Episode Transcript
[00:00:00] Speaker A: Hello and welcome to the Lodestar podcast News in Brief, where we are going to be recapping all the main points from last week's supply chain news and flagging what might be important this coming week. Now, in this episode we are going to be giving details of an exclusive story on Cargowise that caused a bit of a stir for us last week. Some details on Hapag Lloyd's bid to take over fellow ocean carrier Zim, and a look at rates after reports of an upcoming Trans Pacific rate war. All this and much, much more. So let's get straight into the episod.
So happy Chinese New Year to everyone listening or watching who celebrates and I'm going to introduce my guests for this episode. As always, I am with the Lodestar Managing editor Gavin Van Mul.
[00:00:45] Speaker B: Hello Gav Shalom.
[00:00:48] Speaker A: And I'm with the Lodestar publisher, Alex Linnane. Hello Alex.
[00:00:51] Speaker C: Hi Charlotte.
[00:00:52] Speaker A: Before we get into the main discussion with my guests for this episode, I just want to flag a major piece of news from last week. Probably the biggest piece of news. This is the long awaited Supreme Court decision on Donald Trump IEEPA tariffs, the so called reciprocal tariffs. And the Supreme Court has upheld the lower court's ruling that the tariffs are illegal. This was a 6, 3 ruling. And the reason that we're not going to discuss this with my guests is because we currently don't have too many details. I mean the administration has previously stated that they're going to find a different way to implement these tariffs, so we might see that. But what we can be certain about is that there will be lots and lots of scrambling in the next few weeks to try and recoup those refunds. We know this is going to be done electronically, but yeah, there's currently not too much information about the timeline, how these will be refunded, when these will be refunded. And so yeah, I'm sure shippers and forwarders have got their work cut out for them. Good luck to everyone involved.
Let's start with perhaps the most interesting story from last week. I'm coming to you Alex, because this is about your exclusive on DSV's choice of TMS systems after its integration of DB Schenker. So what did you find out and what caused the stir?
[00:02:06] Speaker C: Well, first of all I want to say that it was not a hit job as some people have said. I'm pretty sure that Wise Tech, the owner of CargoWise, which is a 45 billion Australian dollar company, can withstand an article by me saying that DSV is starting to migrate. It's tms.
I guess we'll find out when it reports its results on Wednesday. But I do think we just need to put this into context.
So when Cargowise introduced its value pack at the end last year, Forward has started looking for alternatives, the biggest of which of course is dsv. Now DSV itself said in its recent earnings call that it was considering its options and Jenslin CEO said it's very likely that we will over time gravitate towards our own solution.
Now sources inside DSV told me that it started the migration towards Shenkers Tango. Now it's not going to be overnight, there's no major change, it's just starting to migrate things. So we understand DSV has not denied it, it just pointed me to a note in its financial report saying much the same thing. But it's not just about dsv. There are numerous other companies and there's also numerous other TMS solutions coming out. We also ran a story on Australia's argocore, which emerged from stealth operations with its platform cargonautics that aims to identify risk fast, sooner in the process. But I mean there's a ton of new entrants and there's a ton of people contacting us to talk about their own solution.
But Charlotte, you were at Manifest, you probably heard more about it than I did. What did you hear there?
[00:03:45] Speaker A: Yeah, Manifest was a great event. I've put together a little highlight reel. It's not very newsy or it's not going to give you much information, but kind of gives you a little taste of what Vegas was like. So I'm going to roll the tape.
[00:03:57] Speaker B: Viva Las Vegas.
Viva Las Vegas.
How I wish that there were more than the 24 hours in the day even there were 40 more I wouldn't sleep a minute away.
[00:04:17] Speaker C: Oh, this Blackjack and poker and the
[00:04:19] Speaker B: roulette wheel My fortune won and lost on every deal.
[00:04:25] Speaker A: So yeah, I think it's clear from that clip that I had a very good time in Vegas, did a bit of gambling. But more importantly, I met lots of people that I've been speaking to online that you don't meet face to face until you go to an event like this. That was great. And there was a lot of talk about Cargo Wise. I went to an exclusive lunch that was hosted by someone from the industry with a lot of forwarders and they basically spent the whole hour complaining about Cargo Wise. It was really interesting for me. I didn't know much about it going into it. I was asking lots of questions like, well, why don't you just switch then? And. And they all thought that was very funny because they were like, well, we don't have another option. But they were saying that the first person who manages to make the switch effectively will open the floodgates. It'll be a very interesting thing to watch, but something that they kind of were explaining to me was that there's this huge backlog of data that's all in the Cargowise system. And they kind of put it like you've got an iPhone and you've got, you know, thousands and thousands of photos that go way back. If you wanted to get a new phone, you have to, you know, transfer everything over, make sure you're ready to make that switch to a new phone. And that's just on such a small scale. Obviously you've got this backlog of data that goes back years and years and years, and some of it's relevant, some of it's not.
