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Virginia and Baltimore Companies Unite to Solve Shipping Challenges Post-Bridge Collapse

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Global Logistics, Global Trade Daily, News, Ocean Carriers

Virginia and Baltimore Companies Unite to Solve Shipping Challenges Post-Bridge Collapse

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Following the collapse of the Francis Scott Key bridge in Baltimore, companies from Virginia and Baltimore have banded together to navigate the ensuing shipping challenges creatively. As debris clearance progresses, the supply chain faces hurdles, but collaborative efforts are paving the way forward.

Jason Pruitt, owner of Commercial Transportation Intermodal in Baltimore, acknowledges the ongoing complexities despite inventive solutions emerging. Temporary channels have been opened to mitigate the bottleneck, but rerouting cargo through Norfolk, Philadelphia, and New York presents its own set of challenges, particularly with drivers facing driving limit constraints.

Kacy Payne of Evans Delivery Company’s Land Transportation branch introduced the “Drop Lot” solution, easing the burden on Baltimore drivers. By allowing them to drop containers at a designated lot north of Richmond, Norfolk drivers can then take over for delivery to the Port of Virginia, and vice versa for cargo destined for Baltimore. This strategy helps drivers avoid exceeding their daily driving limits, enabling them to make two moves a day within allocated hours.

Ensuring proper insurance coverage during cargo transfers poses a significant hurdle, especially for smaller trucking companies. Larger companies like Evans Intermodal Transportation leverage their extensive network and standardized processes to streamline insurance transfers, offering support to smaller players.

To enhance efficiency and transparency, artificial intelligence (AI) technology will be deployed to track cargo possession throughout the supply chain. Kevin Speers of Splice, a Virginia Beach-based IT company, explains how AI will enable real-time tracking of truck and container information, facilitating seamless transfers.

Virginia Secretary of Transportation Shep Miller emphasizes Virginia’s commitment to assisting the Baltimore shipping community, endorsing innovative solutions like the Drop Lot.

As collaborative efforts between Virginia and Baltimore intensify, the shipping industry is adapting to the challenges posed by the bridge collapse, showcasing resilience and innovation in overcoming logistical hurdles.

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Global Logistics, Global Trade Daily

How Can Small Businesses Streamline Global Shipping Processes?

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The international shipping process has faced a number of disruptions over the past few years, with political issues affecting the ease of moving goods around the world. But, just because sending products abroad is a little trickier doesn’t mean it’s impossible. 

Small businesses can maintain streamlined global shipping and build a multi-national brand, using smart logistics to make the process simpler.

Optimize your global operations with these tips for efficient overseas deliveries.

Understanding the Difficulties

Before looking into how you optimize global shipping for small businesses, it’s a good idea to get to grips with current situations that are making it harder to ship overseas. 

This isn’t essential, but it can help you plan for disruption and better inform your customers of why they may experience later shipments. 

One of the major issues involves the Red Sea, where unrest is causing shipping companies to avoid the Suez Canal and take longer routes to their destination. This can lead to delays of up to 14 days.

There are also problems throughout the Panama Canal, impacting delivery speeds both into and out of the West Coast of the US and the West Coast of Latin America.

There are port strikes, rising fuel costs, and the ongoing Russia-Ukraine war, too, all of which are affecting shipping.

Though it’s a somewhat turbulent time for deliveries, it shouldn’t put small businesses off expanding their market to other countries. Instead, we recommend looking into ways you can streamline global shipments taking into consideration current events, making for smoother deliveries around the world.

Streamlining the International Shipping Process

Logistics are a key part of successful global deliveries and the better you plan the more efficient your shipments will be. Get started with these top tips.

Set-Up Global Payment Systems

If you’re branching out into the global market, it’s important to set up a payment system for international deliveries. For small businesses already using a card reader, check to see if your device is linked to an online account that accepts global digital payments. This will ensure all overseas transactions are tracked right alongside in-person payments for simple cash flow management.

It’s also vital that you charge your customers accurately for global delivery to avoid losing money. Before setting costs, ensure you’ve received quotes from suppliers and have a good grasp on import and export fees. There are tools available, too, that will automatically calculate shipping fees based on the customer’s location, making it easy to generate accurate fees. 

Get to Grips With International Shipping Laws

The international shipping process relies on rules and regulations, making it important that your small business keeps up with compliance. This can be time-consuming, but it’ll make your deliveries much smoother and more likely to reach the customer without an issue. 

Maintain a knowledge of the import rules for any countries you ship to. Most governments will have a detailed guide of their shipping laws, like the UK’s guidelines, which state the steps you need to take to avoid your goods being seized.

If you’re struggling to understand the rules, speak to a government official or consultant. They’ll be able to check over your plans and guide you on ways to improve compliance for efficient shipments. 

