Top 10 International Trade Trends Going Into 2022

Top 10 International Trade Trends Going Into 2022

Amid U.S.-China tensions, Brexit, and other political threats to the world economy, global trade looks as resilient as ever heading into 2022.

Just look at the supply chain crisis of 2021. When crippling gridlock seemed possible, what the world got instead was a lesson in the staying power of ports, trucking companies, and shipping lines across the world.

The $8.6 trillion global logistics industry, it turns out, remains robust enough to get goods from any producer to almost any buyer or consumer on earth. The World Trade Organization now expects global trade to increase 4.7% in 2022, after rising 10.8% in 2021. Total trade in goods and services is expected to reach $28 trillion for 2021 according to UNCTAD.

Even demand-side news has been good. The world’s richest economy, the U.S., is still riding the benefits of trillion-dollar stimulus packages. U.S. gross domestic product is believed to have grown 7% in the last quarter of 2021, up from 2% in the preceding quarter. And when American consumers are buying, the whole world benefits.

Here are the top 10 ongoing trade trends at the start of 2022:

1.   China Close to Passing U.S. as World’s Top Importer

In 2001, the year China joined the WTO, it was already the world’s fourth biggest importer, behind the U.S., Japan, and France. Global trade leaders figured it wouldn’t take long for a country of billion-plus consumers to open itself up and become the world’s biggest importer. Instead, the U.S. has continued to be the world’s biggest buyer of goods, the biggest reason that Washington maintains leverage in trade negotiations. However, in the first 10 months of 2021, the U.S. imported $2.3 trillion worth of goods, compared to $2.2 trillion for China. It appears highly likely that in 2022, China will at last pass the U.S. to become the world’s top importer.

2.   Asian Manufacturing Diversifies

The new Regional Comprehensive Economic Partnership, or RCEP, is set to knock out over 90% of tariffs in 15-nation Asian bloc led by China. The treaty, which does not include the U.S., will accelerate a trends set in motion by trade tensions between China and the U.S., and worries about supply chains. These have pushed manufacturers to build plants in countries like Vietnam, Thailand and Singapore. For example, Chinese shipments of mobile phones, the ultimate complicated manufactured high-tech consumer good, fell 19.7% in November to $16.5 billion from $20.6 billion. The country still shipped out 88.7 million phones, but that was a 18.8% decline from 109.2 million a year ago. The proliferation of new supply chains across Asia is why Chinese imports from ASEAN countries in November rose 34.9% to $38.5 billion from $28.5 billion, the biggest jump in imports from any major region. By comparison, imports from the U.S. rose 22.1%, to $17.8 billion from $14.6 billion, while shipments from the European Union imports increased only 6.8% to $27.3 billion from $25.6 billion.

3.   Commodity Prices Boom Amid Scramble for Resources

The work-from-home economy and industrial activity picking up have generated a booming demand for power around the world, despite fears about climate change. And that’s forced up prices. For example, Chinese natural gas imports rose 17.8% to 10.7 million tons from 9.1 million tons a year ago, while, by value, they increased a whopping 169.8%. At the same China, cut crude oil imports 8% to 41.8 million tons from 45.4 million tons, although imports by value rose 73.7% to $24.6 billion from $14.2 billion. Prices for everything from soybeans to iron ore rose in 2021, part of a wave of inflation sweeping the globe that is likely continue into 2022.

4.   U.S. Hikes Energy Exports

 From gas fields in Texas to coal mines in Appalachia, the U.S. has always been energy rich. Now, it’s becoming a chief supplier of energy to countries around the world, trade statistics show. With new terminals for exporting gas and coal, the U.S. has emerged as the world’s dominant, and most diversified, energy supplier. The U.S. exported $189.4 billion worth of mineral fuels in the first 10 months of 2021, up 53% from $123.4 billion over the same period in 2021. Coal exports increased 49% to $7.3 billion. Energy experts the U.S. to remain dominant in energy production and exports for decades to come.

