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Week 32 Freight Updates

August 11th, 2021

Despite ocean freight rates reaching record highs, “global container shipping demand was up only 2.7% in the second quarter versus the same period two years ago,” according to Maersk’s Q2 2021 report. With factors like the demand boom in the U.S. and the string of supply chain setbacks the industry’s been experiencing lately, many are chalking up these huge spikes in shipping rates to severe equipment imbalances.

And major ocean carriers like Maersk, Matson, Hapag-Lloyd, and ONE just keep on raking in the profits. According to Supply Chain Dive, “Hapag-Lloyd increased its earnings outlook for the year and now expects EBITDA to be in the range of $9.2 billion to $11.2 billion.” Meanwhile, “ONE’s revenue more than doubled in its most recent quarter to reach nearly $5.8 billion.”

Organizations such as the National Retail Federation are also warning trans-Pacific U.S. shippers in particular of the potential this month’s holiday shipping demand has to further intensify market conditions. On top of this, the new COVID-19 restrictions in South Vietnam have reportedly “caused a 100,000 TEU pile-up at Ho Chi Minh City’s Cat Lai port,” based on an article published by The Loadstar.

Shippers are mostly to blame for slowing cargo flow during the surge in imports from Asia, Class I railroads told US rail regulators in defending their storage fee practices that have come under greater scrutiny of late. The charge from the railroads comes as their rail ramps in Chicago are storing roughly three times the amount of ocean containers than this time a year ago. “It is important to note that while freight congestion caused by container dwell and longer-than-normal street turn times are ‘back end’ challenges that may be difficult for a shipper/receiver to manage, these are driven by ‘front end’ decisions including continued ordering of freight shipments without the resources to move the container beyond the rail terminal,” BNSF said in its response.

As a similar situation begins to develop in China, legislators over in the U.S. working on updating the Shipping Act of 1984 have ultimately decided to place maritime regulators like the FMC in charge of identifying whether or not carriers are behaving unreasonably.

To understand how this bill could impact container shipping, or to follow up with any of this week’s other top news, check out the following article highlights:

Global demand isn’t booming. So why are shipping rates this high?

Global demand isn’t booming. So why are shipping rates this high?

There is no COVID-era surge in global cargo demand. There’s a lengthy albeit temporary spike in congestion compounded by a localized, stimulus-and-savings-driven demand boom in America.

Ocean carriers boost profit expectations as congestion, demand raises rates

Ocean carriers boost profit expectations as congestion, demand raises rates

The ocean freight market is pushing cargo owners to the limits in terms of time and price. But the timeline for when the market will cool remains uncertain as stakeholders expect demand to continue at pace through the end of the year.

U.S. retailers, Maersk sound alarm on August import volumes (sub. required)

U.S. retailers, Maersk sound alarm on August import volumes (sub. required)

It appears August will be the cruelest month for trans-Pacific U.S. shippers as container volumes into North America are expected to reach a new record on holiday shipping demand that comes amid an already overloaded supply chain, according to the National Retail Federation.

Ominous signs for supply chains from new Covid lockdowns in Vietnam and China

Ominous signs for supply chains from new Covid lockdowns in Vietnam and China

The lockdown in South Vietnam has caused a 100,000 TEU pile-up at Ho Chi Minh City’s Cat Lai port. And in China, ports at Shanghai and Ningbo are reportedly also facing additional congestion from new COVID-19 restrictions.

Shipping Act rewrite defers to FMC to define ‘unreasonable’ export rejections (sub. required)

Shipping Act rewrite defers to FMC to define ‘unreasonable’ export rejections (sub. required)

Bipartisan legislation introduced Tuesday seeks to strengthen U.S. enforcement of container lines’ common carriage responsibilities to serve exports, but the bill’s authors say it will ultimately be left to maritime regulators to determine when it is “unreasonable” for carriers to not accept bookings.

Class I railroads blame shippers in defense of storage fees

Class I railroads blame shippers in defense of storage fees

2021-08-10T22:51:07+00:00August 11th, 2021|Shipping News|
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