<div class="phx-topic abstract-wrapper">Rates and volume on the major trade lanes out of Asia fell during the third quarter, but not enough to slow OOCL’s revenue growth. </div>

Rates and volume on the major trade lanes out of Asia fell during the third quarter, but not enough to slow OOCL’s revenue growth.

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<div class="phx-topic">OOCL shrugged off plunging rate levels and declining volume on the major trade lanes out of Asia to post a sharp increase in revenue for the third quarter. The Cosco Shipping Holdings subsidiary is the first of the major carriers to report its third-quarter performance, and although the operational update Friday did not contain profit and loss figures, the revenue increase achieved despite falling volume indicates there has been no slowdown in profitability. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5255531_1.0.PNG"></img><a href="/s3/files/styles%2F400w%2Fs3%2Ffield_feature_image%2FTP%20spot%20contract_0.PNG">Click to enlarge</a>.</div>OOCL reported total revenue was up 16.9 percent year over year in the third quarter at $5.04 billion, while overall volume across its four main trade lanes — trans-Pacific, Asia-Europe, intra-Asia, and Australasia/Oceania — fell 3.4 percent to 1.74 million TEU. Trans-Pacific volume handled in Q3 was 419,386 TEU, a sharp drop of 14.4 percent compared with the same period last year. But revenue on the trade lane rose 21.5 percent year over year to $1.91 billion. That came despite average spot rates falling 57 percent from July 1 through Sept. 30, according to rate benchmarking platform Xeneta. Asia-Europe was the only trade to see a drop in revenue, which fell 1.4 percent to $1.3 billion in the quarter as volume declined 7.3 percent to 384,919 TEU. Average spot rates on the trade fell 35 percent year over year through the third quarter. For the first nine months of the year, trans-Pacific revenue rose 54 percent year over year to $5.9 billion while volume fell 14 percent to 1.3 million TEU. Asia-Europe nine-month revenue rose 32 percent to $4.2 billion as volume fell 2.5 percent to 1.2 million TEU. Carriers are on course for <a href="/maritime-news/container-lines-course-163-billion-profit-2022-hsbc_20220125.html">another year of record profitability,</a> with long-term contracts already signed at elevated levels offsetting the sharp decline in spot rates since January on the two major trade lanes out of Asia. Since the beginning of the year, average spot rates on the Asia-US West Coast lane have fallen 73 percent to $2,447/FEU, while long-term rates valid for three months or more are up 30 percent, Xeneta data shows. On Asia-North Europe, the spot rate is down 55 percent since Jan. 1 at $3,773/TEU, while long-term rates are up 2 percent at $4,969/TEU. Contact Greg Knowler at <a href="mailto:greg.knowler@ihsmarkit.com">greg.knowler@ihsmarkit.com</a> and follow him on Twitter: <a href="https://twitter.com/greg_knowler">@greg_knowler</a>. </div>

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OOCL posts strong Q3 revenue growth despite volume, rate declines

<div class="phx-topic abstract-wrapper">A vigorous blank sailings program on the Asia-North Europe trade lane has yet to stem the rapid decline in spot rates that have fallen more than 50 percent since Jan. 1. </div>

A vigorous blank sailings program on the Asia-North Europe trade lane has yet to stem the rapid decline in spot rates that have fallen more than 50 percent since Jan. 1.

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<div class="phx-topic">Carriers on the Asia-North Europe trade lane have blanked almost half a million TEU in capacity over the past two months to put the brakes on freefalling spot rates ahead of the coming contract tender season. With demand falling through the traditional peak shipping period and rates tumbling, carriers withdrew 228,715 TEU of capacity in August and 251,089 TEU through September, 15 percent more than during the same two months last year, according to Sea-Intelligence Maritime Analysis. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5256133_1.0.PNG"></img><a href="/s3/files/styles%2F400w%2Fs3%2Ffield_feature_image%2FAE%20blanks.PNG">Click to enlarge</a>.</div>But even with the vigorous blank sailings program over the last two months, falling demand and a slight easing of port congestion in North Europe has seen average spot rates falling 28 percent since Aug. 1 to the current level of $4,160 per TEU, according to data from rate benchmarking platform Xeneta. The rate has fallen 50 percent since Jan. 1 but is still almost five times higher than in September 2019. Peter Sand, chief shipping analyst at Xeneta, said the blanked sailings are influencing market rates, but it may be “too little too late” to stem the rate freefall, in part because the cancellations have not been spread evenly across carriers. “In the early days of the pandemic, it was really useful as a massive erosion of rates was prevented … all carriers did the same,” Sand told JOC.com Friday. “Today, not all carriers are blanking sailings. This lack of uniformity looks to be too little too late from the outside. Right now, carriers see different dominant strategies as opposed to the early days of 2020 when they all saw one.” <h2>Volume trending down </h2>Spot rates are suffering primarily from a lack of freight demand. Volume data for August is not yet available, but European imports from Asia have fallen on a year-over-year basis in every month since January. Through July, westbound Asia–Europe volumes have fallen 6.5 percent to 6.65 million TEU compared with the same seven-month period in 2021, according to Container Trades Statistics. “Falling demand for ocean freight, whatever the drivers — inflation, fears of a looming recession, an extremely early peak season — is making capacity more readily available than it has been in a very long time and rates continued to fall this week as a result,” said Judah Levine, head of research at freight marketplace Freightos, in a market update this week. Despite the decline in demand, North Europe’s four main hubs — Rotterdam, Antwerp, Hamburg, and Bremerhaven — remain congested. The 60-day average dwell time for imports at those four ports reached seven days as of Sept. 23, up from just over six days at the beginning of the year, according to data from freight visibility provider FourKites. Many Asia–Europe shippers will soon enter contract negotiations with carriers for 2023. However, Jérôme de Ricqles, a consultant at digital freight transportation marketplace Upply, said the change in market conditions from last year will cause both parties to approach the talks differently. “Shippers will go into negotiations with far more arguments and far more aggressivity,” de Ricqles said during an Upply webinar last week. “But shippers will enter the tender negotiations with global volume below what was on the table for the past two years, and that will deplete their negotiating power.” On the other side of the table, “carriers know they are not in a place where if they lower the prices, they will get more business,” de Ricqles added. “Business is sluggish because of falling demand.” Contact Greg Knowler at <a href="mailto:greg.knowler@ihsmarkit.com">greg.knowler@ihsmarkit.com</a> and follow him on Twitter: <a href="https://twitter.com/greg_knowler">@greg_knowler</a>. </div>

Asia–Europe carriers cancel sailings as demand, rates slump

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

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Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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OOCL posts strong Q3 revenue growth despite volume, rate declines

Asia–Europe carriers cancel sailings as demand, rates slump