Market Update – 30th October 2023
The logistics industry is increasing efforts to build steel containers outside of China, alongside other products. This will inevitably shield a key part of global trade from pressures in the supply chain and geopolitical rifts.
Manufacturers are expanding their horizons by developing more factories across the Asian continent, as well as the US. This is to alleviate extreme dependency on China which could have been partly responsible for trade disruption during Covid-19.
The proposed actions are in response to a broader trend where businesses and policymakers are reviewing their reliance on Chinese manufacturers. This revaluation is occurring in the context of escalating diplomatic tensions and China’s growing intimidation towards Taiwan.
Businesses are concerned for the safety of their supply chains, so are finding solutions to possible threats to their operations running securely.
In other news…
- The Russian rail freight sector is steadily growing this year. This is thanks to its almost complete re-orientation in the Eastern direction and the ongoing adaptation of Russian economics from the sanctions and their consequences.
- German rail freight organisations have raised their voices against the extension of the licence for long lorries. It is said to encourage hauliers to continue transporting goods by road rather than by rail for environmental reasons.
- Airfreight rates are beginning to soar and airfreight indices have shown decent growth since 1 October. Rates out of China to the US are up 6%, and up 4.6% to Europe, in the past month. But, out of Hong Kong, rates have grown 14% to North America.
- Hong Kong Air Cargo has expanded into Europe for the first time with a new flight operating to Italy targeting e-commerce volumes. This service is a dedicated solution for e-commerce logistics, ensuring same-day delivery of goods.
- Ocean carrier loop suspensions will add significant tonnage to the idle fleet unless the redundant vessels are redeployed or chartered-out. The 2 loops deploy 22 vessels of between 13,000 teu and 14,000 teu. There are queries of what the alliance members will do with their surplus ships.
- Container shipping lines are set to see another spike in costs next year after the Suez Canal Authority announced that it would increase fees on northbound transits by 15%.
Shipping lines are facing more disruption and delay at the Panama Canal, due to being the driest October in 73 years combined anti-mining protests in the region. The water reserve must guarantee supply for more than 50% of the population, as well as maintaining the operations of the interoceanic waterway.
Digitalisation is going to be high on shippers’ agenda in the coming year as they aim to be more resilient and agile. Supply chain visibility and sustainability, on the other hand, have become less urgent objectives.
Container shipping lines are set to see another spike in costs next year after the Suez Canal Authority announced that it would increase fees on northbound transits by 15%.
Vietnam is prepared to build a dry port in Russia’s eastern region of Primorye to simplify import and export procedures and optimize logistics between the two countries.
That’s it for this week’s report, if you have any questions about the stories covered today or need support with your current supply chain, please get in touch.