Supply Chain Updates – Howard Knott

Ferry updates

DFDS has introduced a new schedule on its Rosslare/Dunkirk service following the replacement of the Ro-Pax Kerry with the somewhat larger and faster Regina Seaways. The five round trips weekly sailing schedule has been revised to better suit customer needs. The new vessel can accommodate up to forty more trailers than the Kerry.

Stena Line has switched the freight ferry Stena Foreteller from the Rosslare/Cherbourg route to their Birkenhead/Belfast service. The replacement vessel, Stena Vinga has a significantly smaller trailer capacity but can accommodate driver accompanied units giving increased flexibility to Hauliers operating in this way.

The vessel switch further increases capacity on the Birkenhead/Belfast route which has already seen substantial additional capacity put into place to meet the post-Brexit demand.

Grimaldi Line, which operates a twice-weekly, Cork/Antwerp service has added a Zeebrugge call to one of the rotations.

CLdN operates twice weekly from Cork to Zeebrugge. The line has also substantially increased its carryings on services out of Dublin to Zeebrugge, Rotterdam and Santander over the first six months of 2021 with increased frequencies and larger vessels. The Port of Zeebrugge reported that traffic growth on services linking that port with Ireland increased by almost 24% in the period while traffic on UK routes dipped.

CMA-CGM, currently the world’s number three container shipping company, has made a €25 million investment in Brittany Ferries. In a statement from CMA CGM the company says: “The agreement establishes a commercial partnership between the CMA CGM Group and Brittany Ferries using available cargo space on board Brittany Ferries’ services to the United Kingdom, Ireland and the Iberian Peninsula. The transportation of goods aboard Brittany Ferries’ roll-on roll-off (roro) ships will help expand the CMA CGM Group’s offering in the roro sector for the Atlantic and northern coast of France to destinations in the United Kingdom.

The partnership with CMA CGM will also pave the way for Brittany Ferries to gain more expertise in freight and logistics. It will help the company to adapt more easily to the post-Covid-19 trends in goods transportation, including the transport of unaccompanied trailers, and to offer new transport services so it can better meet the needs of its customers.”

Through this agreement, both groups will be able to introduce new Ro-Ro services both with Brittany’s traditional area of operation on the Atlantic Arc and supplement CMA CGM’s rapidly developing network of Marseilles based Western Mediterranean Ro-ro freight services. An important link in this chain will be the unaccompanied trailer rail service which is expected to be operational towards the end of 2022. That service will utilize the Atlantic Coast rail network between Cherbourg and Bayonne at the Spanish border. This will enable trailers to be taken directly off ferries from Ireland and British South Coast and loaded on rail. The Port of Cherbourg anticipates that further intermodal services will follow. Cherbourg is currently served from Rosslare six times weekly by Stena, once weekly by Brittany Ferries, and from Dublin, four times weekly by Irish Ferries.

The Irish Ferries Dover/Calais service continues to operate at a five times daily round-trip frequency. Both DFDS and P&O have added capacity and sailings to that route. Eurotunnel Freight has launched with Getlink, an unaccompanied trailer service running between its Folkstone and Calais Terminals. Up to now, all trailers on the Eurotunnel services were shipped on a driver-accompanied basis. The new operation runs 24 hours a day, 7 days a week.

 

Container shipping updates

Samskip has added a Rotterdam call to its Dublin/Waterford/Amsterdam service. The company also operates a twice-weekly service in conjunction with DFDS Logistics linking Dublin, Waterford, and Cork with Rotterdam. The rail link operated by Iarnród Eireann on behalf of XPO Logistics linking the inland port of Ballina and Waterford port’s Belview Container Terminal is scheduled to meet the Samskip services there.

Irish Continental Group has reported strong growth figures for the first half of 2021 for its Eucon lift-on, lift-off container business and the Dublin Ferryport Terminals (DFT) operation. The Eucon business focus is on container links with the Benelux region and additional shipping and container capacity has been added to support this business growth.  

