Nearly 90% of supply chain leaders expect ‘inflation and recessionary fears’ to impact business in ‘23 — Container xChange report
The outlook for the supply chain industry “remains challenging,” officials from Container xChange conclude in “Supply Chain and Shipping predictions for 2023,” a report issued Jan. 9. The report is based on interviews with supply chain leaders, surveys and data studies.
“Europe is hit hard with all-time high inflation; China struggles to cope with the virus and the US continues to witness hinterland transportation challenges and labor unrest,” said Christian Roeloffs, cofounder and CEO of Container xChange, an online container logistics platform. “Most of these challenges will stay in 2023. Consumer confidence will pick up, but it really depends on whether we witness more disruptions in the coming times.”
Among the report’s findings:
• 88% of respondents fear that the biggest impeding factor for businesses in 2023 will be inflation and recessionary fears, followed by “implications of war,” “impact of COVID in China” and “worker strikes.”
• 67% consider India and Vietnam as attractive alternatives for China plus one strategy; the United States to emphasize on “friendshoring” in 2023.
• Observers predict worker strikes will rise in 2023.
• Most respondents predict container and contract rates will fall farther in 2023.
• 86% agree that the container depots will be overwhelmed with containers as the demand and supply gap widens, and there is less demand owing to declining consumer confidence.
Declining trade tests shippers’ ‘patience, pockets and commitment’ — survey
Global trade declined during the second-half 2022 due to “severe economic headwinds in many countries” and the continued effects of COVID-19, and the results are reflected in GSF/MDS Transmodal Container Shipping Market Review’s most recent edition, the review’s officials say.
Third-quarter 2022 was a “time of marked increases in consumer and producer price inflation, historically large increases in interest rates by central banks and high levels of stock inventories in many importing countries,” the review’s writers said in a Dec. 20 press release. “Global energy prices edged higher amid disruptions to supplies arising from the Russian invasion of Ukraine.”
Here are a few review highlights:
• Trade volumes of goods capable of being transported in containers continued the decline observed at second-quarter 2022’s end, but the drop in overall volumes “was much less than what was reported by the container shipping sector,” according to the report writers. “This is attributed to commodities, such as coffee, scrap metal and plywood, that can also be carried in bulk or semi-bulk form, switching away from containerized movements where shipping rates remain relatively high.”
• Despite falling for a second quarter, carriers’ unit revenues (earnings per container moved) were still 2.8 times higher than pre-COVID rates whereas unit operating costs have only risen by a factor of 1.5 over the same period. “Cost pressures have largely been higher charter rates and a slow rise in fuel costs that has since receded,” the report writers said. “Container shipping lines remain highly profitable despite a falling market.”
• Spot rates fell by 20% during the period, leaving many shippers “burnt” by their decisions to commit to long-term contacts earlier in the year and “questioning the many sources in the industry who confidently predicted that disruptive congestion and capacity shortages would continue through 2022 and beyond,” the report writers said.
• Meanwhile, service levels remained at “historic” lows, with the predictability of arrivals at 85%, meaning one in six sailings arrived later than normally expected.
Export freight decline continues, Valenciaport index shows
The Valencia Containerised Freight Index (VCFI) fell -13.1% in December compared with November’s index, the fourth-consecutive monthly decline in a year “marked by ups and downs that reflects the uncertainty of economic and commercial activity in all markets,” Valenciaport officials announced on Jan. 13. At year-end 2022, the VCFI was 3,603.07 points (it hadn’t been below 4,000 points since November 2021).
“From the point of view of international trade demand, the scenario remains uncertain and complicated, due to the sustained fall in consumption in an environment of high inflation,” Valenciaport officials said. “Proof of this is the recent reading of the Goods Trade Barometer, produced by the World Trade Organization which shows a drop in the indicator to 98.3 points, slightly below its reference value of 100 and seven points below the previous reading, which took place in June and stood at 105.5 points.”
Yilport to operate Ghana’s Takoradi Port
Port and container terminal operator Yilport Holding Inc. has signed an agreement to operate the Takoradi Port in Ghana starting in April, Yilport officials announced on Jan. 11.
Per the memorandum of understanding, Yilport and Ibis Tek will establish a joint venture company — Yilport Takoradi Port Management Co. — on 70-30 basis respectively to invest in and operate the Takoradi Port. The aim: Develop the existing container terminal in three phases to reach up to 2.25 million twenty-foot equivalent units annually. The joint venture also will develop multipurpose berths for liquid, bulk and general cargo operations for about 20 million tons annual handling capacity. In all, Yilport plans to invest more than $700 million to build and operate a state-of-the-art port complex.
Tanzania Ports Authority takes over cargo handling at Port of Dar es Salaam
The Tanzania Ports Authority (TPA) has taken over cargo handling responsibilities at the port of Dar es Salaam, replacing Tanzania International Container Services Ltd. (TICTS), TPA officials said in a Dec. 30 website post. TICTS had been operated by Hutchison Ports under a concession that expired in September 2022.
TPA is searching for a new investor in Dar es Salaam, which is Tanzania’s largest container terminal. It handles more than 85% the country’s trade and serves as a gateway to Tanzania, and eastern, central and southern Africa. Hutchison Ports Tanzania is a member of Hutchison Ports, the port and related services division of CK Hutchison Holdings Ltd.
Uganda drops Chinese firm from railway deal, considering Turkish builder — Reuters
Uganda officials recently terminated its contract with China Harbour and Engineering Co. Ltd. to build a rail line to the Kenyan border and are considering a deal with a Turkish company, according to a Jan. 13 Reuters report. In 2015, Uganda signed an engineering, procurement and construction contract with China Harbour and Engineering to build the $2.2 billion 273-kilometer, standard-gauge line, which would connect the city of Kampala and Uganda’s border with Kenya, per Reuters.
Euroports buys stake in BB Logistics Oy
Euroports Finland Oy has acquired “a substantial part” of BB Logistics Oy, Euroports announced on its Facebook page last month. Euroports Finland Oy and the owners of BB Logistics Oy signed an agreement through which the BB Logistics owners will sell a substantial part of the company to Euroports Finland, Euroports officials said in a Dec. 21 Facebook post. “The agreement brings together two innovative companies that share a commitment to providing the highest quality maritime supply-chain solutions to customers across the globe,” they added.
M&A: TÜV Rheinland buys D/Gauge
Testing services provider TÜV Rheinland has acquired the UK railway clearance company D/Gauge, which offers “a suite of services to support universal rail initiatives — one, to decarbonise the industry, and another, to drive the industry forward with digitisation,” TÜV Rheinland officials said in a Jan. 12 press release.
Indian Railways: Moving more coal
The Indian Railways hauled 536.22 MT of coal from April 2022 through December 2022, an increase of 13.2% compared with the same 2021 period, according to a Jan. 11 Ministry of Railways Twitter post.
