Freight News from Lloyds Loading List

Latest News headlines from BIFA

Posted on Thursday August 09, 2018

The medium-term outlook for global container port demand growth "is positive thanks to strong underlying economic momentum across the world's major economies," said Drewry in its Global Container Terminal Operators Annual Review and Forecast 2018.

The analysts' latest five-year container port demand forecast is based on average global growth of six per cent per annum.

"The global container port industry is now of such a scale that six per cent annual growth equates to around 45 million additional TEU each year, broadly equivalent to the size of the world's largest container port, Shanghai," said Drewry.

The port terminal industry experienced growth of three to four per cent per annum between 2012 and 2014.

"It looked as if that would be kind of the way it was going to be for the future. But then the last couple of years it's really picked up again into sort of the five-six per cent growth band. It's sort of had a second lease on life and our latest projections reflect that," said senior analyst Neil Davidson.

However, Mr Davidson noted that owners of container terminals and investors are taking a cautious approach.

Drewry said, "Bottom-up capacity projections on a terminal-by-terminal basis present a more conservative picture, with global container port capacity projected to increase by around 125 million TEU by 2022, a growth rate of just over two per cent per annum. This is clearly well below projected demand and reflects the cautious investor sentiment towards greenfield projects over the last few years."

As a result, Drewry is projecting average terminal utilisation globally "to increase significantly from 68 per cent in 2017 to 80 per cent by 2022. Average regional utilisation levels are projected to increase most sharply in Greater China, North Asia, Southeast Asia and west coast South America".

Mr Davidson cautioned that utilisation may be higher at particularly popular terminals or terminals designed to accommodate the largest ships.

"All the capacity is not the same," he said, adding that there are fewer terminals that are large enough, have deep enough berths and cranes to handle the very largest containerships.

He said that is not a big issue today. Whether it becomes one in the future will depend on the investments terminal operators make.

Traditional port operators have "become very cautious in terms of expansion," he said. "The exception to the rule has been the Chinese players, who have remained very bullish and aggressive and buying assets and building more capacity. A lot of the new capacity that's around or coming on stream is driven by Chinese investors and Chinese money."

Mr Davidson said the kind of returns that were being generated five to 20 years ago from the terminal industry are very different from what they are today. That has led to a change in attitude by the traditional terminal operators and "over time will lead to a change in the nature of the investors in the industry."

Source - Shipping Gazette

Posted on Thursday August 09, 2018

BIFA has been advised that as per China Customs 2018 no.60 regulation, and China Customs 2017 no. 76 regulation, that from August 1st 2018 advanced manifests must be submitted for all sea and air shipments inbound/outbound/via China comprising the following information: 

  1. Shipper’s company code, contact number, country code
  2. Consignee’s name, company code, attention of party, contact number, address, country code
  3. If consignee is “TO ORDER”, then it is required to provide company code and contact number of notify party
  4. It is recommended that the AEO code is provided, where applicable, which can accelerate process of customs

 The legislation requires that complete and accurate digital manifest data must be submitted to China Customs before departure for air shipments, and 24 hours before loading for sea shipments.

 It would appear that the legislation came into force on the 1st June, but enforcement commenced on the 1st August. We would suggest that Members check individual carriers for confirmation when they need the applicable data, as there do appear to be some variations.

Posted on Wednesday August 08, 2018

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 4.1% in June 2018. Capacity growth has now outstripped demand growth in every month since March.

There are three main factors driving the slowdown:

  • The restocking cycle, during which businesses rapidly built up inventories to meet demand, ended in early 2018. There was a marked fall in air cargo volumes from March.
  • We are now seeing a structural slowdown in global trading conditions as indicated by the fall in the Purchasing Managers Index (PMI) to its lowest level since 2016. Factory export order books have turned negative in China, Japan and the US.
  • The temporary grounding of the Nippon Cargo Airlines fleet in the second half of June exaggerated the slow-down by shaving up to 0.5 percentage points off June growth.

