During a year already described as “perpetual peak season,” the back-to-school rush continues. Port congestion is stretching towards an all-time high with ships anchored en masse on the West Coast. Meanwhile, carriers continue to present spectacular financial results. And complementing a very intensive season in shipping, long-term developments of the logistics industry in the face of the pandemic round out this week's Friday Five. Let's dive in.
While 2021 has seen a year-round perpetual peak intensity, the traditional August peak season rush might see a record number of cargo vessels anchored outside Long Beach. The port, which has seen vessels anchored almost all year, had its all-time record of 40 vessels anchored set on February 1, 2021. This year's low of 8 was hit on June 18. This week, more than 30 ships stay anchored outside Los Angeles, as similar AIS images can be seen outside ports in Vietnam and China amid new Covid lockdowns and congestion. Will the Long Beach record be broken again during the latest summer rush?
In a world more and more dependent on steel boxes, finding a fresh supply of ocean freight containers is proving tougher than ever before. Global demand is surging as “black swans” have displaced thousands of cargo containers in jam-packed ports and freight hubs around the globe. Available boxes, also known as 20-foot-equivalent units, or TEUs, remain in short supply. Production of the freight boxes is expected to rapidly rise after years of decline with 2.8 million produced in 2019, writes Paul Berger for the Wall Street Journal. In principle, enough containers exist to handle global trade volumes — they are just stuck in the wrong places.
A.P. Moller-Maersk posted its Q2 results expecting an EBITDA of $18B to $19.5B — an almost 100% increase from last year. Earlier this year CEO Soren Skou called Q1 Maersk’s “best quarter ever.” Ocean volumes increased 15% from 2020 and average freight rates year-on-year soared to 59%, with the company adding that the “exceptional market situation” will likely continue throughout the year. Greg Miller of FreightWaves even asks whether this EBIT guidance is too conservative.
Start-up Eviation will supply DHL Express with 12 electric cargo aircraft, with the 3PL heavyweight planning to establish a groundbreaking (pardon the pun!) electronic air cargo network. Emphasizing the sustainable improvements to cargo transportation and moving to a zero-emissions logistics industry, DHL is set to receive the aircraft from Eviatian in 2024, with a maiden flight scheduled for later this year.
While the pandemic has taken a short-term toll on global trade, long-term consequences affecting everything from day-to-day life to shipping are emerging. Driven by opportunity cost, risk-hedging carriers have chosen to emphasize more profitable tradelanes. Asia-Europe, transpacific and transatlantic tradelanes have seen more coverage as a result, leaving Latin America, Oceania and intra-Asia stagnating.
The biggest loser to emerge is the continent of Africa as its countries are unable to stimulate economic growth in addition to having low vaccination rates, Sam Chambers writes for Splash24/7.
Carriers have reported a massive increase in required fleet capacity to manage ships getting stuck in congested ports around the world, just to carry the same amount of cargo. With freight rates going up and fleet deployment becoming an even more tense zero-sum game, shippers turn to markets with the highest demand, according to Jan Hoffman of the United Nations Conference on Trade and Development (UNCTAD), commenting on the piece.
With prices of supplies possibly soaring as a result of delays and port congestion, Starbucks’ strategy of buying its Arabica green coffee a year or more in advance is paying off. CEO Kevin Johnson said it could give the coffee powerhouse a significant edge over competitors since rising supply chain costs risk making the price of coffee increasingly volatile in the near future.
If you missed it, be sure to check out last week’s logistics news recap which took a closer look at our collective readiness for back-to-school season. Stay tuned every Friday for a roundup of the week's biggest logistics headlines in our weekly blog, The Friday Five.
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