Weekly Supply Chain Update: 11

CMA CGM and Google Partner to Integrate AI for Global Operations Enhancement

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CMA CGM and Google have formed a strategic partnership to integrate AI across CMA CGM's global operations. This collaboration aims to enhance efficiency, decision-making, and customer service by leveraging Google's AI solutions. The partnership will optimise vessel routes, container handling, and inventory management to reduce costs and carbon footprints. CEVA Logistics, CMA CGM's logistics arm, will use Google technology for smart warehouse management, improving volume and demand forecasting. CMA Media will also benefit from AI tools for synthesising documents, generating media snippets, and digitising archives. Both companies emphasise the transformative potential of AI in shipping and logistics, with dedicated training sessions at CMA CGM's TANGRAM centre. Sundar Pichai, CEO of Google, highlighted the partnership's goal to digitally transform operations and improve customer outcomes.

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Mixed Results in Weekly WCI Spot Rate Data from Drewry

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This week's WCI spot rate data from Drewry showed mixed results. Rates from Asia to North Europe rose by over $200/FFE, surpassing $8,200/FFE, while rates from Asia to the Mediterranean increased by about $100/FFE to exceed $7,700/FFE, though the pace of increase has slowed. Transpacific rates moved in opposite directions: US West Coast rates dropped by $224/FFE, while US East Coast rates rose by $225/FFE, now exceeding $9,600/FFE, a level not seen since August 2022. Atlantic westbound headhaul rates declined for the eighth consecutive week, dropping by $12/FFE this week, totaling a nearly $300/FFE decrease over the past eight weeks, a 13% decline.

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Shifting Capacity Raises Rates on Secondary Trade Routes, Warns Xeneta

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iner companies are shifting capacity from secondary services to major trade lanes to capitalise on high returns, leading to increased rates on secondary routes, warns consultancy Xeneta. Capacity injections have been noted in the Indian subcontinent, Latin America, and US West Coast routes, with significant capacity increases of 9.0%, 6.0%, and 4.7% respectively since June. Global container volumes hit 74 million TEUs in the first five months of 2024, surpassing the 2021 record, driven by booming Chinese exports. Longer voyages around Africa, due to the Red Sea crisis, have increased container-miles by 17.9% in 2024. This shift has reduced available capacity, causing congestion and further slowing port calls. Fronthaul volumes rose by 10.4% in the first five months of 2024, while backhaul and intra-regional trades increased by 4.4% and 5.5%. Spot rates on European and US backhaul trades to Asia have softened, but fronthaul spot rates from the Far East to North Europe and the US have surged by up to 150% since April.

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Santos Brazil to Complete Tecon Santos Expansion by 2026, Five Years Ahead of Schedule

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Santos Brazil announced that the Tecon Santos expansion, increasing its capacity to 3 million TEUs, will be completed by 2026, five years ahead of schedule. The project, which began in 2019 with a R$2.6 billion (US$470 million) investment, has already seen R$1.3 billion (US$235 million) invested. In 2024, R$420 million (US$76.5 million) will be spent, boosting capacity from 2.4 million to 2.6 million TEUs. The expansion includes extending the quay to handle three 366-metre New Panamax ships simultaneously. Improvements also involve building a new container yard, increasing electrification, and expanding refrigerated container sockets. New equipment like cranes and forklifts is already in use. Environmental efforts include using CNG vehicles and solar panels, with a goal of carbon neutrality by 2040. Investments in IT include a new Terminal Operating System and AI integration.

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Dry Bulk Newbuild Contracting Drops 34.2% in First Half of 2024 Amid Market Uncertainty

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In the first half of 2024, newbuild contracting in the dry bulk sector fell by 34.2% year-on-year despite favourable market conditions. This decline is due to increased newbuild prices, limited shipyard availability, and uncertainty about future fuels and commodity demand. Conversely, the second-hand market saw a 15.2% price rise and an 11.7% increase in sales. Shipyards are occupied with container, LNG, and tanker orders, delaying new dry bulk ships until post-2026. Shipowners are also uncertain about which fuels to adopt and the future demand for coal and iron ore. The current dry bulk fleet is relatively young, with an average age of 12.3 years, and the existing orderbook should suffice to replace recycled ships in the near term. Supramax and panamax ships dominate the orderbook, while handysize ships are underrepresented despite many being over 20 years old. In the medium to long term, stricter climate regulations will drive newbuild contracting, necessitating fleet renewal to comply with new standards and adopt alternative fuels, according to Filipe Gouveia, Shipping Analyst at BIMCO.

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Port of Antwerp-Bruges Sees Growth in First Half of 2024 Despite Challenges

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In the first half of 2024, the Port of Antwerp-Bruges handled 6.6 million TEUs, a 4.1% increase from the same period in 2023, and the total throughput rose by 3% to 143.2 million tonnes. This growth is driven by increased container transport demand and extends to other product categories despite geopolitical tensions and economic uncertainty. Conventional breakbulk showed improvement, although it was 6.2% lower year-on-year due to a decrease in imports and an increase in exports. Iron and steel throughput remained stable, with exports up by 7.4% and imports down by 3.7%. Roll-on/roll-off (RoRo) traffic dropped by 5.7% due to congestion and altered business models, with significant decreases in second-hand cars (-45.8%) and other transport materials, while unaccompanied cargo rose by 2.4%. Dry bulk saw a slight increase of 0.4%, and liquid bulk grew by 0.7% after a slight decline in the first quarter. There was a 2.8% decrease in ocean-going vessels calling at the port, with a 4.2% reduction in gross tonnage. CEO Jacques Vandermeiren noted that despite challenges, the port has seen strong growth and remains committed to energy transition initiatives, indicating a promising year ahead.