Global trade

Congestion at the ports

Profit forecasts for the world’s second-largest shipping company are once again rising as freight rates skyrocket due to persistent congestion in container shipping. A.P. Møller – Mærsk A/S (Maersk) announced Tuesday that it expects earnings before interest, taxes, depreciation and amortization (EBITDA) to reach $37 billion in 2022.

The upward revision follows Hapag-Lloyd, the world’s fifth-largest ocean freight company, raising its 2022 forecast by up to 30%, as profits continue to rise. Echoing Hapag-Lloyd’s projections, Maersk said the new guidance reflects ongoing congestion in global supply chains that has “lasted longer than originally anticipated,”

Higher freight rates to offset lower volumes

He said it has resulted in higher freight rates that have offset trade volumes. Maersk’s guidance assumes a gradual normalization of the ‘sea’ shipping business in the fourth quarter of 2022.

Maersk’s update comes ahead of the release of the second quarter results on Wednesday. Maersk Previews Second Quarter Financial Results, Expecting Revenue of $21.7 Billion (Equivalent to $14.2 Billion in Second Quarter 2021), Adjusted EBITDA of $10.3 Billion and Adjusted EBIT of $8.9 Billion said to have been surpassed. “The strong results reflect the continuation of exceptional market conditions in Ocean,” said Maersk.

Looking back at full-year results, Maersk now expects free cash flow (FCF) to exceed his $24 billion, up from his previous $19 billion-plus, but 2022 to his 23-year ‘s cumulative capex guidance remains at his $9 billion to $10 billion.

Container shipping rates down 25%

According to Drewry’s World Container Index, spot container shipment prices have fallen for his 22nd straight week and are now down more than 25% year-over-year. Long-term container freight rates also peaked, but remained more than double last year and nearly tripled pre-pandemic levels, according to Oslo-based cargo benchmarking firm Xeneta.

Despite the news about freight rates, Drewry’s Container Forecaster report, published in June, said that while the booming cycle driven by the container shipping pandemic had “definitely” changed in recent months.

How can this last with softening trade? That’s because the airline still holds the ‘Ace Card’ and that’s because of the continued congestion at the port, which is the main reason for the surge in fares. The market was likely to “normalize very quickly” once port congestion cleared. “North American ports are becoming increasingly congested, increasing the likelihood of not being able to sail,” the update said.

Related article: Container shipping rates have peaked

Container shipping wait times at ports

The total wait time for ports on the US East Coast is 0-3 days, while congestion in Savannah and Houston causes delays of 10-15 days and 14 days respectively. Meanwhile, wait times in Los Angeles and Long Beach were slightly reduced to 15 days, and in Vancouver he was also reduced to 7 days. Prince Rupert’s wait time has been reduced to five days for him, but yard density continues to exceed capacity.

China’s manufacturing back on line

According to Maersk updates, Shanghai is slowly returning to normal after his two months of COVID lockdown in April and May. Factory production “recovered nicely” in July, with many trades showing signs of a seasonal peak. “The situation in Shanghai has normalized, but remains fluid and unpredictable.

Related Article: China container shipping export index up in June

Trade volumes down 2.5% this year

Anne-Sophie Zerlang Karlsen, Head of Asia Pacific Customer Logistics at Maersk, said: Looking at trade volumes, Maersk’s 29 July update Global trade volumes fell by 2.5% year-on-year in May, and year-to-date growth fell by a similar level, according to “Container imports to Europe have been hit hard by economic sanctions due to the Ukraine conflict.” Negatively impacted in terms of volume following activation and broader demand weakness, with imports into Asia weighed down by the COVID-19 lockdown in China and a general slowdown in the Chinese housing market. “North American imports remained stable at very high levels.

The outlook remains very uncertain and we see risks primarily on the downside of our base case,” Maersk said. I’m here. The shipping company has just started reporting second-quarter results and could even exceed the “astonishing” $59 billion profit it posted in the first quarter of this year.

Higher port tariffs due to congestion

The Ports of New York and New Jersey on Tuesday announced new tariffs on empty containers and export volumes to ease container congestion. Both loaded and empty containers deemed durable are subject to a quarterly “container imbalance fee”.