So one of the major forwarders was saying that they're kind of gathering their data, they're cleaning it up, they're making sure that they know what to archive, what they don't need anymore, so that when the switch is feasible, they are able to do it. So I thought that was quite interesting. There was also a lot of talk at Manifest about how different platforms are going to do pricing. So there was like outcome based, there was action based, there was seat based, so all the different things. And I think there was just kind of a lot of talk about this is the year of experimentation with all these different things. I've never been to Manifest before, so I don't know what previous years were like, but I think like, with any event, you kind of, if you go to it every year, a lot of it's quite similar chat and I kind of got feedback from people who do go to Manifest every year that this year felt like people were not only aware that they needed to make this AI journey, but now they're actually starting to assess their options and take action. So it did feel like this year was quite a pivotal one for Manifest and I am looking forward to seeing what happens in the coming years.
Talking of a period of change, we had a very interesting story from last week that German ocean carrier Hapag Lloyd was looking to take over fellow ocean carrier Zim Gav. Do you have any details on this? How likely is this to be pulled off and what effect will it have on the industry?
[00:06:49] Speaker B: Yeah, it was a big week for M and A in a lot of the areas we cover, so. And the biggest of those was Hapag, which has tabled a $4.2 billion bid for Zim. That's an all cash deal as far as I understand it.
The offer has the support of the board as well as a large number of shareholders. Of course, many of those are in the US because it's listed New York, so you've got a load of institutional investors there.
There has been pushback from the unions in Israel and reports of various strike action taking place there subsequent to the news breaking. I mean, Zim has often been a possible takeover target, but structurally the biggest barrier to that has been the Israeli government's so called Golden Share, which it basically retains a sort of a stopgap control over the company. So in times of war, for example, that Israel would still have a strategic shipping access, shipping assets to be able to import and export stuff, particularly import it. And so that's always proved the problem. Now, even though the Golden Share only amounts to like 1% of the stock capital or something, it creates conditions whereby for example, no more than 24% of the company could have been held by a non Israeli citizen. For example, in the case of this, it's been overcome by Hapag has teamed up with an Israeli private equity fund called Fimi. And what they're going to do is hive off Zim's domestic operations as well as the ships that it actually owns and create this new company called the New Zim, which will own the Israeli assets and continue to operate three key services, two intra Europe and one to the east coast of the US and back to Israel.
For Hapag, they're paying $4.2 billion in cash, which is way above the offer or the reported offer of Zim's chief executive, Eli Glittmann. Last year I think he was offering just over sort of half of that or around half of that.
And so hapag will get 87 ships. Now these are all on very long term leases. So in effect it's paying for 87 SHIP mortgages, most of which have a tenure of 10 years plus.
And the addition of that capacity into its fleet will cement its position as the fifth largest carrier. It provides more heft in its relationship with Gemini and crucially, it massively increases its commercial presence in the Trans Pacific trades, although currently how advantageous that is is questionable.
And then finally in terms of I can't see any competition concerns. I think they're talking about the completing by the end of the year.
And yeah, I mean we suspect that sort of come a year's time we'll be looking at sort of the international assets within Hapec and a new ZIM taking place in Israel. But all in all, Charlotte, it's been a big week for M and A. As I said, we've had over here in the UK one of the large or one of the big mid sized UK forwarders, Legendia is on the block and it's been rude to me for a while but we learned from various competition authorities review of an offer that is under offer from asiad which is the state owned man shipping company.
We've got APM Terminals buying into DP World's facility in Jeddah and then over in the US there's the freight forwarder. AIT Worldwide is getting some private equity investment from Greenbrier. But we'll have more on that next week because our correspondents in North America, Ian Potska is doing an analysis of that deal.
[00:11:05] Speaker A: Yeah, it's been a very busy week for merger and acquisition news. We also had an update on the bid to merge the US railroads Norfolk Southern and Union Pacific after the initial bid for the merger got rejected by the Surface Transportation Board for missing information. So what's the latest on this one, Alex?
