Hi, this is IINO.
Today I would like to present you with the logistics news for June 2021, a collection about logistics and shipping that were reported.
I’ve carefully selected information that is useful for those who are interested in logistics and who are involved in logistics, therefore I’d like to explain it in a way, that can be understood by those who have read the news on logistics, and not.
So, let’s get started.
“Container shipping companies post record-breaking results for January-March 2021”
Major container shipping companies have announced record-breaking financial results, with the highest profits ever recorded.
Usually, the January-March is a quiet period for container transport, and some shipping companies post losses. However, this fiscal year, due to the rebound from the Corona disaster, each company recorded an unprecedented high profit.
The increase in freight rates had an impact, and both sales and profits more than doubled.
Maersk, the largest shipping company, posted a 31% increase in sales over the same period last year. While average 40-foot freight rates rising 35%, fuel prices fell nearly 30%, so it made results in record profits for the quarter.
Other shipping companies also posted significant profit increases, with CMA-CGA in France doubling its profit from the same period last year, and COSCO Shipping Holdings in China almost doubling its sales.
In addition, Evergreen and Yang Ming Shipping in Taiwan, and HMM in South Korea, which had previously posted losses, returned to the black and posted their highest profits.
“Congestion on North American routes shifts from ports to the inland. Chassis shortages are becoming more serious.”
Since last year, North American shipping routes have been congested, causing cargo stagnation, but the congestion location is shifting from the west coast of North America to inland areas.
Until now, congestion on North American routes has been concentrated in ports, with more than 40 container ships waiting offshore at west coast ports.
Cargo is languishing at various rail terminals in Chicago, the inland transit point, and taking a long time to pick up.
Railroad terminals in the U.S. generally operate on a flatbed basis with containers on chassis. This method has many advantages, such as that trucks can come with just the head and pick up the container immediately.
However, due to the rapid increase in containers and the shortage of chassis, they have been forced to change to direct placement and stacking of containers.
As a result, after containers are placed directly, they need to place them on chassis for transportation. It caused increase of chassis operation works and cargo stagnation.
The chassis shortage is so serious that shipping companies urge shippers to return containers and chassis as soon as possible.
“Container freight rates on the East Coast of North America and Europe have soared. Influence of congestion at Yantian Port?”
Shanghai Shipping Exchange in China announced that
Freight rates for the West Coast have fallen for the first time in two weeks, but for the East Coast were the new high.
Congestion at Yantian Port in China seems to be affecting the rise in freight rates.
The delay at Yantian Port in China became more serious, and it has spread to periphery Shekou and Nansha Port, therefore restrictions of export containers are in place now.
As of June 10, 2021, the delay of vessel is about 15 days.
Yantian Port congestion problem effect
As a result, shipping companies respond by the omit of Yantian or changing the port of call.
The congestion mainly affects services to Europe and the east coast of North America via the Suez Canal and is likely to spur higher freight rates in the face of tight demand.
“Maersk offers a new Co2 emissions measurement tool to decarbonize.”
Maersk has launched an emissions dashboard that allows customers to measure Co2 emissions throughout their supply chain.
This device allows customers to analyze how much CO2 is being emitted in the transportation of their products and measure the overall door-to-door emissions, not only one mode of transportation but also each mode such as ships, trucks and airplanes.
Ten of Maersk’s customers have already used the system on a trial basis and feedback the results to Maersk, which led to the full-scale launch of this service.
“Home Depot, a major U.S. retailer, charters container ships to transport its products.”
With container transportation under pressure, shippers are finally starting to charter container ships.
Home Depot, a major U.S. retailer, will start its transportation by themselves in July.
According to a ranking of U.S. container importers for 2020 compiled by a U.S. shipping magazine, Home Depot ranks third after Wal-Mart and Target. You can see consumer goods-related demand is high.
Retail demand overgrew due to the Stay Home of the Corona disaster and consumer demand is about to enter the busy season, so Home Depot seems to have started to secure shipping space.
“Christmas shopping season affected? China port backlog disrupts the shipping rush.”
It is said that the stagnation of the Yantian Port in China will further disrupt the global supply chain.
The ports of Los Angeles and Long Beach have an average of 30 container ships a day waiting to bring in cargo. The disruption to the global supply chain caused by the pandemic has meant weeks of delivery delays for consumers.
Still, disruptions may continue and affect Christmas shopping lists, predicts the CEO of a Danish marine consulting firm.
”The danger for outbreak of a bullwhip effect, including lower profit margins and excess inventory.”
There is outbreak of a bullwhip effect, which could be dangerous for companies trying to recover quickly from a pandemic.
The bullwhip effect is a phenomenon in which companies order more products than they need, for a surge in demand by preparing for a continuous increase demand or avoiding running out of stock.
This distortion of demand is amplified with each step in the supply chain. As the result, it will be far removed from the realistic demand of consumers, and it will cause excess inventory and low profit margins, and at last drag down the nascent economic recovery.
The overall ratio of business inventories to sales in March was 1.23, the lowest since 1992.
This raises the alarm that we should not fall victim to the bullwhip effect by placing large orders.
Comment section of this news.
In June, we talked about the congestion Yantian Port in China. As I explained in the news, this was because the port’s processing capacity was greatly reduced to deal with the corona infection.
Although vaccination is now being promoted in many developed countries, the situation is still tense, and a problem like this at one port can affect the entire supply chain.
It is not only the problem at the ports, but also at the inland areas of the U.S., it has been clogged with logistics due to the chassis shortage problem. Furthermore, it is expected that U.S. imports for the Christmas shopping season will be moved up to early July.
In response, Home Depot has taken a move to charter a container ship. Since ocean freight rates have risen so much and space is hard to come by, this is a powerful move by a huge shipper.
Amazon is also developing air transportation, and the time may come when shippers will have their own assets. This was interesting news.
And there is a news that Maersk’s provision of tools to measure CO2 emissions. I thought that Maersk is definitely the No.1 company in the container industry, as it is trying to differentiate itself by not only fuel against the decarbonization movement that is currently being promoted around the world.
It is tough to differentiate oneself from others in the marine transportation industry. I think it is a good trend that shipping companies with assets have taken this kind of action, and I myself learned a lot from the fact that they can provide this kind of service in the area of cargo transport.
What did you think of this issue of Logistics News? I hope you were able to understand the current state of logistics.
The sources of the news I referred to this time are linked in the summary section, so please refer to them for details.
That’s it from the field! Thank you very much.
The first news
Container shipping companies report unprecedentedly strong results for January-March. Corona disaster
The second news
Congestion on North American routes, from ports to inland. Serious chassis shortage
Congestion spills over to Yantian Port, Shekou and Nansha. Restricted loading, delay of about 15 days for main vessel.
Container freight rates soared on the east coast of North America and Europe. Congestion at Yantian Port may have an impact.
Maersk helps customers decarbonize by providing tools to measure CO2 levels
U.S. retail giant Home Depot to charter ships to transport its own products in July.
China port backlog threatens Christmas shipping rush
Caution – Bullwhip Effect in the Making
Translated with www.DeepL.com/Translator (free version)
Contact to IINO san