5.   High-Tech Trade Booms

The prevalence of lockdowns, boosted further by the omicron crisis, has solidified people’s habits around the world. Home workers have been buying computers, routers, and other gear to transform their home spaces into offices. The recent omicron wave of the Covid-19 virus will perpetuate people’s habits and buying patterns into 2022. In the first nine months of 2021, Chinese high-tech imports increased 24% to $560.4 billion; U.S. imports went up 16% to $419.2 billion; and European Union imports rose 18% to $332.8 billion.

6.   Cars Go Electric

Global electric car sales are expected to top $800 billion by 2027, more than double the current value of the market. Overall, around five million electric cars are expected to be sold in 2021, driven by evolving technology, and fears about climate change. And it’s showing up in trade statistics. The top market, Germany, increased imports of electric cars 138% to $6.1 billion in the first nine months of 2021. The second biggest market was the UK, which hiked imports 121% to $5.2 billion. The world’s top exporter was Germany, which increased shipments 110% to $10.6 billion.

7.   Batteries Needed

That’s boosted the trade in materials related to making batteries. Chinese exports of lithium batteries increased 78% to $25 billion from $14 billion during the first 11 months of 2021. It’s getting raw materials from Latin America. The world’s top two exporters of the raw material needed to make electric batteries — lithium carbonate — are Chile and Argentina, according to an analysis by Trade Data Monitor. But now the Latin American countries have been changing where they ship the material crucial to manufacturing electric vehicles. Increasingly, they’re sending lithium to China, as that country develops its own battery supply chain, instead of other key markets like Japan, South Korea and the U.S., according to TDM.

8. U.S. Consumers Lead Recovery from Covid.

U.S. imports have driven global manufacturing and the recovery of the global economy. In the first ten months of 2021, U.S. imports increased 21.4%, rising to $2.3 trillion from $1.9 trillion. U.S. consumers have been buying a lot of everything. Furniture imports, for example, were up 26% to $60.9 billion, part of the transition to a stay-at-home economy. Vehicle imports increased 16% to $227.7 billion. Even if it’s passed by China in 2022, there’s no sign that the U.S. will cease to be a lucrative consumer markets for the world’s top manufacturing corporations.

9. Fears of Supply Chain Meltdown Overblown

After a summer of stories about container ships crammed together by ports and in canals, trade rebounded in the fall. For the first 10 months of 2021, the Port of Los Angeles, the top U.S. port, registered imports of $226.9 billion, up 20% from $188.4 billion during the same time period in 2020. (TDM’s database includes shipments by port for several countries.) Other U.S. ports registered similar increases. It seems unlikely that the container shipping industry will retreat in the forseeable future. It is the anchor of the hyperglobalization that now dominates the economy.

10. Coal is… Back

Despite the renewed focus on the climate, coal trade boomed in 2021. The world simply doesn’t have enough fuel capacity, even with the addition of renewable sources like wind, hydro, and solar. U.S. coal exports, for example, increased 49% to $7.3 billion over the first ten months of 2021. China more than tripled imports of coal by quantity, hiking purchases to 35 million tons in November, up from 11.7 million tons in the same month a year ago. By value, shipments grew a whopping 761.8%, rising to $5.9 billion from $681 million. China’s top sources of coal are Indonesia, Russia, Mongolia and the U.S. Chinese coal imports from the U.S. increased 993.4% in the first ten months of 2021, to 8 million tons, from 733,789 tons over the same time period in 2020, according to International data. Imports from Indonesia leapt 60.3% and those from Russia grew 82.2% while shipments from Mongolia fell 43%.

DIGITIZATION’S NEXT FRONTIER: NON-FUNGIBLE TOKENS A GAME CHANGER FOR TRADE FINANCE?

Trade finance is known for its stubbornness in the face of change. Even as the world has gone digital, paper-based manual processes remain commonplace across the complex network of counterparties involved in financing global trade. Thankfully, the tide is now turning.  The operational challenges of relying on manual processes and systems are well known and much maligned across the industry–incorrect documentation and KYC, non-interoperable systems, manual reconciliation, poor visibility, excessive costs, to name just a few.

