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dramatic-year

A dramatic year for Airfreight

A dramatic year for Airfreight 1170 658 La Chang

Air freight experienced its biggest drop, in volume, demand and shipments all in 2019. Indeed, the International Air Transport Association (IATA) said this hasn’t happened since 2009.

As Alexandre de Juniac, Iata’s director general and chief executive officer said, “Trade tensions are at the root of the worst year for air cargo since the end of the global financial crisis in 2009.” This drop is due to an accumulation of political, economic and social problems.

Since the crisis in 2009, all trade was affected specifically the industry of transport and logistics. However, this crisis won’t last. Indeed, this fall in demand for air freight is due to political and economic problems in the various regions of the world. The IATA’s annual report shows the very poor results obtained this year on the world market. This is a considerable drop in the transport industry as a whole, with freight volume falling by 3.3%.

It can be seen that depending on the region, the results may differ. For example, in Africa, no international FTKs (freight tonne kilometres) have been contracted. But this region will experience better growth thanks to Asia’s investment: airfreight volumes were sustained.

In contrast, Asia has been the most affected by the decline in demand. Indeed, we know that this region is popular for the world’s manufacturing. Asia has seen its volume fall by 6.4%. With the arrival of the Coronavirus, this should not reverse the trend. It complicates the transport of trade between external and internal countries. However, it will not impact the market in the long-term.

“While these are easing, there is little relief in that good news, as we are in unknown territory with respect to the eventual impact of the coronavirus on the global economy. With all the restrictions being put in place, it will certainly drag on economic growth, and for sure, 2020 will be another challenging year for the air cargo business.” Alexandre de Juniac, Iata’s director general and chief executive officer

The European market were impacted by changes to the European agreements. Brexit, approved by the British, disfavoured the flow of trade. Indeed, this break accompanied by less efficient activity in Germany caused that fall.

In America, the fall was caused by social problems and economic difficulties in many American countries (from the second half of the year), leading to a 5.3% reduction in FTKs.

Finally, the Middle East region got caught between the problems in Asia and the changes in Europe. As a result, it lost 4.8% growth in 2019. Therefore, the region has lost all the growth it had generated in 2018 (4.6%).

Despite this year’s air freight crisis, IATA remains confident for the year 2020. Because this drop in demand is due to many factors in each region, but which are not permanent over time. The situation is not expected to get any worse despite recent events such as the coronavirus.

welcome-2020

Welcome to 2020 the year of change

Welcome to 2020 the year of change 1170 658 La Chang

As we know, Maritime transport is the most cost-effective way to transport goods and represents more than 90% of the world’s trade according to the United Nations.

 

In some numbers it represents:

– more than 10 billion tons of goods and merchandise per year,

– more than 90,000 ships,

– more than 800 million tonnes of CO2 per year, i.e. 3 to 4% of global warming.

Journalist Rose George, author of the book “90% of Everything “, says that while humans have been moving goods on water for 4,000 years, container ships have fuelled globalization in its modern form.

Transporting 90% of the world’s trade is a great responsibility and as with great responsibility comes great pressure. As we welcome 2020, we see the beginning of much stricter regulations enforced in the shipping industry globally. More than 150 years after the opening of the Suez Canal, the environment is at the heart of the concerns and objectives of the shipping industry.

Sustainable shipping for a sustainable planet ” is the World Maritime theme for 2020. This is in line with the new regulation “IMO Sulphur 2020” of the International Maritime Organization (IMO) to achieve the objectives of its 174 member states. The IMO is the United Nations agency responsible for ensuring the safety and security of maritime transport and preventing pollution of the seas from ships.

Effective from the 1st January 2020 the maximum sulphur emission will be drastically reduced in order to protect overall human health and biodiversity.

Sulphur dioxide is an acidifying gaseous pollutant. It contributes to the acidification of the environment, which is detrimental to all ecosystems. Sulphur dioxide emissions are also responsible for the formation of toxic mists known as “SMOG”. Sulphur dioxide also has harmful effects on human health such as on lung function (coughing, respiratory problems, bronchitis, etc.).

A study on the impacts of sulphur dioxide on human health published in 2016 and cited by the IMO, estimates that “more than 570,000 premature deaths will be avoided between 2020 and 2025 thanks to the introduction of new regulations on maritime transport “.

More precisely, the IMO poised to ban shipping vessels using fuel with a sulphur content higher than 0.5%. When compared to the present upper limit of 3.5% this is a significant difference in sulphur content present in the environment. The usual marine fuel is thought to have a sulphur content of around 2.7%. This is the most impressive change in registry in the maritime world ever.

Today it’s imperative for ship owners and operators to consider and adopt various strategies to meet the new IMO regulations:

– Use of a lighter fuel oil such as marine diesel or a low sulphur fuel oil: this solution makes it possible to comply with the new standards planned however, higher fuel purchase costs must be anticipated.