"Air cargo continues to be a difficult business with downside risks mounting. We still expect about 4% growth over the course of the year. But the deterioration in world trade is a real concern. While air cargo is somewhat insulated from the current round of rising tariff barriers, an escalation of trade tension resulting in a ‘reshoring’ of production and consolidation of global supply chains would change the outlook significantly for the worse. Trade wars never produce winners. Governments must remember that prosperity comes from boosting their trade, not barricading economies," said Alexandre de Juniac, IATA’s Director General and CEO.      

June 2018
(% year-on-year)

World share¹

FTK

AFTK

FLF     
(%-pt)²     

FLF
(level)³  

Total Market        

100.0%     

2.7%         

4.1%    

-0.6%      

44.3% 

Africa

1.9%

-8.5%

-1.4%

-1.9%

24.9%

Asia Pacific

36.9%

1.5%

5.2%

-2.0%         

54.5%

Europe             

24.2%             

3.3%

5.4%       

-0.9%         

44.6%             

Latin America             

2.7%

5.9%

-5.7%

4.1%

37.2%

Middle East             

13.7%

3.8%

4.5%

-0.3%

43.7%

North America            

20.6%

3.8%

3.4%

0.1%

35.8%

¹% of industry FTKs in 2017   ²Year-on-year change in load factor   ³Load factor level              

Regional Performance    

All regions except Africa reported a year-on-year increase in freight volumes in June 2018, but the slow growth in Asia-Pacific, which accounts for nearly 37% of the entire air cargo market, dragged the global growth rate down.

  • Asia-Pacific airlines saw freight demand increase by just 1.5% in June 2018 compared to the same period last year. Capacity increased by 5.2%. The international freight performance by the region fell to 1.1%, a 17-month low, although this partially reflects comparisons with the strong performance in June 2017. For the first six months of 2018 FTKs expanded by 4.6% year-on-year, and freight volumes are expected to settle at an annual 3-4% growth.
  • European airlines posted a 3.3% increase in freight volumes in June 2018. Capacity increased by 5.4%. Growth is being affected by a slowdown in export orders. Supply chain bottlenecks, which are often alleviated by air freight, have also eased. For the first half of 2018, the region expanded 4.1% year-on year.
  • North American airlines' freight volumes expanded 3.8% in June 2018 compared to the same period a year earlier. International FTK performance was 5.9%, making the region the strongest-performing market for the first time in two years. The strong dollar and robust growth in the US economy is driving inbound shipments. Capacity increased by 3.4%. Growth for the first half of 2018 was 5.3%, second only to exceptional growth in Latin America.
  • Middle Eastern carriers' freight volumes grew 3.8% in June. This was an improvement on the May figure of 2.7% but this is well below the average five-year rate of 9.5%. Capacity increased 4.5%. Growth for first half of 2018 was 4.3% year-on-year, and the expectation is for volume growth to remain modest in the months to come.
  • Latin American airlines experienced growth in demand of 5.9% in June 2018 – continuing its recent run of posting the largest increases of any region. Unusually, capacity decreased by 5.7%. The pick-up in demand for international freight (5.2%) slowed compared to last month, but continues to trend well above the five-year average (1.6%). Growth for the first six months of 2018 was 10.1%, comfortably the best performance of any region.
  • African carriers saw freight demand contract 8.5% in June 2018 compared to the same month last year. Capacity also fell, by 1.4%. It is difficult to be positive about the current picture in Africa. International FTKs fell at the fastest pace (-8.6%) for nearly nine years. Although the year-on-year growth rate for the first half of 2018 was 3.0%, in seasonally-adjusted terms, FTKs are trending downward at an annualized rate of almost 20% over the past six months, and demand conditions are weak on all the main markets to and from the continent.

View June air freight results (pdf)

Posted on Wednesday August 08, 2018

“Our members still face significant problems at the port with shipping lines cancelling calls; or operating a cut-and-run policy, where the ship leaves before all containers that are booked are loaded, or discharged.

“Those members are also experiencing knock-on effects at other UK ports where vessels are being diverted, causing additional cost and disruption.

“Previously BIFA has expressed its disappointment that the port authority, which owns Felixstowe has made it clear that it does not consider BIFA members to be direct customers of the port, and would not be willing to have a discussion about possible compensation for the damage caused and the increased costs that have been incurred by those members.

