Exports from Vietnam to the US grew 40.2%, year on year, in the first three months of 2019, while exports from China to the US slumped by 13.9%, in what appears to be a clear indicator of the effects of the ongoing US-China trade tensions on international trade and supply chains.

The latest US Census Bureau data shows that if Vietnam’s recent exceptional pace of growth can be sustained for a full year, unlikely though that may be, it could leapfrog Italy, France, the UK, and India in the ranks of top exporters to the US, rising from 12 to 7 in US export rankings, figures from Reuters indicate. Meanwhile, India would improve two spots and France by one if they keep growing at the same pace for the rest of the year. Ireland would slip by four, and the UK and Italy each would drop two, Reuters observed.

Although China remains by far the biggest exporter to the US and will remain so this year, if its current pace of declining export volumes to the US continues for the rest of this year Chinese exports by value will fall from US$539 billion in 2018 to $464 billion in 2019, analysis by Reuters indicates. They would still place it ahead of Mexico and Canada, the second- and third-largest exporters to the US, at $346 billion and $318 billion, respectively, in 2018.

Reuters noted that Vietnam was “a standout in a region where the world’s export engines largely are hurting amid trade-war tensions and a slowing electronics cycle”. Japan, South Korea, Singapore, and Taiwan all saw export contractions in April, while in the same month Vietnam’s exports gained 7.5% from a year earlier.

Logistics and trade observers believe Vietnam is benefiting from businesses shifting their supply chains in response to increased US tariffs on Chinese goods, although Vietnam’s economy was growing anyway thanks to continuing international investment in the country, which offers low-cost labour and an improving business climate.

                 

CMA CGM has announced that its Singapore-headquartered subsidiary, APL, will exit the Asia-Europe trades after the summer.

The announcement came as the French carrier reported its first-quarter results this morning, which included $1.7bn in revenue from recently acquired 3PL Ceva Logistics.

However, it was the decision to withdraw APL from a series of trades and instead focus on its transpacific and intra-Asia services that caught the eye, potentially reversing CMA CGM’s long-held philosophy of maintaining the separate branding of acquired companies.

“The new organisational setup will allow the group to simplify its offer, making it more legible to its customers, and benefit from the expertise of specialist companies from coherent regional groups, while reducing its costs,” CMA CGM said.

It added that a $1.2bn savings plan, first announced in March, was today upped to target $1.5bn in savings, “mainly by streamlining its organisation and its maritime routes”.

As a result, CMA CGM would be the sole carrier in the group to operate on the transatlantic, Asia-Europe, Asia-Mediterranean, Asia-Caribbean and Europe-India/Middle East markets.

For the first three of those routes, of course, CMA GCM operates as part of the Ocean Alliance, with Evergreen and Cosco/OOCL.

Meanwhile, APL will continue its focus on the transpacific trade, where it launched the Eagle Express (EXX) service for US importers willing to pay premium freight rates for guaranteed container deliveries and which operates outside of the Ocean Alliance grouping.

The ‘Eagle GO Guaranteed’ concept was expanded to the Asia-Europe and Asia-Latin America markets last year, and it remains to be seen whether CMA CGM will continue selling the service to shippers and forwarders.

APL will also continue to operate Asia-Indian Subcontinent (where it will be the CMA CGM group’s only brand) as well intra-Asia routes (in cooperation with CMA CGM’s CNC subsidiary), the US cabotage services (which are protected by the Jones Act and require US-flagged vessels) and the Asia-Oceania routes.

However, CMA CGM said its Australian subsidiary, ANL, which was one of its first acquisitions, would “remain the lead brand for Oceania”.

The changes are set to take effect on 1 October.

Earlier this year, CMA CGM consolidated its intra-Europe brands and dispensed with 250 years of history by folding MacAndrews into the newly acquired Finnish shortsea operator, Containerships.

Prolonged US-China trade tensions will weigh on China’s port operators, according to Moody’s Investors Service.

The ongoing trade war, including the latest round of tariffs, would reduce container throughput growth in China over the next 12 to 18 months, which would be a credit negative for the country’s port operators, Moody’s said.

The ratings agency forecasts container throughput growth this year could range from flat to low single digits, from 4.7% in 2018 and 8.3% in 2017.

In addition, port handling charges will likely continue to decline, reducing operators’ cash flows and further pressuring operators, it added.

“We expect US-China relations to remain contentious and trade negotiations to continue for some time even if the two countries reach a trade agreement, resulting in a difficult operating environment for China’s port sector,” said Moody’s Hong Kong-based assistant vice-president and analyst Ralph Ng.

“Ongoing consolidation within the shipping sector, overcapacity in the port sector and regulations will likely further reduce handling charges, which is credit negative because these charges account for most of the port operators’ cash flows.”

The decline in port handling charges will erode the total revenue and profit margins of China Merchants Port Holdings, Hutchison Port Holdings and Shanghai International Port Group, the three major China-based port operators rated by Moody’s.

Nevertheless, Moody’s expects them to manage these challenges, even as their credit quality weakens.

Observers at the Port of Liverpool reported dramatic scenes early this morning at the UK port’s Liverpool2 container terminal, when the crew of the MSC Matilde containership “were disembarked from the vessel as a precaution” after it started listing heavily during the night.

Liverpool Echo published a dramatic photo showing the vessel listing and said the crew from the 20-year-old ship had abandoned the vessel at around 2am.

Global container line MSC confirmed that there had been an incident at Liverpool, but that the vessel and its crew were back to normal. It said: “Early Friday morning on 24 May, the container ship MSC Matilde was found to be listing in dock at the Port of Liverpool, UK. As a precaution, to ensure the safety of the captain and crew, they were disembarked from the vessel.

“There were no reports of injuries, loss of cargo or damage to ship and operations are back to normal. The cause of the incident is still being nalysed by the relevant authorities.”

To Our Valued Clients,

URGENT ANNOUNCEMENT

The increase in bunker price in 2018 has been significantly higher than what had been expected and has now reached a level of 440 USD/ton in Europe, the highest since 2014. The increase is more than 20% compared to the beginning of 2018 and this unexpected development means that it is no longer possible for carriers to recover bunker costs through the standard bunker adjustment factors.

Due to the unsustainable nature of the situation, Carriers have decided to introduce an Emergency Bunker Surcharge (EBS) as a necessary action to ensure a continued sustainable service to Shippers.

EBS will be charged as a separate amount to ocean freight and is applicable to all cargo globally, with a shipped on board date on or after 1st June 2018

For LCL Shipments EBAF will be charged @ USD5.00 per cbm

Surcharge Levels will be Reviewed on a Monthly basis and are calculated using the below Tariff adjustment mechanism:

The EBS tariff communicated above is based on a bunker price of USD 440 (IFO380 in Rotterdam). EBS tariff is subject to change as per below trigger events:

Should the bunker price (IFO380 in Rotterdam) increase to a level of USD 530, EBS tariffs will be multiplied by a factor of 2.0.

Should the bunker price (IFO380 in Rotterdam) decrease to a level of USD 370, EBS tariffs will be zero.

We trust that all of the above is clear but if you do have any questions or queries please do not hesitate to contact us and we will assist in any way possible.

Fortitude Global Logistics have joined and have been appointed founding members for the UK of One World Network.

One World Network (OWN) is a non-exclusive global professional freight forwarders network consisting of 2-4 members per city/country (or 4 members for bigger cities). OWN is committed to strengthen your relationship with OWN membership and to have a common platform for networking as well as ensuring competitive rates given to members.

Find out more at www.own-alliance.net