DFT will now further extend its operations, having secured a twenty-year operating contract at the Dublin Inland Port. This facility is located close to Dublin Airport, the N2 and the M50 and will be formally launched within the coming months. The primary objective in establishing the facility is to handle and store empty container equipment and relieve pressure on land resources at Dublin Port.

The opening by Doyle Shipping of an extra operational shift at Dublin Port’s common User Terminal has facilitated the return of the IWT chartered rail service linking the Port with Ballina to full operation.

 

Problems on deep-sea shipping will remain in place for some time

Marseilles based CMA-CGM has announced that it will freeze spot container rates for the period up to February 2022. Over the past year rates on all trades but particularly those on the routes to and from Asia have increased dramatically too, in some cases, five times what they were pre-COVID. Traders, along with Regulators, have expressed concern that the continued rise in rates could significantly de-stabilize world trade. It remains unclear as to whether other Lines will follow CMA-CGM’s example and what will happen with rates following the Chinese New Year holiday. The rate-freeze applies across all container services operated by the Group including the inter-Europe services operated by Containerships.

Commentary on the rate freeze has all said that, though the CMA-CGM initiative is welcome, it remains unclear that it will have a significant effect in tempering the rate increases being experienced by traders. Many shippers will, either directly or through their Forwarders, have contract rates in place with their shipping lines and, given the capacity shortages being experienced on all trades the Lines will be hard-pressed to accommodate all the cargo contracted by them and have little capacity available for sale on the “spot” market.

Congestion remains the dominant issue in deep-sea shipping. There has been significant commentary on the persistently high number of container carrying vessels anchored off the southern California Coastline with numbers recently topping 80 vessels, each waiting for a week or more to dock. The situation off Chinese ports is much worse with over 200 vessels unable to dock and discharge cargo and empty containers. The vessels waiting off Shanghai and elsewhere include several ships with a container capacity of over 20,000 units.

The port congestion is Covid related in two ways. There are considerable labour shortages in the ports, on all modes of inland freight transport and in warehouses and Distribution Centres. The surge in demand for manufactured goods throughout Europe and North America had been expected to tail off as Covid lockdowns eased and expenditure on services picked, has, if anything, accelerated. This is in the face of component and raw material shortages.

Due to port congestion vessel productivity has dropped off. Carriers have been very active in charter markets and inputting tonnage that might in more normal times have been withdrawn, back into service. Some forwarders and NVOCC’s have been chartering smaller container ships to operate “one-off” voyages between smaller Asian and smaller European ports, thus avoiding congestion and are able to pay the inflated charter rates through charging a significant premium for the use of these services. This activity has had a knock-on effect on the charter market for such vessels that would normally be operated in feeder and short-sea services.

It is unclear when and if the tailing off of Covid income support schemes will reduce cargo volume on deep-sea services. If Covid related lockdown of facilities and inland transport services eases enabling goods to flow more easily and vessels to achieve higher productivity, then there could be a softening of freight rates. Add to this the fact that most carriers have placed significant new vessel orders over the past six months and that these will come into service over the coming year or so could stabilize.

 

Use of Rail

Meanwhile, considerable progress has been made in the development and operation of rail freight services both within Europe but also between European and Asian destinations including, for example, the Indian Sub-continent. Rates on these services now appear reasonable in the context of very high vessel shipping rates.

 

Airfreight

The airfreight business remains challenged by the very slow recovery of passenger flying. Pre-covid the percentage of air freight that was flown in the lower hold of passenger aircraft was in the order of 65%. On long haul flights, the aircraft being used were widebodies, many of these with a cargo capacity of up to 25 tonnes. It now appears likely that many of these aircraft will not return to passenger operation, being displaced by new narrow-body aircraft with limited cargo capacity.

This development has led to a surge in the retirement of wide-body planes and the establishment in several locations of facilities at which these can be converted to freight only aircraft. Significant numbers of Boeing 737 and Airbus A320 are also now being converted to freighters. It remains unclear when all this activity will stimulate the air freight marketplace.