“We have made it clear to the port authority that BIFA believes that many of its members are the port’s customer for the terminal processes that it undertakes after a vessel has been discharged for imports and prior to loading for export traffic.

“In our opinion, as the port authority produces a publicly available tariff detailing services being offered and the associated charges; and then either invoices the freight forwarder directly for these charges; or grants credit facilities, all the elements of a contract between the port authority and our members are thus in place.

“The port authority does not accept this line of argument and we remain very disappointed that it is not even prepared to discuss any kind of compensation for such a complete failure in customer service.”

Posted on Tuesday August 07, 2018

The latest Container Shipping Forecaster from Maritime Strategies International (MSI) does not expect a repeat of last year, when mainline spot rates had reached their pinnacle by week 30 and then declined during the peak season.

MSI says it expects 2018 to “avoid this trend” and is predicting peak season transpacific rates to reach some 10-15% above 2017 levels, with Asia-Europe rates about 5% higher.

Moreover, it noted that, with the exception of Asia to North Europe, “mainline freight rates currently sit above their equivalent 2017 position”.

Container lines desperately need a decent peak season in the third quarter to mitigate a disappointing first half.

They collectively lost some $1.2bn in Q1 and it is difficult to see the second quarter having been any better. Indeed, given the higher cost of fuel and charter costs in Q2, some analysts are expecting the interims to show a deteriorating trading picture.

In June, Hapag-Lloyd felt obliged to issue a profit warning, citing “an unexpectedly significant and continuing increase in operational costs since the beginning of the year, especially with regard to fuel-related costs and charter rates”.

The German carrier will publish its H1 results on 10 August.

Notwithstanding the welcome impact of a strong peak season on voyage results during Q3, carriers will hope that any momentum will carry over into the Q4 slack season and provide a springboard for a better start to 2019.

However, MSI warns that, despite the prospect of improving freight rates, this positive development for carriers remains “vulnerable to rising costs”.

“Higher volume growth and more aggressive capacity management are the obvious drivers to improved levels, but these gains will be largely eroded by growing bunker costs and liners will struggle with profitability for the remainder of the year,” predicts MSI.

Commenting on a surge in June volumes on the transpacific tradelane, which has been attributed to “panic-buying” as the trade war scenario between the US and China escalated, MSI said that although the “noise” around the imposition of trade tariffs had focused on the mainline trades, “their potential impact will be felt more widely”.

The biggest effect of tit-for-tat tariff hikes will, however, be felt on the eastbound transpacific route, but MSI remains concerned about the indirect impact on other trades.

“The key area to watch is how far tariffs on US imports risk disrupting complex cross-border supply chains which feed into finished products and which are especially key to the high density of regional and feeder services in the intra-Asia market,” said MSI.

Meanwhile, for containership owners, the consultant said there was “limited charter market upside” expected after the welcome rebound in daily hire rates so far this year.

It said time-charter rates had “levelled off” in recent weeks, not least due to recent moves by carriers to cull services and restrict capacity on some routes to improve profitability.

MSI said that, “given the justified sense of buyer’s remorse over 20,000 teu+ newbuildings”, which has been the root cause of overcapacity issues this year, it is expecting a “pause for thought” by carriers on ordering new ULCV tonnage – with the possible exception of Cosco.

Read this post on The Loadstar

Posted on Friday August 03, 2018

(See www.worldacd.com/yields for more yield developments)

It had to happen one day, or rather one month: no year-over-year (YoY) growth to speak of. June 2018 was that month: for the first time in two years, air cargo's worldwide volume growth stagnated as the YoY increase for the month was a mere 0.4%. Admittedly, the first half of 2018 brought an overall YoY growth of 3.7%, but this year-to-date growth % has slowly but surely decreased for a number of months now. Judging by the very diverse stories appearing in the trade press over the past weeks, our industry is clearly divided when it comes to the prospects for the second half of 2018. On the one hand, we read optimistic prognoses from some of the big forwarders, based mainly on what they see as a continuing capacity squeeze. On the other hand, people get worried about the (future) negative effects of the trade policies - real or only tweeted - of the unpredictable man in the White House.