Automate Compliance, Documentation, and Reporting

There’s a lot of paperwork involved when shipping internationally. Luckily, though, your small business can take advantage of advanced digital tools to automate a lot of the laborious processes.

Automating software is available for compliance, making it easy to arrange the correct classifications for your products and adhere to global regulations. You can also use automated software to correctly fill out documentation and reports, inputting relevant information based on data already in your systems.

According to a survey by Deloitte, almost all global trade professionals were using a global trade management tool to make cross-border operations simpler. As more industries turn to digitization, it’s smart to switch paper-based operations to high-tech software to keep up with your competitors.

Find a Reliable Shipping Company

Choosing a trustworthy, credible shipping company to deliver your goods will make all the difference to your logistics. They’ll offer services that go beyond moving packages from A to B, including:

  • Updating you on delays and maintaining good communication
  • Handling your goods with care
  • Answering your questions regarding compliance and delivery
  • Offering great customer service
  • Dealing with lost parcels swiftly and effectively

Finding a shipping company that helps rather than hinders your efficiency will have numerous knock-on benefits for your business, too, from improving customer satisfaction to increasing loyalty among your audience. It’ll also impact your brand image, making it well worth the search.

Plan For Delays

A shipping company that currently reports no problems or delays is a red flag. These are tricky times for international freight, and some of your deliveries will likely be delayed on their route to your customers. But, by preparing in advance, you reduce the impact they’ll have on your business.

Smart logistics is proactive, and planning a schedule that avoids bad weather, political events, and seasonal delays is a great way to keep your shipments arriving on time. For example, if you’re shipping at Christmas, anticipate slower deliveries and higher demand by sending earlier.

Even with great logistics, though, you can still experience delays. This is why it’s important you have a good line of communication with your supplier. A credible company will update you on any changes to the estimated time of arrival (ETA) quickly, and provide an explanation as to why they’ve occurred. 

Once a delay is registered with your small business, inform the customers. Send an email updating them that their shipment will be delayed, along with any additional information, including the cause of the delay. Be sure to let them know of the new ETA, too, and offer an apology gift if necessary – like a discount on their next shop – to bolster your brand image.

Manage Customer Expectations

Marketing your global shipping as quick and reliable might be tempting, but if there are delays this will only end up hurting your credibility.

Rather than leading with the ideal situation, manage customer expectations by being honest. People would rather know their package is likely to be delayed, and a realistic delivery time is far better than the disappointment of a late shipment. Give your ETA some wiggle room and you’ll have happier, more loyal customers.

It’s also a good idea to include some information on your website about why global shipping can experience delays. This keeps your customers informed, shows you’re taking delivery logistics seriously, and builds credibility for your small business.

Enable Product Tracking

A great way to keep both your business and your customers up to date on global shipments is with tracking. Many international freight companies will offer an option for tracked deliveries, giving you real-time information on where the product is and when it’ll be delivered. 

This transparency improves the customer experience and reassures them that their delivery is on the way, with 90% of people actively wanting to track shipments. It’s likely to boost their view of your brand, too, as you prioritize their knowledge of the delivery over the potential savings of untracked deliveries.

Final Thoughts

The international shipping process isn’t always easy to navigate, with regulations, compliance, and delays making global business deliveries a lot of work. But, once you’ve got the right logistics in place, reaching customers around the world becomes a lot easier.

To stay on top of global shipping news or learn more about logistics, be sure to keep up with Global Trade.

Author Bio

Harvey Holloway is a digital marketing specialist, with a 1st class honours degree in Digital Media Design. Harvey is now looking to connect with leading publications and share his experience with a wider audience. Connect with Harvey on Twitter: @HarveyTweetsSEO.

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Global Logistics, Global Trade Daily, International Trade, News, Ocean Ports

Regulatory Confusion Surrounding Tugboats and the Francis Scott Key Bridge Collapse

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It has been just over one week since the disastrous Francis Scott Key Bridge collapse. Investigators are making progress along multiple fronts, and the role, or lack thereof, of tugboats is front and center. 

According to tracking data from marinetraffic.com, the Dali cargo ship was unaccompanied when it crashed into the Key Bridge on the morning of March 26. Tugboats operated by McAllister Towing and Transportation aided the Dali out of the dock for roughly 30 minutes before leaving the vessel at 1:09 a.m. At roughly 1:25 a.m., the ship began to veer right, departing the main channel and striking the bridge four minutes and 23 seconds later. 

It is common for tugboats to accompany vessels the size of the Dali out of the ship’s berth and then disengage once they reach the channel. Tugboat regulations vary, and ship owners pay for their services. In the case of the Key Bridge, tugboats peeling off before the vessel reaches the bridge are common. But the question with the Dali remains – had the tugboats escorted the ship to the bridge, what would the likelihood of a collision have been?