Digital solutions have emerged in many different shapes and sizes, but one of the technologies which seems most encouraging is enterprise blockchain. Trade is a fundamentally decentralized system. The industry is heavily intermediated–predominantly by banks that help to facilitate transactions and provide the financing behind them, but also by insurers, customs officials and other market participants. Firms have tried countless times to apply centralized solutions to this decentralized system but, unsurprisingly, none have really worked. 

The decentralized nature of blockchain makes it a perfect fit for trade finance. For the first time, the entire industry is getting behind a technology and moving it into real world deployment at a record pace. The architecture underpinning the entire ecosystem of trade is undergoing complete digital transformation, and exciting new blockchain-enabled developments continue to emerge. One such development is non-fungible tokens, or NFTs. But what are they and how do they benefit participants? 

WHAT IS AN NFT?

A non-fungible token is a unique and non-interchangeable unit of data stored on a digital ledger. NFTs use blockchain technology to provide a public proof of ownership. You’ve probably heard of NFTs in the entertainment industry, largely because they can be associated as unique items with easily reproducible items such as photos, videos, audio and other types of digital files. But they also have wide applicability in the financial services space–and specifically in trade finance. 

It’s important to note that an NFT is simply a specific type of tokenization. Once a trade finance document or obligation has been tokenized, it can be referred to as an NFT. By contrast, a smart contract is a digital contract, stored on blockchain, which will execute once specified conditions are met. In the case of trade finance asset distribution, both smart contracts and tokenization work together to facilitate this activity.

WHAT ARE THE BENEFITS OF NFTs IN TRADE FINANCE?

In reality, NFTs for trade finance have been around for some time, though we’ve only just begun to describe them this way. You could think of trade finance as a practical implementation of the NFTs in the news today. Marco Polo is one such platform which already tokenizes payment obligations and invoices. 

Storing ownership data on blockchain reduces the costs and complications of paperwork that is otherwise required to verify the process. This is no small feat when you consider many of the processes and technologies underpinning trade finance have not been modernized in decades.

Take, for example, invoice financing. While a common activity, managing invoice payments and terms can be slow and inefficient for companies and their trading partners. They must navigate different currencies and jurisdictions, each with unique requirements in terms of contract terms and payments. 

By digitizing these manual processes and storing the data as an NFT, a technology such as blockchain has a real impact on reducing the costs, risks and delays to participants involved in trade finance. 

MAKING TRADE FINANCE MORE ACCESSIBLE TO SMEs

It is complicated and legally difficult to provide an optimal level of credit support to small companies. Nearly $1.5 trillion of demand for trade finance is rejected by banks, according to the Asian Development Bank, with 60% of banks expecting this figure to increase over the next two years. SMEs in developing markets that rely heavily on access to trade can be severely hindered through these outdated processes.

Tokenizing the payment guarantee of the final buyer can make it easier to provide this support, but there are important caveats to this. While tokenizing payment guarantees makes it cheaper and easier to execute credit support, there is no guarantee that these processes will then be used to extend supply chain financing through to the long tail of suppliers. It certainly could be used in this way, but it also might not be. This needs to be adopted at the industry level as suppliers would need to pass the NFT onto their own suppliers in turn for the tokenization of payment guarantees to truly be effective.

Although tokenizing the payment guarantee of the final buyer is a frequently mentioned use case, NFTs can also be used to digitize invoices for factoring, for example. Asset originators can tokenize invoices which can then be financed. This could be a very helpful step in enabling small companies to access the financing they need to grow trade.

EXPANDING THE TRADE ASSET ECOSYSTEM

Beyond their immediate benefits to banks and trading businesses, NFTs can also enable institutional investors to expand their activity in trade finance assets. These assets have historically struggled to scale for well-known reasons: investors find them complicated, there aren’t trusted quantitative benchmarks available and there often isn’t the necessary infrastructure to process them properly. Tokenizing trade finance receivables and payment obligations can simplify the process of asset transfer and solve one of these challenges, thus contributing to the scaling of trade finance assets.