Results for the early summer month of June may not be the best leading indicator for the rest of the year. Nonetheless, it is noteworthy that business from Asia Pacific to the other regions did not improve vis-a-vis June 2017: -0.1% YoY. Air cargo from the origins Africa, Europe and the Middle East also contracted YoY (MESA by almost 4%). The Americas, however, again bucked the worldwide trend: the USA enjoys high economic growth, whilst South America has been in 'catching up' mode for a number of months already. The worldwide yield continued to be much higher than a year ago.

What to make of these developments in the light of the uncertain times we live in? Should they be seen as a harbinger of times to come? Let us take a look at the June-figures for the markets most 'threatened' by the trade measures announced by Donald Trump.

Exports by air from China to the USA dipped considerably in June. Although this market had been sub-par for the full first half year of 2018 already (-2.9% YoY), the June figure of -5.9% YoY could be indicative of a worsening climate between the two economic powerhouses. By the way, China to Europe was also negative  in June (-2.9% YoY), but USA to Europe showed growth of 3.7% YoY, well above the worldwide average, albeit much lower than in the earlier months of 2018 when it topped 8%. With a YoY growth of 3%, USA exports by air to China grew more than the overall air cargo ex USA...

Who is to tell what results will be reported for July onwards, when the first tariff increases may start to bite. To us, the world of air cargo looks fairly uncertain at the moment: for once, to predict the future it may be just as helpful to read the tea leaves (as well as tweets?) or to gaze into a crystal ball.

Source: WorldACD

Posted on Wednesday August 01, 2018

In figures released in the second calendar year after the EU referendum, exports to non-EU countries amounted to around £342bn in 2017 showing the worldwide demand for British goods and services remains. Exports to EU countries were around £274bn in 2017.

The fastest growing export market for the UK since 2010 was Oman, with exports increasing by 354 per cent to £3bn. This was followed by Macedonia (FYROM) with UK trade growing by 318 per cent to £1bn and then Kazakhstan which was up by 210 per cent to £2bn.

International Trade Secretary, Dr Liam Fox said:

“British goods remain in global demand as exports to non-EU countries continue to grow in markets such as Oman. It shows the confidence the world has in our goods and is important as 90 per cent of global trade will come from outside EU.

“As an international economic department, we have a dynamic and experienced team who will negotiate free trade deals and make a success of Brexit. We’re also supporting UK businesses in exporting more and talking to international businesses on why we should be the top destination for investment through our GREAT campaign.”

Today’s figures also reveal in 2017:

  • Overall exports of goods rose by 13% to £339bn;
  • Overall exports of services rose by 7% to £277bn;
  • The USA remains the UK’s top export market, buying over £112bn worth of goods and services in 2017, an increase of eight per cent since 2016.
  • Other top markets include Germany, France, Netherlands and Ireland.

The news is promising as separate ONS figures show that UK exports overall rose by 5 per cent in the year to end May 2018. Our world-leading services sector recorded a trade surplus of £111bn in the same period, with services exports totalling £279bn in the year to May 2018.

The UK also attracted more than 2,000 foreign direct investment projects in 2017-18.

Source: Department for International Trade (DIT)

Posted on Monday July 30, 2018

New legislation on cross-border haulage has today (19 July 2018) been given Royal Assent marking a significant step in the government’s preparations for exiting the European Union.

The Haulage Permits and Trailer Registration Act will ensure that the UK has the powers it needs to support British hauliers to continue operating internationally after exiting the EU.

As our recent White Paper set out, the government’s overall aim in its negotiations with the EU is to retain reciprocal access for road hauliers.

However, it is possible that the future exit deal could require a form of permitting system and the government needs to have legal frameworks in place to introduce a new administrative structure. This act provides the government with this flexibility.

Transport Secretary Chris Grayling said:

"Royal Assent of the Haulage Permits and Trailer Registration Act is a significant step in our preparations for exiting the European Union.