[00:11:22] Speaker C: Well, Union Pacific CEO Jim Vayner sort of surprised investors actually by announcing that it would resubmit its merger application for Northrop Southern at the end of April.
He sort of played down the decision by the Surface Transportation Board. He said that the proposed tie up would mirror the model created by cpkc, the last merger in rail there and it would be comparable in scale to BNSC and that it would handle about 39% of U.S. rail gross tonnage miles. And the CFO Jennifer Hammond added that most of the projected growth, so around 75% would actually come from moving trucks off from moving trucks off the road rather than from competing rail operators.
Anyway, that's the current status.
[00:12:12] Speaker A: We'll have to see if this new information is sufficient enough for them.
Gav, as I mentioned at the start of the episode, we are now in the Chinese New Year period and this is always a bit of a weird one for shipping because obviously manufacturing slows down, therefore shipping slows down. So how are carriers coping with this? Have there been many blank sailings?
[00:12:29] Speaker B: Oh yeah.
So capacity in the run up to Chinese New Year's, you know, is clearly sort of over tonnage. The, the peak season didn't materialize as they expected. Probably worth just mentioning by the way, given the sort of trade diversification that we saw over 2025. It's not China. You know, this date, the 17th of February to two weeks beginning the 17th of February is Chinese New Year is also Tet, that is Vietnamese New Year, same date. And Vietnam is not quite as close as China but certainly its supply chain gets stretched for a similar period of time. So it's probably, probably worth remembering that because it's not just about China.
Anyway.
So last week Drury reported the 136 blank sailings have been announced for February. That's up 122% on January but then that drops to just 53 announced for March and obviously March shipping is back in full swing again. So clearly they're hoping for some post Chinese New Year rebound in volumes. I mean seasonally the period immediately after Chinese New Year tends to be one of the slumpiest periods of the year volume wise.
But it's difficult to know what's going to happen after this Chinese New Year because the pre Chinese New Year peak season petered out.
So there may be a bit of pent up demand that didn't get loaded on the ships before the before Chinese New Year happens. It's very difficult to foresee.
[00:14:12] Speaker A: And how is this translating into rates? Do you have any figures for us?
[00:14:15] Speaker B: Yeah, I mean I have a few rates.
[00:14:20] Speaker A: Yeah.
[00:14:22] Speaker B: Well, you know, on a general principle talking about pricing week after week has its own sort of tedious business baked into it. But that notwithstanding there has been so, so the, you know, in general spot rate markets are muted for the next two weeks because there's just less volume being shipped. If you want to get a, get a quote from a Chinese forwarder for your shipment, you good luck in getting anything before March because basically everyone's, the offices are sharp. It's just the same as happens here over for Christmas and New Year. Nonetheless, there's been a little bit, I mean Trans Pacific spot rates in reference to that trade certainly stabilize in the final week before Chinese New Year with Forward is paying sort of 1450 to $1600 for a 40 foot into the west Coast.
There is some data from the indices from WCI from Zenita as well freightos there has been some data but it's the spot rates out of Asia on the Trans Pacific have been in gentle decline I would say this week.
What volumes removed? I'm not really sure.
One second please.
Here we go.
And yeah, and just on demand because this is. So although capacity at the moment is slated to come back into these trades, especially Trans Pacific after Chinese New Year, we don't have a huge amount of insight into demand levels Afterwards. I mean, this is what I was talking about in the previous question, really. I mean, what we did have this week was the Port of Los Angeles reported January volumes. They were 8 down 8% year on year. All the predictions that I've seen from ports and from maritime analysts in the United States is that they're projecting there will be year on year decreases in January, February, March, possibly even into April and May.
And there's not a great deal to suggest that any of that demand picture changes significantly just because China returns to work. Right. So overall, on balance, yes, a rate war post Chinese New Year is probably looming unless there's a massive constriction of capacity.
[00:16:53] Speaker A: Good news for shippers anyway. Alex, what about in air? How are things looking over there?
[00:16:58] Speaker C: Well, we decided to give rates a pause for the week because of Chinese New Year instead. Actually, I looked at the UK air freight market and discovered that London is no longer the be all and end all of air freight and that regional airports are doing much better. So Glasgow in particular, Birmingham, East Midlands, all seeing a lot of growth while London airports are flatlining. That's sort of by the by.
We also looked at air freight capacity globally. I spoke with Marco Blumen from Avian and he gave lots of really interesting stuff about where the capacity growth, half of half of deliveries this coming, this year are going to go to the Middle East. So that's going to be quite an interesting change of deployment.
