Weekly Roundup – May 9, 2024

Welcome back to the weekly roundup, where we provide concise summaries of the most important supply chain and logistics stories of the week. Covering breaking news, emerging threats, and changing market dynamics, it contains all the news you need to maintain a competitive advantage.

Opinion: Dark clouds are gathering on the horizon for the big container lines

The recent quarterly results from major carriers like ONE and Maersk show improved performance compared to the fourth quarter of 2024, largely due to increased freight rates resulting from the Red Sea crisis. This crisis, causing significant disruptions to key shipping routes, directly impacted carrier profitability positively. Despite warnings from carriers like Maersk and Yang Ming about future downward pressure on rates due to increased capacity, Q1 2024 is likely to be the peak quarter for profits in 2024. The ongoing crisis also exacerbates port congestion in key hubs, and additional disruptions, like potential strikes by railway workers in Canada, could further strain cargo flows. However, amidst these challenges, the global container shipping industry continues to break records, highlighting its resilience in adapting to operational hurdles—a reminder that successful supply chain management thrives on the ability to navigate unforeseen disruptions effectively.

ZIM renews strategic partnership with ArrowSpot Systems

ZIM Shipping Lines has extended its partnership with ArrowSpot Systems for another five years, integrating ArrowSpot’s cargo monitoring solutions into their ZIMonitor service. This service focuses on proactive remote tracking, monitoring, and control of reefer containers transporting sensitive, high-value cargo to minimize damage or loss. ZIM’s Head of Global Logistics Equipment, Gil Lehmann, praises ZIMonitor’s reputation and customer satisfaction, attributing it to ArrowSpot’s technology and dedication. ArrowSpot’s ArroWatch 24/7 service, powered by intelligent decision-support technology and skilled staff, swiftly responds to critical events like temperature deviations in reefers. ZIM’s commitment to effective cargo monitoring is underscored by their collaboration with ArrowSpot, ensuring reliable and efficient support for global cargo solutions, particularly for sensitive items like pharmaceuticals and food.

Red Sea rate effect spreads to other trade lanes as demand rises: Maersk

Maersk CEO Vincent Clerc highlighted the escalating rate strength in ocean routes due to diversions around southern Africa, impacting trade lanes beyond those directly affected. Despite a historically weak first quarter for container shipping, demand surged significantly year over year across various regions, including a 28% increase in Asia-North America volume. Maersk’s first-quarter results showed substantial declines compared to the previous year, reflecting industry-wide trends as markets normalized from peak levels in 2022. Although average rate levels fell year over year, Maersk saw sequential increases, largely due to Red Sea surcharges.

Maersk expects ongoing Red Sea diversions to affect profitability through 2024 but has revised its full-year forecast, anticipating a lower EBIT loss. Clerc anticipates positive impacts on prices in trades like Latin America and Africa through at least the second quarter, with uncertainties remaining for the fourth quarter. Maersk’s logistics segment faced challenges, with declining rate levels and weaknesses in contract logistics and ground freight, while its terminals business showed growth in revenue and volume. Despite short-term gains from diversions, Clerc cautioned that overcapacity remains a persistent challenge for the container shipping industry.

Import surge boosting rail container dwells at some LA-LB marine terminals

Rail container backlogs are growing at the ports of Los Angeles and Long Beach due to a surge in imports from Asia, driving up eastbound intermodal train movements and creating a shortage of railcars returning westbound. Terminals like Yusen in Los Angeles are experiencing double their normal inventory of rail containers, necessitating extra expenses for near-dock storage to prevent operational disruptions. Terminal operators fear further congestion as imports are expected to strengthen in May and June. Union Pacific (UP) and BNSF railroads are preparing to handle rising volumes, with plans to increase railcar supplies ahead of the peak shipping season in August. Rail container dwell times at Los Angeles-Long Beach terminals have been steadily increasing this year, reflecting the substantial increase in imports. The National Retail Federation forecasts continued year-over-year increases in imports through August, heightening concerns about congestion and operational challenges at these key ports.

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