Logistics Lowdown - December 2016

 

 Logistics Lowdown
 
Brought to you by AGWorld.
 
We give you the skinny in the big bad world of logistics. Read this curated collection of articles every month to learn about the latest developments and most pressing problems facing our fast-changing industry. 


 
1.
NEW ENTRANTS TO SHIPPING SLOW CORRECTION OF MARKET
Shipping giant Maersk has stated their optimism about the gradual correction of overcapacity by 2022, but new entrants to the container trade with global ambitions may be an impediment to the restructuring of the market. New players such as Korea Line have signaled their intention to buy new ships amid low shipbuilding prices. The South Korean market is also keen on propping up its ailing shipping industry by proposing a state-supported ship financing vehicle with initial capital of $1 trillion won ($851 million). Although we are seeing shipping lines scrap more ships, new entrants eager to seize market share will pose a challenge to the market correction.

2.
TIGHT SPACE IN WAREHOUSING TO CONTINUE INTO 2017
2016 has been another year in which the demand for warehouse space has outpaced supply - particularly in the urban areas near key seaports. The Los Angeles basin saw 0.9 percent vacancy; Chicago is at 3.9 percent; and Central New Jersey is at 3.4 percent. Warehouses near the West Coast ports have the tightest space and this trend will continue into 2017. However, industry analysts say that signs in the market do not point to a real estate bubble, instead calling it a "disciplined" market.
 
3.
NY-NJ PORT LOSING MARKET SHARE ON EAST COAST
The Port of New York and New Jersey's share of the East Coast container trade has declined to less than one-third this year, following previous years of decline. Both the port's share of imports and exports on the East Coast have fallen. There has been a migration of business from north to south, as the costs of real estate, labor, tolls, oversight and many other aspects of shipping are lower in ports further south such as Savannah. Port congestion and slow turn times have contributed to this dilemma for NY-NJ.
 
4. GROWING ALLIANCES PROMPT HONG KONG TERMINALS TO JOIN FORCES
Hong Kong International Terminals (HIT), COSCO-HIT, and Asia Container Terminals (ACT) at the Port of Hong Kong have entered into a collaborative agreement, bringing all three under the same management. The move is a response to the growing shipping alliances that dominate the container trade. Transshipment hubs are competing fiercely to be put on the route of these alliances; once an alliance choose a transshipment hub, it will be difficult to change given the larger size of the alliance. The agreement would create more capacity at the port by increasing flexibility in planning yard operations.
 
5.
WHITE HOUSE PREDICTS NEARLY ALL TRUCKING JOBS ARE AT RISK
A new report from the Executive Office of the President finds that 80-100% heavy duty trucking jobs are at risk of loss due to automation, along with most parcel delivery and Uber driving jobs. Adoption of self-driving trucks will depend not only on technological advancement but also pricing, availability of infrastructure, and the industry's willingness to change, which may delay self-driving trucks from dominating trucking even if the economic benefits become more visible.

 

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