Newsletter 15/2023: Actual situation in international transport

Newsletter 15/2023: Actual situation in international transport

Prices for shipments from the Far East to Europe have come under market pressure to levels that are economically unprofitable for shippers.

OCEAN TRANSPORT

Imports from the Far East

Prices for shipments from the Far East to Europe have come under market pressure to levels that are economically unprofitable for shippers. They have reacted by reducing capacity - some alliances have cancelled departures (blank sailings) or even cancelled entire services (see The Alliance and their FE5 service between South East Asia and Europe). Ships are therefore currently well filled, with some shipowners reporting full capacity on the Asia-Europe route until the second week of January. Container rates are rising again after this move. The first increase in spot prices is from 15 December, with more expected from 1 January 2024 and possibly even after 15 January 2024. We strongly recommend early booking of import shipments before CNY (10 February), at this time the fight for price can very quickly turn into a fight for space on ships...
 

Exports

Export shipments are relatively calm. There is space on ships in general, and the level of rates has more or less moderated to pre-foreign levels.
After 1 January, new charges will be levied: an ETS (emissions trading system) as an alternative to the carbon allowance and a canal passage fee will be (re)introduced for shipments passing through the Panama Canal. The Canal has long faced a water shortage in Lake Gatún. As we mentioned earlier, the canal has been widened to allow larger ships to pass through (and thus the process of filling the locks requires more water), and this year is the driest in the area, so there is no natural replenishment of the lake. Currently, the boaters are having to lighten the boats (carrying less cargo than the boat could hold) and so are trying to compensate for this loss. The charge applies not only to shipments to ports on the west coast of the USA, Canada and Mexico but also to ports in the western part of South America (Colombia, Peru, Chile).
For export shipments to the Far East (China and Southeast Asia), it is only a matter of weeks before the effect of the blank sailing in the westward direction aimed at artificially reducing capacity becomes apparent.
 

AIR TRANSPORT

The rise in airfares from China to Europe appears to have peaked last week and this week rates have stabilised thanks to a slight improvement in capacity.The only airport now facing traffic difficulties due to heavy snowfall is Beijing airport where the vast majority of international flights have been cancelled.Thus, it can be said that the situation at all major Chinese airports is stable and smooth although the current available departure dates for standard bookings are in the middle of next week.However, it is still possible to arrange immediate departure of a shipment and its arrival in the Czech Republic within 1-2 days at additional rates.

Export capacity from the Czech Republic is still smooth despite increased demand over the last two months and the current pre-Christmas rush, although some air carriers have reached their current capacity and have flights filled sometimes up to a week in advance and will be strengthening their capacity for these reasons.  One example is Qatar Airways which will operate daily service to Prague on a wide-body Boeing 787 Dreamliner from 1 January 2024.So there is nothing to prevent the fast and reliable handling of export shipments even in this hectic pre-Christmas period.

ICS2 implementation deadline for maritime transport postponed

The original date when the ICS2 procedure was to be implemented also for import sea, rail and road transport has been postponed - due to the unpreparedness of some EU member states - from 1 March 2024 to 3 June, but even this is unlikely to be a "big bang" date.
The information system was already supposed to be operational for air transport, but even this segment is not yet fully operational because not all member states are equally prepared to send data in the required format. Data is collected but ends up in one big digital pile without any meaningful use.


Hong Kong port at a dead end?

For those of you who had the opportunity to visit Hong Kong back in the mid-1990s, you will remember that planes used to fly into Kai Tak Airport, which was located in Hong Kong's mainland Kowloon. The single runway was not only a challenging landing and take-off maneuver for the aircrews, but also a certain adrenaline rush for both the passengers of the planes and the tourists watching the planes land just above the city.
 

https://www.youtube.com/watch?v=A0bxgcJZrro
https://www.youtube.com/watch?v=M5jrPCyvxEE

The airport increasingly encountered limits to further development. Its location in the immediate vicinity of the city did not allow for expansion and modernisation. It was therefore decided to build a completely new airport on an artificially created area in the sea near the island of Lantau. In the summer of 1998, the airport was relocated, ushering in a new era of air transport in Hong Kong. With this move, HKG International Airport maintains its global dominance in air cargo. The vacant area of the former Kai Tak Airport quickly grew into the surrounding city - a modern terminal for mammoth cruise ships was built here, sports facilities were built and the area was even used as a temporary isolation facility for people infected with covid.

Is something similar in store for the Port of Hong Kong?
Very likely yes. The port terminals are immediately adjacent to a densely populated part of the city with no possibility of further expansion. Moreover - according to the online newspaper Splash247.com - there is no common action (development) plan for the entire port, nor does the port have a central administration responsible for development. Development is also hampered by protectionist restrictions protecting Hong Kong's truck market (high fees at border crossings with mainland China). The Port of Hong Kong is thus retreating from its former position every year. As recently as 2012, it was the world's 4th largest container port; last year it had already dropped to 10th place. And it is the only major Asian port that has seen a gradual decline in the number of containers handled. It is perhaps only in handling dangerous goods shipments that it maintains its distinction.

Splash247 sees the future of the port in its relocation. The relocation should be done in a coordinated way so that the eventual new port replaces not only the existing Hong Kong port but also some other ports in the so-called Greater Bay Area - such as the smaller ports of Shekou, Chiwan and Mawan, which have a similar problem of not being able to expand in area. The relocation would also free up space for the highly desirable housing and commercial development in Hong Kong.The way out is therefore seen as building an entirely new port with modern infrastructure and a unified IT platform somewhere near Chek Lap Kok airport. Will this plan succeed as the airport relocation did, or will Hong Kong and other smaller ports in the Greater Bay Area settle for a receding role?
 
 

Toll increases in Austria and Hungary                                  

Austria is introducing CO2 tolls just one month behind Germany.
The toll in Hungary is also almost doubling. Both of these measures will have a significant impact on the price of transport not only to these countries, but also for transit traffic, especially to the Balkans, but also to Italy.

What is the year ahead of us?

Green. Environmental charges in transport are introduced (tolls on roads, ETS - EU Emission Trading System in maritime transport). The so-called carbon duty (CBAM) is being reported, and will start to apply in 2026. All this - and other measures yet to come - will result in increased administrative burdens and further price increases.

Digital. The development of artificial intelligence will increasingly speak to systems in logistics and transport chains. We will be launching a completely new version of our eSTONE that will partly use AI-generated data. It will not only be able to track shipments in real time, but will provide ongoing reports on your shipments and will add many other features. We are very excited and believe you have a lot to look forward to as well.

So let's hope that the increased environmental costs are put to good use and that AI is a good servant and not an evil master.

Have a peaceful Christmas and a prosperous 2024.
 
The smoke of the old naval battles is gone.
Jack Kerouac, Book of Haiku

Graphic created by AI based on the brief "artificial intelligence shipping industry new year 2024"
Created by human hand.

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