Interest in trade finance as an asset class has grown over the past couple of years for reasons unrelated to NFTs. NFTs, as we think of them today, are relatively new and tend to be associated with digital content rather than physical goods. This framework suits trade finance assets because while they are linked to physical assets, the securities themselves are digital.

Programmable contracts used in combination with NFTs have shown great promise in tackling the problem of trade finance asset distribution. The use of the two functionalities together has promise as a way to support the building momentum around trade finance as an asset class.

OLD LEGACY SYSTEM MEETS NEW NFT BLOCK CHAIN TECH

In order to get the most out of NFTs and blockchain for trade finance–like any nascent technology–they must be used alongside existing systems. In reality, most businesses will continue to use their long-standing legacy systems throughout this transition to a fully digitized space. 

It is crucial, therefore, that disruption is kept to a minimum. NFTs and enterprise blockchain platforms should be viewed as a means of supporting and improving current processes, rather than replacing them. In other words, integration is the single most important factor in helping this industry to keep up with the rapidly digitizing world around it.   

Belly Cargo is Soaring to New Heights! What does that mean?

When consumers board an airline flight from Frankfurt to Amsterdam or Toronto to New York, they’re typically asking only these questions: “How crowded is the cabin? Does the plane have Wi-Fi? I wonder if I’ll get something to eat or drink”

Yes, they also know their bag is heading into the cargo hold, but they don’t really concern themselves with what else is being carried in that space – so called “belly cargo.”

Critical to the airlines’ flight revenues, though, belly cargo is a favorite method for businesses to ship goods from Point A to Point B in a timely and reliable manner. Pre-pandemic, in 2019, it is estimated that 47 percent of all air cargo was belly cargo – carried within the holds of regularly scheduled passenger airline flights. In turn, 53 percent was air freight, carried aboard dedicated all-cargo aircraft, called air freighters.

Belly Hold Cargo

During the height of the pandemic however, passenger flights dropped significantly or even halted totally. Now that’s reversing.  Fortunately, as airlines reintroduce more passenger flights and increase key route frequencies in 2022, our clients have more belly hold cargo options for shipping their goods.

The numbers show that belly cargo is soaring in use. During March 2022, Vienna International Airport reported strong tonnage increases for belly cargo on scheduled passenger flights – up 54 percent in January 2022 and 48 percent in February 2022, versus the same months in 2021.

Ecommerce growth is driving much global demand for belly capacity.  Certainly, shippers have much to cheer about right now with more flight options. In April 2022, United Airlines announced that it was offering the most robust summer transatlantic season in its history, an expansion with 30 new or resumed flights. So, its airline network will be 25 percent larger than in 2019.

One shift this year, though, is that many airlines are often positioning smaller aircraft on routes once served by larger aircraft; that can impact belly hold cargo capabilities. Crew shortages due to COVID-19 illnesses have also hampered some airlines in their return to service. But while it’s an evolving ‘airscape,’ shippers are generally in a better position with belly cargo options than during 2020 and 2021.

Making the Right Choices

We, Transmarine Cargo Services ship clients’ goods via truck, rail, and ocean ships, as well as within air freighters (dedicated all-cargo planes). Air freighters can transport hefty loads – everything from large machinery to building materials andagri produce like tea. In April 2022, Emirates SkyCargo reported that it had shipped more than one billion doses of Covid-19 vaccine doses globally.

Transmarine Cargo Services’ skilled employee teams of experienced logistics experts will work ‘round the clock to assist clients in handling and shipping their cargo. Onofre stresses that wise shipping decisions are made based on the client’s budget, timing, shipment consignment weight and measurements, plus the nature of products being shipped.

For example, are the goods being shipped as belly hold cargo permitted on a passenger aircraft per the International Air Transport Association’s (IATA) security regulations? And, “for belly hold cargo, can the goods secured on pallets fit within the aircraft contours,” Onofre asks? “But clients can rest easy as our experts will help them sort it all out.”

