Global shipping and logistics markets are recovering in 2017 with higher freight rates and profits compared to 2016. Major shipping companies consolidated and formed new global alliances that now control over 90% of container ship traffic. These changes have disrupted ports and supply chains. Technology adoption is increasing to bring more efficiency and transparency to global supply chains. The economic outlook remains optimistic for the second half of 2017, though port congestion from rising import volumes is a concern.

1. Globalization Picks Up Pace
as Shipping and Logistics
Market Recovers

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5. We look back at a much
different ocean freight
market versus in 2016.
Higher rates, consolidations,
and new alliances are the
trend while faster, more
efficient and digitization are
the keywords for global
supply chains.

6. Is There Really A Recovery?

7. logistics market research indicates that
the top 20 operators by capacity posted
combined net losses in 2016 of $5
billion.
- The Wall Street Journal

8. Journal of Commerce notes that
investment bank firm, Jefferies,
anticipates Maersk to increase its
net operating profit after tax by
32% this year to $1.6 billion
based on 10% higher freight rate.

9. Meanwhile, Jefferies expects
Hapag-Lloyd’s adjusted earnings
before interest and tax will more
than triple to $442 million due to
higher rates and contribution from
its merger of United Arab Shipping
Company.

10. We at Xeneta are optimistic
for an ocean freight recovery.
Based on our logistics market
analysis, rates are higher this
year as compared to 2016.

11. According to Lloyd’s List, the National Retail Federation (NRF) and
Hackett Associates’ monthly Port Tracker anticipates the
Transpacific peak season could bring record US import volumes
this year. US containerized imports handled at major retail ports
in August could reach 1.75 million TEU.

12. 1.72 million TEU. That was up 7.3% from
April and 6.2% higher than in May 2016.
Estimated at 1.66 million teu, up 5.3%
from the same time last year.
1.71 million TEU, up 5.1% from last
year
MAY
JUNE
JULY

13. 1.75 million TEU, up 2.2%
1.66 million TEU, up 4.3%;
1.71 million TEU, up 2.2%
1.6 million TEU, down 2.7% from last
year.
AUG
SEP
OCT
NOV

14. Some actions to date appear to have
alienated traditional allies and are
causing them to work more closely
together, leaving the United States on
the sidelines. ‘America First’ may well
result in protectionist actions that will
cut the United States off from the
benefits of the global value chain and
economic growth for US importers and
exporters.
- Ben Hackett, Hackett Associates Founder

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16. The New Alliances Take
Shape

17. Effective since April of this year, THE Alliance, the OCEAN Alliance,
and the 2M Alliance structure have already made an impact.
Based on logistics market research, these alliances account for
over 90% of container ship traffic worldwide and have disrupted
Europe-to-Asia container traffic at an unprecedented scale
according to Nik Delmeire, secretary general for European
Shippers’ Council.
US ports have also experienced delays. For example, Seattle’s
container Terminal 18 has had to deal with crowded truck turn
times lasting from one hour to one day as the port absorbs more
calls thanks to the new shipping alliances.

18. While alliances overall benefit the
customer, the formation of a new
alliance is disruptive for customers in
the short term.
-
Mærsk

19. Faster, Efficient and Digitized

20. As more and more
business moves
online, the need for
transparency in
shipping and
logistics is apparent.
Logistics providers,
ocean and airfreight
providers, trucking
and rail providers are
all investing in
technology.

21. In terms of the
ocean freight
market, Maersk has
been at the forefront
embracing such
technologies as
blockchain, drones
and introducing its
digitized freight
forwarder via its
logistics subsidiary,
DAMCO.

22. According to Lloyd’s List, the National Retail Federation (NRF) and
Hackett Associates’ monthly Port Tracker anticipates the
Transpacific peak season could bring record US import volumes
this year. US containerized imports handled at major retail ports
in August could reach 1.75 million TEU.

23. What’s Ahead?

24. The second half of 2017 is full of optimism for the shipping and
logistics market. Rates will likely remain higher versus 2016 as
peak season begins in late summer.
However, port congestion may remain a concern as consumer
sentiment in the US will likely remain positive and demand more
import goods ahead of the holiday season.
For the airfreight market, this could be an opportunity to keep
watch on. We may see a shift as shippers look for ways to reduce
any disruptions.

25. Forwarders will certainly
benefit in all of this as they
assist shippers with value-add
solutions such as alternative
delivery modes and routes.