The Patapsco River is a vital national trade artery. The Cybersecurity and Infrastructure Security Agency (CISA) is tasked with protecting the US transportation systems sector from risks and threats. While CISA designates the Department of Transportation and the Department of Homeland Security as transportation co-sector risk management agencies, the issue of tugboat regulation and where responsibility lies remains unclear. 

The US Coast Guard is another entity responsible for risks and threats, as is the Joint Information Center (JIC), an investigative arm involving the US Customs and Border Patrol and US Immigration and Customs Enforcement employees. Yet, to date, CISA, the US Coast Guard, and the JIC have yet to publically accept regulatory responsibility as it relates to tugboat protocol. 

The Coast Guard can require tugboat escorts for certain vessels if they are deemed hazardous to navigation. The same applies in the event of precarious weather conditions. However, there appears to be an accountability gap where regulatory ownership is unclear.

The economic fallout from the collision is daunting. The Port of Baltimore generates roughly $3.3 billion a year, and 31,000 vehicles use the bridge daily. Had the tugboats been purposely called off, the captain’s log should reflect that.  

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Global Logistics, Global Trade Daily, International Trade, News, Ocean Ports

Emergency Shipping Route Opens Following Baltimore Bridge Collapse

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In the aftermath of the collapse of the Francis Scott Key Bridge in Baltimore, Maryland, authorities have swiftly established a temporary shipping pathway to mitigate disruptions to maritime traffic. The bridge collapsed after being struck by the Dali containership, prompting a halt in ship travel into and out of the Helen Delich Bentley Port of Baltimore.

Maryland Governor Wes Moore announced the creation of a temporary channel near the collapsed bridge during a press conference on April 1st. This alternate route, situated to the northeast of the bridge wreckage, aims to facilitate the movement of vessels around the affected area, particularly for essential commercial purposes.

The construction of the temporary channel was overseen by the Captain of the Port (COPT) and is designated for use by commercially essential vessels. The first vessel to utilize this alternate pathway was the tugboat Crystal Coast, towing a fuel barge, on April 2nd, marking a significant milestone in the recovery efforts.

President Joe Biden pledged the full support of the US government in reopening the port and reconstructing the bridge promptly after the incident. US Coast Guard Captain David O’Connell emphasized the importance of the alternate route in ensuring the resumption of marine traffic into Baltimore.

Plans are underway to establish additional channels, including a second southwest route and a third channel to accommodate deeper vessels navigating the area. Meanwhile, international support for the investigation into the bridge collapse has been initiated, with the Maritime and Port Authority of Singapore collaborating with Synergy Marine Pte Ltd to assist the US Coast Guard’s inquiry.

Tragically, the recovery operation also uncovered two bodies from the waters beneath the Francis Scott Key Bridge, underscoring the severity of the incident and the urgent need for comprehensive measures to address the aftermath.

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Global Logistics, Global Trade Daily, News, Ocean Carriers

China’s Container Trade Faces Hold-Offs Due to Supply-Demand Imbalance

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Container xChange has released its latest China market update, shedding light on the current container price trends in China. Despite expectations of price drops post-Chinese New Year, the market is witnessing a significant mismatch between buyer and seller price expectations, in a demand deficit environment.

According to Christian Roeloffs, cofounder and CEO of Container xChange, “There is significant imbalance between supply and demand price expectations for containers. Buyers are expecting price reductions in weeks to come, while sellers are holding off the inventory as they expect prices to remain stable due to tight capacity, especially after the diversions due to the red sea and highly imbalanced trade, particularly, for example from China into Russia.”

China’s exports to Russia grew by 12.5 per cent year on year in the first two months of 2024, while imports rose by 6.7 per cent.

Data from Container xChange’s market intelligence team reveals that while there is a surplus of units held up in Russia, capacity in that region remains saturated. This situation has not created enough confidence for significant price drops and has resulted in a cautious approach from both buyers and sellers, leading to a gradual filling up of depots. However, the current depot pressure is not yet strong enough to prompt traders and sellers to lower their price expectations, nor is there significant pressure from buyers to increase their price expectations.

“Looking ahead,” Christian Reoloffs continued, “while mid to long-term forecasts suggest a necessary adjustment in prices to restore liquidity, the present market sentiment indicates a reluctance to anticipate significant price drops.”

The buyer sentiment of further price declines is also echoed by the Container price sentiment index (xCPSI), a proprietary market sentiment tool for container prices by Container xChange, where the index value fell from an all-time high of 83 points in the last week of January’24 to 22 points as on 14th March 2024.

Chart 1: Container Price Sentiment Index, xCPSI, by Container xChange, as on 15 March 2024

The holding off of the capacity is also due to a demand lull, if we look at the situation from a pure economics basis. The market is currently not being driven by demand.