"The haulage industry is at the heart of our trading relationship with the EU and we are confident that we will reach an agreement to maintain the current liberal access that is beneficial to both sides.

"But these powers give us the flexibility to have systems in place if a permit system is required and provides reassurance for hauliers to continue planning for a smooth EU exit."

The act comes as part of wider government preparations to ensure the UK can deliver a smooth and orderly EU exit.

The key elements of the act include:

  • establishment of a framework for the regulation and enforcement of existing permit arrangements with non-EU countries which may be used, if necessary, to manage permits arrangement with EU, ensuring hauliers can obtain the necessary paperwork to provide services after the UK leaves the EU

  • the establishment of a trailer registration scheme allowing UK trailers users to meet the registration standards outlined in the 1968 Vienna Convention - this will ensure UK operators driving on the continent can comply with the requirements of those EU countries which require the registration of all trailers travelling on their roads

The DVSA is making progress in creating a permit administration scheme and the DVLA on establishing a trailer registration scheme. It is intended that both will be open for applications later this year.

The department has also begun working with stakeholders to produce a trailer safety report. This follows extensive debate around trailer safety during Parliamentary consideration of the act. The report, scheduled to be published by July 2019, will consider whether mandatory registration and periodic roadworthiness testing should be extended to additional trailer categories.

Source: GOV.UK

Posted on Monday July 30, 2018

Chart shows percentage of respondents reporting deterioration/decrease, no change, and improvement/increase in traffic volumes (left to right)

The survey, conducted in early July, queried chief financial officers and heads of cargo on subjects like demand for capacity, trade tensions and increased input costs. The study indicates a “squeeze” felt among cargo carriers that intensified during Q2 2018, resulting in more moderate year-over-year profit margins across regions.

“Half of the respondents reported that profitability increased in annual terms in Q2, but this was the lowest proportion since April 2017,” the study said.

Many carriers are pointing to rising fuel prices as the principal cause of the constriction. Three out of four respondents said they were hit with higher unit input costs in Q2 2018 than the same period last year.

Fifty-seven percent of participants expect profits to continue to increase between now and July 2019, but at the same time, the proportion surveyed that expect to see a “deterioration” at some point over the next 12 months jumped to 32 percent – its highest level since October 2016 – participants citing continued anticipation of higher input costs.

Still, almost two-thirds of respondents reported higher year-over-year air cargo volumes during Q2. Participants generally reported that conditions “remained strong on the key markets across the Pacific and Atlantic,” despite rising trade tensions between the U.S. and China at the time of the survey.

To read IATA’s analysis of the survey, follow this link.

Source: Aircargoworld.com

Posted on Wednesday July 25, 2018

Loadstar Logo (1)

The company’s Pier J Terminal at the Californian port of Long Beach was the first to be affected.

The port said it was monitoring the situation, while local media reported that it did not seem as severe as a previous cyber attack on Maersk.

A notice sent by Cosco to its customers said “local” network systems and some email services had been affected. However, The Loadstar understands the attack has spread to the line’s operations in the UK.

While the carrier has yet to respond to requests for comment, it has issued an updated notice: “Due to [a] local network breakdown within our America regions, local email and network telephones cannot work properly at the moment. For safety precautions, we have shut down the connections with other regions for further investigations.”

The attack comes a little over a year after NotPetya, which, while it was not directly targeted, hit Maersk Line and cost the carrier some $300m.

Earlier this year, SeaIntelligence Consulting chief executive Lars Jensen said that, even though some action had been galvanised by NotPetya, the level of cyber-attacks was increasing.

“It’s important to remember Maersk wasn’t attacked; that was collateral damage from an attack on Ukraine’s government. But it’s exceedingly likely we will see a repeat,” said Mr Jensen.

“You can beef up your cyber defences, but the most important thing is to make sure you have some sort of contingency plan in place.”

There has been no confirmation this is a direct attack on Cosco and no further information is available on its source.

In its statement, Cosco stressed that all its vessels were “operating as normal”, its main business systems remained stable and it had taken “effective measures” to combat the attack.

“The business operations in the affected regions are still being carried out, and we are trying our best to make a full and quick recovery.”