The tariffs will come into effect from 1 September, with a mandatory 30-day notice period nationwide. The port of New York and New Jersey is the busiest port on the East Coast and her third busiest port in the nation.

Recent products that cleared customs in July include a BMW motorcycle and David’s Bridal of China dress, Plug Power parts, a Tractor Supply gas cooker and Target’s 12 Days of Beauty Box. But like other ports, New York and New Jersey ports have handled record volumes of import containers during the pandemic and have seen those import containers wait longer at terminals.

These containers clogged shore capacity and reduced port productivity. As a result, more ships are at anchor.

Shipping lines will pass on the fees

Under the new tariffs, shipping lines that do not take empty containers out Shof port will be charged $100 per container. The port’s new container export volume stipulates that the export volume must be at least 110% of the shipping line’s incoming container volume for the same period. Failure to meet this standard will result in a charge of $100 per container charge to the carrier for not meeting this standard.

Both loaded and empty containers are included in the import container count. Excludes rail volume. Record Freight, Excess Containers The surrounding land is also used by the port to accommodate excess containers.

The port has established temporary storage facilities for both empty and long-used import containers on a 30-acre site within the Port of Newark and Elizabeth Port Authority Marine Terminal. Ports are also in negotiations and are researching additional areas that can be used as storage areas. “As we continue to manage record volumes of cargo and work with tenants and port stakeholders to remove empty containers in a timely manner, we will reach out to all industry stakeholders and impact millions of Americans.” We urge you to find sustainable, long-term solutions to an industry-wide problem that gives you the edge over time,” said Port Authority Chairman Kevin O’Toole.

The extended anchorage time can be tracked by the ship transit time from China to the ports of New York and New Jersey.

Related article: Is this the end of the container shipping industry bull run as demand drops?

Record US import volumes

“The Port of New York and New Jersey is facing record import volumes, leading to empty containers accumulating in and around the port complex that are now affecting the regional supply chain that is already under stress from various sources across the country,” said Bethann Rooney, director of the Port Department at the Port Authority of New York and New Jersey. “We emphatically encourage ocean carriers to step up their efforts to evacuate empty containers quicker and at higher volumes to free up much needed capacity for arriving imports in order to keep commerce moving through the port and the region.”

EU situation

European goods and German port stresses East Coast ports like New York receive a lot of goods from Europe, where trade has been severely impacted by ongoing labor strife at both ports and rails. Exports bound for the United States are at least two months late.

Among the thousands of containers that were imported into the Port of New York and New Jersey in the month of July, according to a review of customs data using ImportGenius, there was wine from Spain, pasta, Prosecco and Giorgio Armani suits from Italy, and furniture from France.

Planet, a new contributor to the CNBC Supply Chain Heat Map, captured photos to show the impact of the rail strikes that has left a crush of containers at the rail terminals in Hamburg. Due to cloud cover in July, the comparison is for May 15, 2022 and June 11, 2022. The accumulation of containers is clearly visible.

Logistics experts say an ongoing labor dispute has increased the number of containers, slowing trade. Andreas Braun, Director of Marine Products for Europe, Middle East and Africa, Crane Worldwide Logistics, said: rail operators continue to miss their normal delivery and pickup window, failing to deliver a loaded container more than seven days before he loads at the terminal.

Due to summer timetables, container rail operators have had to make way for an increase in passenger trains, which contributes to further delays. “At least a week’s delay is normal for him now, but it could take up to two weeks for him, and there is a constant threat of missing the ship,” Brown said.

Related article: Urgent call on EU to review Container shipping sector

Renewed interest in shipping stocks

Among independent analysts, J Mintzmyer of private consulting firm Value Investor’s Edge was an early and highly successful endorser of Zim (NYSE: ZIM). Perhaps most notably, he named the top earlier this year, before container names started dropping in March.

Mintzmyer is now targeting a rebound in the boxship stock sector. In his recent post on his Seeking Alpha on ship owner Danaus (NYSE: DAC), he wrote: Rise from recent trading range”

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