The recent decrease in freight rates, from $3351 on 23 February 2024 to $3069 on 8 March 2024, represents an approximate 8.41% decline. This trend indicates a more balanced market and aligns with our observation that container prices are not showing significant increases in March.

“The decline in freight rates and the steady container prices suggest that demand is under pressure. Additionally, the management of the Red Sea crisis has alleviated concerns of sudden container price rises, providing a more predictable environment for freight forwarders and stakeholders.”

Deep Dive into China Container Rates:

The analysis of container trading price data from November 2023 to March 2024 reveals a cyclical upsurge in prices leading up to the Lunar New Year, followed by a stabilization in prices post the holiday period. Cities such as Dalian, Fuzhou, Guangzhou, Shanghai, and Qingdao have shown significant percentage increases in prices, aligning with the cyclical trend.

Table 1: Container Trading Price development in China (November 2023 – 15 March 2024, US dollars for 40 ft high cube cargo worthy containers)

The average prices for 40 ft cargo-worthy containers in China was around $1700 in November 2023, while this has stayed at elevated levels since the Houthi attacks at $2100 so far in March 2024.

In 2024, China’s economic outlook is characterized by a blend of opportunities and challenges. It is expected that the country’s leadership will target a growth rate of approximately 5%, supported by robust government spending to stimulate economic growth and bolster public confidence. Fiscal expansion is anticipated to be a key strategy in driving growth, particularly through increased public investment and fiscal transfers. Geopolitically, China faces complexities in its relationships with Western nations. Relations with emerging economies are also expected to be strained, especially regarding security issues in the South China Sea.

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Global Logistics, Global Trade Daily, News

China Reopens after Chinese New Year, Container Rates Plateau

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Geopolitical risks are impacting the supplier strategy of many companies globally. While majority (63%) of the companies surveyed by Container xChange in the month of February’24 are looking to diversify their supplier portfolio, 37% are still going to reduce the number of suppliers they aimed to diversify in the year 2021 in response to the pandemic and its resulting repercussions. 

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Chart 1: Container xChange Supplier Diversification Survey Results, February 2024

Persistent geopolitical tensions in eastern Europe and the Middle East, have led to shifts in trade patterns, requiring industry players to redesign supplier mix for their supply chain. 

“We are uncertain about who to partner with and who to discontinue our associations with. The situation is getting trickier for us as freight forwarders due to the ongoing war in the Middle East, leading to fewer partners in the east. The risks of sanctions and increased uncertainty are significant factors driving our need for trusted partners.” – A freight forwarder from the USA and a Container xChange customer

Container Trading and Leasing rates plateau

The month of February 2024 marked a pivotal moment in the trajectory of container leasing and trading rates, which had been on the rise since past three months (starting November 2023), coinciding with the onset of the Red Sea crisis. This inflection point closely aligned with our forecast from the preceding months, as Container xChange had anticipated a reduction in demand and subsequently a reduction in average container prices and leasing rates post Chinese New Year.

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Chart 2: Average container trading prices for 40 ft High cube containers in China 

As the Chinese New Year holiday period concluded and business activities resumed, the rates failed to sustain their upward momentum. 

Our forecasts predict that the container prices will fall by a measure of 8-16% in the coming two months (March and April 2024) in China going by the cyclic nature of price developments as an impact of the post Chinese New Year demand reduction.  We also foresee potential decline in container prices across the United States, ports of Vancouver and Toronto, and in Europe in the coming two months. * 

(*It’s important to note that these forecasts assume that other macro and micro factors remain constant. Any significant changes in these factors could impact the accuracy of these forecasts.)

Table 1: Year-on-year comparison of average container prices** for 40 ft cargo-worthy containers in China. 

**All average prices are rounded off in the nearest dollar. 

Red Sea Update

On November 19, Iran-backed Houthi forces began attacking shipping vessels affiliated with Israel passing through the Red Sea. 102 days later, the shipping industry has emerged from this crisis better prepared than many had predicted.

As the industry typically responds to such crises, the initial impact was felt on rates. Freight rates immediately and persistently jumped as the world entered the last month of 2023. This timing also coincided with the pre-Lunar New Year rush, which builds up in January and culminates in February. Consequently, the freight rate boom continued well into 2024 as shippers aimed to deliver cargo for the cyclical demand, known as the pre-Chinese New Year rush.

Following the conclusion of the Chinese New Year on February 24, 2024, signs of fading demand and falling freight and container rates began to appear.

What Lies Ahead?

A continued decline in rates is expected, although not crashing. Freight rates typically fall by 30% every year from February to March and into April. Similarly, container rates are expected to fall by a measure of 18-6% depending on locations, with a higher percentage of decline expected in Asia.

Over the last 30 days (February 2024), container prices rose by 10% in Northeast Asia, 7% in Oceania, and 2.5% in Southeast Asia, remaining stable in North America. However, prices declined in Europe (5-7%), Japan and Korea (5%), and the Middle East and ISC region (2.4%).