So capacity is going to beat demand, be higher than demand. So there's that to worry about for airlines.
And route data is already showing that capacity is shifting. So Asia to Gulf and Asia to Europe lanes have been up sharply in capacity terms.
China and North America has gone down and extra lift from China and Hong Kong are likely going to be absorbed on strong sort of outbound legs. But as ever with air freight and E commerce in particular, the backhaul is going to be the problem for this year. We're going to follow this article up with one on Demand this week, so stay tuned for that.
[00:18:21] Speaker A: Look forward to it. And could you give us a recap of what was on Premium last week as well, please?
[00:18:26] Speaker C: Yeah, sure. There's a fascinating article on MSC and its forwarding ambitions. There's a look at the UPS fight with the Teamsters, an article on Hapag, Lloyd and Zim of course, and an expose of the rumors circling and circling in M and A circles, including in Abu Dhabi, which, including Abu Dhabi ports, that is, which may have sort of refound confidence after the troubles at DP World this Week.
[00:18:54] Speaker A: Yeah. Speaking of, we probably should address the news that the CEO of DP World, that is Sultan Ahmed Bin Sulayem, was named in the Epstein files. Apparently he had exchanged hundreds of emails with Jeffrey Epstein over a decade since this. He has left the company and DP World has appointed Yuvraj Narayan as the group's chief executive officer. He's been at dp world since 2004. Gav, did you want to say something about this?
[00:19:21] Speaker B: I mean, it's a pretty horrible story all around really, isn't it? But the catalyst for the departures really seems to have been the announcement from the Canadian fund lacasse that it would halt its future investments with the company. And that would have been a really big blow because La Casse is a very key source, source of finance for DP World. They have a very enmeshed relationship and there's a lot of money that's been plowed in by both companies actually into their joint venture investment platform.
Broadly. A company this size across all these geographies and tens of thousands of staff can never really be about one man. I mean, I have noticed over the years or over my career of being a business journalist and the number of people I've interviewed that companies can very often sort of take on the characters and personalities of their leaders. So it's going to be very interesting to see how DP World now develops under Mr. Narayan. I mean, he knows the port industry inside out. So I think it will be, I think really, and I don't want to sort of brush over, you know, the events that have gone, but I think in terms of looking forward, it will be interesting to see how the different personality impacts the global organization.
[00:20:53] Speaker A: Absolutely.
Looking to the upcoming week now, I'm really excited because I'm going to be guest starring on BIFA TV. That is the British International Freight Association's YouTube channel. And I'm going to be doing a quick Q and A about things that I've been speaking to forwarders about and some major topics that I've been noticing recently. So I'm not sure when that is going to be out. That's completely up to them. But we are recording on Monday, so I'm sure that will be out very, very soon. Gav, do you have anything on your radar for the upcoming week?
[00:21:20] Speaker B: Yes, Charlotte, I've got tpm, Trans Pacific Maritime. In case no one knows what that is, the world's biggest shipping conference that's coming up the week after next. I'll be getting ready of that.
Very interested to see whether we're going to see a resurgence of the port fees debate. I don't know if you remember Charlotte from last year, if you remember Sorentoft's speech, but it certainly the whole issue of the USTR 301 port fees kick things off last year.
This year courtesy of the maritime Action plan that was announced by the White House this week, which is threatening to levy even higher fees on every single non US Ship. I mean, that's going to be that. That could promise a massive, massive taxes on the American consumers.
[00:22:09] Speaker C: So.
[00:22:11] Speaker B: So yeah, looking forward to that. It looks like it'll be a new debate, but could be a rehash of an old debate.
[00:22:17] Speaker A: Yes, so much has happened since the last tpm. You certainly won't run out of things to talk to people about. I'm very jealous that I'm not going to be there. And Alex, what about you? Have you got anything on your radar for this week?
[00:22:28] Speaker C: So yes, as I said, we'll be looking at air Cargo demand in 2026. We will be looking at cyber attacks, particularly in the port sector and what that might mean. And of course there's wise tech global results.
[00:22:39] Speaker A: Lots and lots to look forward to. Thank you both so much for joining me this week for all your good insights.
[00:22:44] Speaker B: Thanks Charlotte Shi Shi Ni Charlotte and
[00:22:47] Speaker A: thank you everyone for listening to and watching our podcast. If you're not watching, then do head over to our YouTube channel at the Lodestar Podcasts to see all the wonderful things we're doing over there. Please like comment, share, subscribe all of thank you so much for listening and we will see you next week.