– Installation of a smoke filter called “scrubber” on the ships’ chimneys to purify 99% of exhaust gases.

– Use of fuels such as Liquefied Natural Gas (LNG): LNG refuelling infrastructures remain rare because these ships are very expensive to produce.

– Use of electric power as a means of propulsion by ships.

– Due to this health risk it is evident that the reduction of sulphur oxides is the Maritime Transport Industry’s way of giving back and helping the environment.

This is a real environmental issue and involves major financial and technical investments for shipping companies. Whatever the solution chosen, additional costs and investments are to be anticipated.

Some potential impacts:

– The “IMO Sulphur 2020” regulation may lead to a reduction in the carrying capacity of ships.

– As the price difference between conventional HFO (Heavy Fuel Oil) and LSFO (Low Sulphur Fuel Oil) is very significant, many shipping companies are choosing to install scrubbers which immobilizes the vessel for about a month or invest in environmentally friendly ships.

– The new demand for fuel oil with a low sulphur content is likely to disrupt the market for petrol producers. It will take them a few months to find a balance between quantities of oil with a low or higher amount of sulphur.

– According to Patrik Berglund, CEO and co-founder of XENETA: “This is the opportunity of a lifetime for the shipping lines to jack up prices because the entire industry expects increased costs ”. But we will know more precisely in the coming months how the market will react.

In summary, these regulations will allow the industry to continue to prosper while responding to current environmental issues. And what is certain is that the shipping industry is strong and will remain the leader in the transport market.

world-trade

World trade entering a new normal says UNCTAD

World trade entering a new normal says UNCTAD 1170 658 La Chang

According to the latest United Nations Conference on Trade and Development (UNCTAD), the world trade increase fell below the historical average of 3% in 2018 managing growth of just 2.7% and properly below the 2017 growth rate of 4.7%.

Therefore, global container traffic growth also fell from 6% in 2017 to a modest 2.6% last year while container port throughput growth also declined to 4.7% from 6% over the same period.

Shamika Sirimanne, the director for the division on technology and logistics, said at the launch of the latest UNTAD review, “There has been a shift in globalisation patterns with a regionalisation of trade flows and supply chains.”

Moderated economic and merchandise growth has been accompanied by fundamental changes to China’s economy which has ceased to be the world’s factory and has moved to a more consumption-based demand economy.

According to UNCTAD, “The WTO [World Trade Organization] is in a bit of a funk right now,” and this has led to the proliferation of regional trade agreements, while trade uncertainties, caused by tensions in the Middle East and the trade war between the US and China in particular, have stalled global economic growth. For the maritime sector that lack of growth has been accompanied by “persistent over-supply of [ship] capacity.”

While trade growth in the container shipping industry was under 3% capacity growth was 13.1% in 2018 and is projected to reach 13.4% this year, containerised trade reached more than 150m teu in 2018.

According to the report, overcapacity has caused major fluctuations in freight rates in the major container trade lanes. Eastbound transpacific rates stood at an average of just over $2,300 per feu, but the rates declined nearly 28% to $1,667 per feu the following year. And while rates did recover in 2012 the cost of a 4oft unit out of Shanghai to the west coast of North America had declined to $1,736 per feu on average last year.

Westbound trades out of Asia to Europe were in even greater trouble, probably because the ultra-large container ships, in excess of 18,000 teu, were all deployed on these trades. Though the fluctuations in container costs pre-date the delivery of the first large vessels in 2013. In 2010 a20ft container to Europe from Asia was priced at $1,789 per teu, by 2011 that had declined to $881 per teu. Freight rates recovered to $1,161 per teu by 2014 but collapsed again to $629 per teu by 2016 before rising to a meagre $822 per teu in 2018.

“Imbalances between supply and demand drove down freight rates on mainline container trade routes during the first half of 2018,” according to the UNCTAD report. It went on to say that these routes were faced with low volumes and excess capacity.

With some 25% of vessels deployed on the Transpacific trades being ships larger than 12,000 teu, freight rate decline was “Due to the continual deployment of mega large vessels,” said the UNCTAD report.

US imports from Asia received a boost with the trade dispute between the US and China prompting shippers to increase imports ahead of the introduction of tariffs and that demand raised rates temporarily. While on the Asia to Europe trades the decline in demand, attributable to the slowing European economies, predominantly the UK and Germany, and capacity oversupply are cited as the reasons for the collapse in freight rates.

ocean-freight

From December 2019 Overall cost of ocean freight will increase

From December 2019 Overall cost of ocean freight will increase 1170 658 La Chang

Low Sulphur Surcharge (LSS)

Effective from December 1st, the new IMO (International Maritime Organization) 2020 Low Sulphur Regulation will come into force, requiring all sea-going vessels to comply and reduce sulphur emissions by 85%.

In order to sufficiently comply with the Regulation, sulphur in fuel oil must be reduced from 3.50% to 0.50% in addition to the 0.10% sulphur limit already enforced in Emission Control Areas (ECA).

