Market Update – 9th October 2023
The Israel-Palestine conflict, marked by recent violence between Israel and Hamas, has sent ripples through the shipping and maritime industry, leading international companies to issue cautionary advisories and adapt their operations in the region. This, alongside the Russia-Ukraine crisis, reminds investors of the intricate web of the geopolitical world.
Changes in the airfreight market are expected, despite Challenge Airlines, Israel’s only freighter operator, maintaining its operations. Tel Aviv’s Ben Gurion Airport remains open, but several major carriers have suspended flights over safety concerns.
The Middle East is a significant contributor to global oil supplies. Any instability in the region can lead to oil price fluctuation due to potential supply disruptions.
Historically, these crises have often led to global inflation rates and trade imbalances. Already there are concerns from investors globally about the impact the conflict will have on the Indian markets due to higher shipping expenses and increased insurance premiums. How this impacts other global markets remains to be seen.
In other news…
- A trial freight train has carried semi-trailers from Ukraine to Budapest as the Rail Cargo Group develops plans to launch a regular intermodal freight connection between Kyiv and Wien. It would carry non-craneable semi-trailers containing building materials. It is thought that rail transport would be better for the environment and would help to address the shortage of lorry drivers in Ukraine.
- The UK government’s decision to cancel the production of the HS2 in the West Midlands, has been condemned as the worst possible outcome for rail freight. Critics argue the rails do not have the capacity for extra trains alongside current services and therefore prevent rail freight growth. Investment will now be required to upgrade the route to ensure all trains can be accommodated.
- International air cargo security is under the spotlight, after around $23m in gold and cash was stolen from Toronto Airport. This was after an unidentified individual simply walked into Toronto Airport’s bonded warehouse and after presenting a fraudulent waybill managed to steal the shipment.
- There are clear signs that the air cargo industry has seen some improvement over the last few weeks, however there is still debate over whether this represents the start of a full recovery for the market.
- In the Capesize Brazil to North China route, freight rates continue to exhibit strength, reaffirming their resilience in the face of various market dynamics. However, amidst these encouraging signs, a significant shift has occurred in the number of ballasters since the end of September.
- Rotterdam and Oslo are establishing a new green corridor ahead of the launch of Samskip’s H2-fuelled container ships. The route will be served by Samskip’s next generation zero-emission hydrogen-fuelled sea shuttle container ships.
Ocean carriers are ramping up efforts to off-hire surplus leased containers or retire their ageing boxes to reduce huge storage costs. With the global downturn in demand, and a collapse in freight rates across many trade lanes, carriers are focused on cutting costs and storing surplus containers is a significant drain on profitability.
Container lines serving Middle East trades are facing the prospect of losing a major source of their income from mark-ups or margins on ancillary collections. Carriers or freight intermediaries and freight forwarders have been barred from collecting terminal handling charges on behalf of customers for payment to terminal operators.
RCL has announced the November launch of a Far East-Africa shipping service – the first direct link between Qingdao and Dar Es Salaam. The 56-day rotation is Qingao, Shanghai, Ningbo, Nansha, Port Klang, Mombasa, Dar Es Salaam, Port Klang, Qingdao.
Fashion brands are facing increasing pressure to revamp their business model and transform their supply chains. Regulators are turning the screws on the sector by threatening hefty fines, and extreme weather in four major Asian production hubs that could take a $65bn toll on the industry.
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.