that I couldn't use the word ousted about the management team that's leaving. They're jumping, not being pushed, apparently. But either way, there's a new CEO, CFO and cto. But happily, the lovely Brian Burke CCO is staying on. But it'll be interesting to watch to see what's actually happening in ck.
[00:06:47] Speaker A: Now, finally, for some strike updates. We had another update from the ILA about their views on automation. And this is a large indication that they will not be budging in these current negotiations, making the promise of a January strike all the more likely. Alex, you reported on this one. What did they say?
[00:07:04] Speaker B: Well, I mean, the ina, as you know, puts out all sorts of statements about all sorts of things. The latest is they wanted to note how unhappy they were with a report that listed the world's most productive ports, in which the us, unsurprisingly, fares pretty badly. Now, the ILA said that was because the metrics that were used favored transshipment ports But I went through the list, when you look at it, many Chinese ports, ports were near the top. And they're not transshipment ports. In fact, they're very highly automated ports, which is obviously something the ILA is fighting against. Now Mr. Daggett Jr hit out in a statement about the metrics used for productive ports. He also quite randomly hit out at private equity companies and finally at US infrastructure investment, which I think actually everyone can agree on. But what it does tell us is that the strike looks increasingly likely. Quite interestingly, Lars Jensen noted on the Freight Buyer Buyers cup podcast last week that a longer strike might actually be in the interest of the employers as well. His point was that the INA will definitely win and the employers, the usmx will definitely lose. So the only issue for the employers really is how to pass that extra cost on to their customers. And one way to do that is to make a strike quite long and painful so that their customers are pretty desperate and will be happy to pay what Lars Jensen called the ILA seller charge. So he thinks a strike will probably last a week, which by the measures that everyone seems to use is a week of congestion for each day of the strike. So that's five to several weeks worth of problems probably for the US Eastern Gulf coast port. We'll see. Wow.
[00:08:48] Speaker A: I mean that just seems so ironic because the ILA keep hitting out about these carriers profits and they're going to be the ones actually giving them the profits, basically.
[00:08:57] Speaker B: I know, I know, the whole thing's a bit bonkers really. And then there's the Trump effect, which we don't know. And then of course there's the tariff thing. There's a lot still hanging on it, but it seems to me like the ILA is not budging very interesting.
[00:09:10] Speaker A: Well, while we are in the North American region and talking about strikes, we reported that a Canada Post strike that has been ongoing since mid November is really taking its toll on the market. Volumes have been piling up at commercial carriers, which has then prompted the larger players to stop some of their non core parcel traffic. Now non asset based courier companies which rely on Transport from FedEx and UPS among others, have found themselves particularly affected. According to Project44, shippers are able to use about six carriers for final mile services in Canada, but less than 3 for inbound and outbound traffic. And so the limited market is highly vulnerable to disruptions. Perhaps more to come on this as the strike continues. And finally to end on some good news, as we always like to do on the news in brief podcast the looming government port strike in India set for 17th December has officially been called off and there is a new five year labor agreement that has finally been approved. So Indian shippers, you can breathe a sigh of relief and now you are hopefully all caught up on the main events from last week's supply chain news. Here are a few things that you might see on the Lodestar this week. Well, I can tell you that the Lodestars article series on automation at ports is going to be launching this week and this is obviously particularly topical at the moment because as we said, this is the key issue in negotiations between the ILA and the usmx. This article series should allow you to understand automation at ports a little bit more. We're going to be taking a look at the issues surrounding automation so for example productivity, labor and some examples of automation and semi automation at ports, among other topics, possibly also some more ILA news this week as the January strike deadline draws closer. And finally, Alex Linane has an interview with freightos this week. So perhaps another look at cargo booking platforms and the tech that is starting to become more popular with carriers. If you remember in last week's episode, Alex gave some insight about this kind of booking maturity and how airlines are increasingly embracing a wider variety of air cargo booking platforms, the data that they provide and their ability to increase speed to the market capabilities. So you might see more on that. Thank you so much for joining me this week and I will see you next time.