Chart 3: Region-wise change in container prices in February 2024

 

Container Market Price Trends

Despite the demand lull post-Chinese New Year, there have been significant week-on-week changes in market prices for containers:

Locations with biggest week on week growth (as on 1 March, 2024) 

Table 2: Locations with biggest week on week growth in container prices 

Locations with biggest week on week declines (as on 1 March, 2024) 

Table 3: Locations with biggest week on week decline in container prices 

 

A significant development is that the rates did not decline drastically in the last week of February (as seen in the table) compared to previous years. This can be attributed to the volatility caused by the Red Sea diversions and capacity being tied up in the market.

Supply Chain professionals hopeful of higher container prices in the coming weeks

While the cyclical forecasts indicate otherwise, Container xChange’s price sentiment index (xCPSI) indicates that the supply chain professionals remain positive about the container price hikes further into the month of March owing to the persistent red sea situation and its implications on supply chains. 

While the xCPSI was in the negative territory throughout Q1’23, indicating a market sentiment where majority expected prices to continue slashing off the floor, the sentiment index reached an all-time high this February’24 owing to the Red Sea crisis and its perceived impact on container prices globally. 

Chart 4: Container Price Sentiment Index (xCPSI) by Container xChange as on 29 February, 2024, source: https://www.container-xchange.com/market-intelligence-hub/ 

“In the shipping industry, March is a transitional period following the Chinese New Year (CNY). Historically, CNY has led to a slowdown in manufacturing and shipping activity in China, which can cause a temporary decrease in demand for shipping services. However, as businesses resume operations after the holiday, there can be a surge in demand for shipping, particularly for goods that need to be restocked after the holiday period.” explained Christian Roeloffs, cofounder and CEO of Container xChange, an online container trading and leasing platform. 

“Additionally, March is often considered the beginning of the contract season for many shipping companies. This is when annual shipping contracts are negotiated and finalized for the upcoming year, which can influence shipping rates and capacity utilization in the industry. While March can be a period of increased demand compared to the immediate post-CNY period, it is not considered as robust as other peak seasons like the pre-holiday period leading up to Christmas.” Shared Roeloffs. 

“Further into the year, rising inflation rates globally could potentially lead to higher production costs and increased consumer prices, thereby affecting trade volumes and container demand. As businesses grapple with inflationary pressures, they may need to reassess pricing strategies.” Added Roeloffs. 

“Consumer concerns regarding prices remain a key factor influencing purchasing decisions, with many consumers waiting for items to go on sale and stocking up on goods less frequently, impacting various product categories. The impact of above-average inflation, geopolitical risks, and uncertainty regarding interest rates is expected to continue influencing consumer goods markets in the near term.” Commented Reoloffs. 

“Additionally, monitoring global supply chain dynamics, including disruptions and changes in trade patterns, is crucial. These factors can significantly affect container trading and leasing rates on trade lanes, highlighting the importance of staying informed and agile in response to evolving market conditions.”

India struggles with container rates volatility 

The average prices for 40 ft cargo-worthy containers remained robust in Nhava Sheva and Chennai, where customers are facing container scarcity and tightening capacity due to the impact of the Red Sea crisis. However, we anticipate a 5% reduction in these prices in the coming two months (March and April 2024).

Although the rates are currently lower than those in 2022 and even lower than 2023, there has been a slight month-on-month improvement. However, there has been a consistent year-over-year reduction in container prices during the subsequent months of March and April, both globally and in India.

The Struggle for SOCs (Shipper-owned containers) in China 

There is a significant disparity between Carrier Owned Container (COC) prices and Shipper Owned Container (SOC) leasing prices. Despite a drop in COC prices, leasing prices for units remain high, leading SOC users to switch back to COC. However, this transition is slow, and market prices are taking time to stabilize. Customers anticipate that SOC leasing prices will eventually balance out, but this process is expected to be gradual.

Moreover, there seems to be a discrepancy between the price expectations of SOC users and the offers from suppliers. SOC users expect lower prices, while suppliers are offering higher prices. This mismatch is prolonging the adjustment process, as either suppliers need to lower their prices or users need to increase their target prices for the market to reach equilibrium. This feedback suggests a complex pricing dynamic in the container market in China, with multiple factors influencing price movements and adjustments.

For similar analysis and for xCPSI, please visit Container xChange Market Intelligence Hub here

About Container xChange 

 

Container xChange serves as a global online platform facilitating container leasing and trading, connecting container users with owners. The platform streamlines the process of finding and exchanging containers, optimizing fleet management, and fostering collaboration across the shipping industry.  