The objective of this regulation is to reduce the amount of sulphur oxide emissions which is expected to deliver major health and environmental benefits, including improvement of air quality and reducing risks of acidification in the oceans.

The new IMO 2020 Low Sulphur Regulation will impact the shipping industry globally, with shipping costs set to increase worldwide. As the cost of the Very Low Sulphur Fuel Oil (VLSFO) is expected to be significantly higher than the present High Sulphur Fuel Oil (HSFO).

For short term contracts of validity 3 months or shorter, please be informed that in the month of December only – Low Sulphur Surcharge (LSS) – will be applied on top of ANL’s ocean freight charges effective 1 December 2019.

LSS per TEU

conference

Global Key Family Network Annual Conference, Barcelona 2019

Global Key Family Network Annual Conference, Barcelona 2019 1170 658 La Chang

 

“TGL being the Australian founding member of the Global Key Family network attended the 2019 annual conference in Barcelona. Over the course of the event TGL reps held over 30 meetings with potential and existing partners from more than 20 countries. The standout of the event was the big contingent from Latin American nations. Through these interactions, our people were able to learn and gain valuable insight into these niche markets. In addition we are now working towards closer trade ties with countries such as Dominican Republic, Brazil, Peru, Mexico, Honduras, Columbia and Puerto Rico. Of course additional partners in already established TGL markets such as Spain, Italy, France, Germany, Netherlands, Canada, and Kenya were also acquired to further boost TGL capabilities in these trade lanes.

TGL will continue to participate and sponsor such global events so that our network is further strengthened. We do this so our customers can rely on our ever-growing network to provide them the service they have come to expect from TGL.”

Southern Chinese port of Guangzhou port expands freight services

Southern Chinese port of Guangzhou port expands freight services La Chang

Southern Chinese port of Guangzhou expands freight services to US east coast opening a new container line.

The route is operated by international shipping giants including Maersk Line, MSC, ZIM, Hamburg Süd, and Hyundai Merchant Marine, with a total of 12 large container ships of 8,200 to 8,500 TEU. The ships will stop at Nansha Port every Monday, first to reach the Port of Newark in 32 days and then Charleston Port in 37 days.

This new route to the east coast of the United States will provide a fast and direct shipping service to the clients.

As the end of August 2019, Guangzhou Port Group operates 154 container liner services, including 109 foreign trade routes and 45 domestic trade routes what makes one of the busiest ports in South China.

More freight investments are desperately needed

More freight investments are desperately needed La Chang

Birds eye view of cargo

More investments in freight infrastructure are desperately needed if we are to meet demand!

“The release of the Australian Infrastructure Audit 2019 brings attention to how more targeted investment in freight infrastructure is necessary according to the Australian Logistics Council (ALC).”

To put simply existing investments to date is not enough to meet the exponentially increasing demand for logistics. With freight volumes projected to be 40% more between now and 2040, additional investment in infrastructure will help with lowering cost for the whole freight sector and reduce delays for the end consumer. A greater adoption of technology is also important and noted for the success of Australia’s future freight and logistics infrastructure. 

 

For further details check this interesting article: 

https://tandlnews.com.au/…/infrastructure-audit-highlight…/…

U.S – Canada Relationship

U.S – Canada Relationship La Chang

The relationship between the United States and Canada continues to thrive to the benefit of both countries. 

On the contrary to the new disagreement between China and the United-States, the relation between U.S and Canada remains civil and cooperative on an international stage.
Indeed, in 2018, Canada was the United states’ biggest goods export market. U.S exports to Canada accounted for 18% of overall U.S exports in 2018.
Canada is currently the United States’ second-largest goods trading partner with 617.2 billion in total goods trade during 2018.
The clearance process for businesses that tend to ship goods valued at less than 150$ is faster and less onerous between the two countries.
In term of ‘border security’, there is a friendly and mutual respectful trade relationship between both countries. The stage is set for safe and secure transportation.

We can Deliver to Amazon!

We can Deliver to Amazon! La Chang

Did you know that we can deliver your goods directly to Amazon?
If you sell to Amazon, you can contact us to get an instant and simple quote!

China, Russia Carriers to Ship Gas on Arctic Route

China, Russia Carriers to Ship Gas on Arctic Route 0 0 La Chang

China is breaking into Arctic transport through a joint venture between the country’s biggest ocean carrier, Cosco Shipping Holdings Co., and its Russian counterpart PAO Sovcomflot to move natural gas from Siberia to Western and Asian markets.

The state-owned companies will operate a fleet of a dozen ice-breaking liquefied natural gas tankers from Russia’s massive Yamal LNG project along the northern coast of central Siberia to destinations in Northern Europe, Japan, South Korea and China. China Shipping LNG Investment Co., a Cosco unit, will operate another nine such vessels, according to maritime data provider VesselsValue Ltd.