The neutral online platform…     

  1. connects supply and demand of shipping containers and transportation services with full transparency on availability, pricing, and reputation,     
  1. simplifies operations from pickup to drop-off of containers,    
  1. and auto-settles payments in real-time for all your transactions to reduce invoice reconciliation efforts and payment costs.    

  

Currently, more than 1500+ vetted container logistics companies trust xChange with their business—and enjoy transparency through performance ratings and partner reviews. Unlike limited personal networks, excel sheets and emails that the industry generally relies upon, Container xChange gives its users countless options to book and manage containers, move faster with confidence, and increase profit margins. 

 

Connect with us on LinkedIn  

 

For media inquiries, please contact, Ritika Kapoor, Market Intelligence & Brand Lead, Rka@container-xchange.com 

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Global Logistics, Global Trade Daily, News, Ocean Ports

Navigating Digital Transformation: Insights from ODeX’s Ocean Freight Shipping Report

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ODeX, a prominent provider of digital solutions for ocean freight shipping, has unveiled a comprehensive report shedding light on the state of digital transformation within the industry. Drawing from a wide-ranging survey conducted by ODeX, the report offers deep-seated insights into operational hurdles, the adoption of digital documentation, and the evolving landscape of maritime logistics.

The survey, encompassing responses from diverse industry professionals, uncovers pivotal findings:

– 75% of respondents encounter operational bottlenecks frequently or occasionally, with documentation issues highlighted by 50% as a major challenge.
– 60% of industry professionals are already embracing digital documentation or payment platforms, indicating a notable shift towards digital adoption.
– Nevertheless, 40% have yet to adopt these digital solutions, primarily citing concerns regarding data security, user adaptability, and implementation costs.
– A significant 70% underscore the utmost importance of grasping the shipping landscape and stakeholders for successful digital integration.

The report delineates detailed recommendations for tackling these challenges, stressing the necessity for enhanced digital documentation, user-friendly platforms, and collaborative industry endeavors.

Liji Nowal, CEO of ODeX, emphasizes the survey’s significance, stating, “The findings underscore the urgency for action within the ocean freight shipping industry. As we navigate the digital transformation journey, it’s evident that a deeper comprehension of the sector’s unique challenges and a united approach are imperative. At ODeX, we are dedicated to propelling this transformation forward, ensuring that digital solutions not only address prevailing challenges but also pave the path for a more efficient and resilient future.”

This report serves as an invaluable compass for stakeholders in ocean freight shipping, accentuating the pivotal role of digital solutions in surmounting operational hurdles and augmenting industry efficiency. ODeX’s commitment to spearheading this initiative is underscored by the survey, reflecting its dedication to guiding the maritime industry toward a more interconnected and digitally advanced era.

The complete report is accessible on the ODeX website, offering a roadmap for industry stakeholders navigating the intricacies of digital transformation in ocean freight shipping.

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Global Logistics, Global Trade Daily, International Trade, News

Rising Spot Rates and Container Demand Surge in the Wake of Red Sea Turmoil, ahead of the Chinese New Year

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The Red Sea, a vital conduit for East-West trade, is undergoing unprecedented turmoil due to persistent attacks by Houthi rebels, causing significant uptick in fuel and insurance costs, longer voyages and capacity soak up for the transportation and logistics sector. 

Container xChange, an online container logistics platform for container trading and container leasing, issues a critical advisory as the Red Sea crisis deepens, impacting the landscape of global maritime trade.

Recent attacks by Houthi rebels have persisted on the Red Sea, with the most substantial assault launched on January 9, 2024, indicating a continued threat to maritime traffic in the Red Sea. 

Customers of the Container xChange platform affirm that the shipping lines have raised their slot prices significantly. A Container xChange customer based and operating in Singapore shared on the Red Sea matter that, “Average rate on China-Europe quoted this week is about US$5400/40’HC, up from US$1,500 (3X) just the week before.” 

Container trading spot rates shoot up by 48% in Latin America East in the last 30 days (as on 11 January 2024)

container
Chart 1: Region-wise container spot rates 30 days delta as on January 12, 2024

Latin America (East and West), Japan & Korea and Europe Mediterranean witness highest increase in Container trading spot rates over the last 30 days.

“We foresee that the rate hikes will flatten out in the mid to long term. We have enough capacity which can be soaked up in longer transit times and yet not cause permanent capacity crunch.” said Roeloffs. 

Demand for Containers shoot up

There is a growing demand for containers in Asia as shippers and forwarders foresee cargo demand in the coming weeks, to fulfil orders ahead of the Chinese New Year. A container manufacturer from China shared with Container xChange, “Shipping companies are demanding more containers now as they avoid red sea. Therefore, Shipping companies and leasing companies have placed more than 750,000 TEU ISO container orders out of China in the last two months.”

Meanwhile, container trading spot rates are increasing at a staggering rate as observed on the Container xChange platform. Spot rates in Shanghai, Hamburg, Boston, in the illustrations below, indicate examples of the steep demand increase that is currently being witnessed for boxes in these hotspots. 

container
Chart 2: Average container market price for trading in Shanghai
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Chart 3: Average container market price for trading in Boston

 

Chart 4: Average container market price for trading in Hamburg

As an immediate reaction to the disruption, these average container spot rates and prices are expected to rise, but then plateau after reaching a high. 

The container price sentiment Index (xCPSI), a sentiment tool by Container xChange to measure market sentiment for container price development, reached an all-time high as container price anticipation peaks. This indicates that the supply chain professionals are expecting these prices to further shoot up in the coming weeks significantly. 

Chart 5: Container Price Sentiment Index xCPSI 2023-24, xCPSI measures container price sentiment index concurrently amongst the supply chain professionals

The index value peaked at 71 in January from an average of 27 in December, mirroring the significant impact Red Sea attacks have had on prices so far. 

The Ultimate Cost Burden 

The two visible and obvious cost components that are leading to higher transport costs resulting from rerouting to Cape of Good hope are – insurance and fuel costs. 

Insurance for cargo transiting Red Sea has become challenging. On top of it, insurance costs have surged in anticipation of the difficulties and challenges that do not seem to taper off.

Another element is the fuel cost which has increased roughly by 20-23% by way of traveling through the Cape of Good Hope, as compared to the traditional Suez Canal route. 

“Ultimately, the final consumer pays the freight cost. In the short term, usually there is some intermediary that pays the bills, because they have promised at some certain price, but ultimately in normal circumstances, the price per unit is adjusted marginally to the end consumer when such a disruption occurs.” added Roeloffs.

Fine-tuning Inventory management strategies 

“There is always safety stock, that retailers keep, so buffer stock is there. Yes, it soaks up some capacity, but this event doesn’t have the capacity to impact inventory to an extent that we do not see products on the shelves. I don’t see that coming.” added Roeloffs. 

 The shipping and the global trade largely have become relatively more resilient to supply chain shocks as these become evidently more frequent and persistent. 

“As we witness continued disruptions disturbing the global supply chains in the mid to long term, we will see enhanced supply chain resilience.” added Roeloffs. 

The bulk, oil and gas sector have no impact so far whatsoever as the vessels carrying these continue to operate on the Red Sea. There has been no attack on these vessel types. High value container vessels are being diverted, impacting the big east-west trade from Europe to Asia and vice versa. 

So far, Out of 700, some 500 vessels have been diverted soaking up significant capacity from the existing overcapacity that the industry was grappling with. 

As businesses face this new challenge, there are three immediate recommendations that can improve the situation handling currently for companies-

  • Hold Adequate Safety Stocks: Maintaining sufficient safety stocks is crucial for absorbing disruptions without significantly impacting inventory levels.
  • Enhance Flexibility: Operating with multiple networks and suppliers adds resilience, reducing dependency on a single source.
  • Leverage Technology: Embracing technology is paramount for identifying problems in (or almost) real-time and making informed decisions, ensuring a proactive response to disruptions.

 Note of context:

In a troubling turn of events, the Red Sea, a vital artery for global maritime trade, is facing unprecedented disruptions, primarily due to recent attacks by Houthi rebels on ships passing through the region. The Red Sea, with its strategic importance accentuated by the Suez Canal, serves as a crucial superhighway connecting Europe, Asia, and Africa. Recent attacks have escalated operational costs, creating significant challenges for shipping industries and placing downward pressure on profits. The Bab el Mandeb strait, also known as the Gate of Grief, has become a focal point, and its geographical challenges make it a critical chokepoint for maritime traffic. The disruption is not only impacting the flow of goods but also leading to a substantial re-routing of vessels, resulting in increased shipping costs, longer voyages, and environmental concerns.

Impact Highlights:

  • Rerouting Challenges: Vessels are diverting around the Cape of Good Hope, leading to increased fuel costs, environmental concerns, and impacts on shipping efficiency.
  • Shipping Industry Strain: Shipping costs have surged, with a 60 percent drop in vessels passing through the Suez Canal.
  • Oil Tanker Stability: Despite disruptions, oil and fuel tanker traffic in the Red Sea remained stable in December, providing a glimmer of hope for stable energy supply chains.
  • Rising Shipping Costs: The Red Sea crisis is projected to push shipping costs up to 60 percent, coupled with a 20 percent increase in insurance premiums, affecting overall operating costs. 
  • Insurance Challenges: War risk premiums for shipping have surged, impacting transportation costs and potentially leading vessels to seek alternative routes.
  • Re-routing Impact: Re-routing through the Cape of Good Hope results in 10-20 days of delays, adding complexity to logistics and affecting delivery timelines.
  • Supply Chain Disruptions: The Red Sea crisis spotlights broader issues of supply chain disruptions, requiring strategic planning and forecasting by companies to navigate challenges.

As the Red Sea crisis unfolds, the global shipping industry faces unprecedented challenges, necessitating collaborative efforts and strategic solutions to ensure the resilience of supply chains and mitigate the far-reaching impacts on international trade.

 

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Global Logistics, Global Trade Daily, News, Ocean Ports

Navigating Global Shipping Challenges: Nexterus Guides Clients Through Red Sea Geopolitical Issues

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Nexterus, a leading supply chain management and third-party logistics (3PL) services provider, is stepping up to assist international clients grappling with recent shipping challenges in the Red Sea due to geopolitical tensions. With container shipping companies diverting vessels from the Red Sea amid Houthi militant attacks, Nexterus is poised to guide clients in identifying alternative shipping routes for their goods.

Lisa Flohr, Director of Operations at Nexterus, underscores the significance of the Red Sea’s closure, a vital trade route, and its far-reaching consequences on the Transpacific trade lane. The company aims to provide solutions and opportunities for clients to navigate the evolving shipping market landscape.

Key challenges and impacts on international trade include restricted bookings on westbound routes, triggering freight rate surges and potential prolonged crises. The situation prompts a cascade effect, affecting regions such as the Middle East, Red Sea, North Africa, Europe, the East, the Black Sea, and the West. Notably, disruptions in one region can influence distant markets, emphasizing the interconnected nature of global trade.

The closure of the Suez Canal has compelled shipping companies to explore alternative routes, such as diverting ships around the Cape of Good Hope in Africa. However, this redirection poses challenges, including increased costs, extended transit times, and potential freight rate hikes. The decision-making process involves weighing suboptimal choices and navigating uncertainties, impacting the Eastern United States and global shipping dynamics.

The indirect effects on global shipping dynamics include an elongation of voyage distances when circumnavigating the Cape of Good Hope, leading to a subtle absorption of transportation capacity. Estimates suggest a 5.1%-6% reduction in global shipping capacity, equivalent to 1.45-1.7 million TEU. The crisis prompts strategic reshuffling, potentially affecting shipping schedules, freight rates, and the delicate balance of supply and demand on shipping lines.

Further challenges for the Eastern United States involve labor relations reaching a turning point, with discussions of potential strikes and labor negotiations. The timing of negotiations, concluding in August, presents a unique challenge for shipping companies, impacting the delicate balance between risks and rewards.

Amid uncertainties, Nexterus emphasizes the importance of seizing opportunities and staying informed on current events. The company commits to continuous updates and collaboration with clients to facilitate the movement of goods. As global shipping faces this “perfect storm,” Nexterus remains vigilant and aims to guide clients through the evolving landscape, emphasizing timely and reliable shipping amid shifting dynamics.

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Navigating the Red Sea Crisis: S-RM’s Gabrielle Reid Advocates Adaptive Shipping Strategies

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As Houthi rebels continue to pose a threat to shipping routes in the Red Sea, global supply chains are experiencing disruptions, compelling half of all fleets to avoid this critical passage. This dilemma prompts shipping companies to consider alternative strategies, such as circumventing Africa’s Cape of Good Hope, despite its increased time and cost implications.

Gabrielle Reid, an Associate Director in the Strategic Intelligence practice of S-RM, a global corporate intelligence and cybersecurity consultancy, shares valuable insights into the Red Sea crisis and advises shippers on contingency plans. Her recommendations include rerouting options, adherence to best management practices, enhanced security protocols, and preparedness measures for potential confrontations with Houthi rebels.

Reid emphasizes the importance of adaptability in mitigating the impact on customers and maintaining global supply chain continuity. Shipping companies are implementing various measures, including optimizing other parts of the logistics chain and proactive communication with customers. However, Reid underscores the dynamic nature of global logistics, warning of potential consequences such as increased freight rates, longer lead times, and disruptions to supply chains, even with available excess capacity.

In terms of affected commodities, Reid notes that rising ocean freight rates will impact goods relying on the Red Sea corridor. Container shipping is expected to experience the largest rate increases, followed by bulk carriers and tankers.

Re-routing through the Cape of Good Hope, while a viable alternative, comes with significant challenges. The longer route, up to 10 days, results in delays, higher fuel consumption, and additional operating costs. Estimates suggest a one-third increase in transit costs from Asia to Europe, with shipping rates rising by 10 to 20 percent in recent days. Reid points out that shipping companies may need to absorb these increased costs or pass them on to consumers, potentially influencing commodity prices and causing ripples in global markets.

The article highlights the critical need for shipping companies to embrace adaptability and develop robust contingency plans to navigate the complexities of the Red Sea crisis, ensuring the resilience of global supply chains in the face of dynamic geopolitical challenges.