Tyre Market In Bangladesh : More Investors Needed

The demand for truck and bus radial tyres has been increasing rapidly in Bangladesh, but there is little domestic production in this segment to meet the rising demand.

The demand for tyres in Bangladesh has been increasing remarkably over a period of time due to the increase in number of vehicles both in commercial and personal space across the country. According to industry experts the demand for tyres has been increasing at an average rate of 9 per cent per annum due to the rising automobile sales, foreign investments and government support in the form of relatively lower import duties.

Though, it augurs well for local entrepreneurs in Bangladesh to grab the opportunity and ramp up their production, but the industry however has not risen up to the expectation and still remains largely dependent on imports. Currently Bangladesh imports tyres from countries like India, Japan, China, and Indonesia, as well as from a few European countries. The market size for automotive tyres in the country has now reached up to $58.90 million from $35.34 million in 2015, making it lucrative for both domestic and foreign players.

 Lacks investment and raw materials for production

Currently, only four local companies are making light automotive tyres taking advantage of the surging market. The companies including Gazi Group, Meghna Group, Rupsha Tyre, Apex Husain and a few others are manufacturing tyres for light trucks, microbuses, minibuses, motorcycles, auto-rickshaws and easy bikes. CEAT, originally an Indian brand, has agreed to set up a manufacturing plant with an investment of $4.99 million in collaboration with A K Khan Limited, a local company recently. 

The tyre manufacturing industry in Bangladesh is still lagging behind as the sector needs huge capital investments. The demand for tyre manufacturing in the country witnessed around 480,000 units annually in 2019 for heavy vehicles and private cars alone of which about 99 per cent met through imports only.

Moreover, scarcity of raw materials is another impediment for local tyre production in Bangladesh. But the situation may soon change as rubber, the main raw material used for making tyres, is currently setting a strong foothold in its production in the country. According to some reports, rubber production in the country has been growing at an average rate of 20.61 per cent per annum.

The tyre market in Bangladesh is dominated by the commercial vehicle tyre segment which takes about 80 per cent of the total demand for the product. Most of which however, is being met by non-branded Chinese tires which are often short of quality but low-cost.

Another large chunk of the Bangladesh tyre market is largely taken over by MRF Tyres, an Indian brand. There are however some private vehicles relying on more costly products like Yokohama, Dunlop and Maxxis offered by Japanese, Thai and US respectively. The Bangladesh tyre imports therefore exceed more than $11.78 million on importing more than 1.5 million tyres form different countries across the world.

Indian tyre exports on a roll

Post-Covid-pandemic exports from India increased in all segments of business and tyre exports too treading in the same growth path along with other commodities. India currently exports tyres to over 175 countries across the world. According to Ministry of Commerce and Industry’s latest statistics the country has exported $548.19 million worth of tyres in the year 2020-2021 (Apr-Nov).

According to Automotive Tyre Manufacturers Association (ATMA) healthy export growth in tyre exports has resulted in Indian tyre companies to invest more than $7 billion in the expansion of their capacities to meet the growing demand for tyres. According to ATMA tyre exports in the country in the FY21 have touched $189.39 million. The US tops the list of export destinations from India, accounting up to 17 per cent of the total export turnover. It is followed by Germany with seven per cent and Bangladesh with four per cent share.

Indian manufacturers are currently focusing on Truck & Bus Radial (TBR) tyre exports, as this segment has witnessed 30 per cent uptick in tyre exports from India recently. The exports from India to Bangladesh have increased in some commodities like rice and others in recent times.  The sudden spurt in demand for tyres in Bangladesh has helped Indian tyre manufacturers to expand their market in the neighbouring country. There are quite a few tyre manufacturers from Bangladesh who have entered into the market, but again most of them are involved in the production of tubes and tires for bicycles, rickshaws and auto-rickshaws. The demand for Truck & Bus Radial tyres has been increasing rapidly and domestically in Bangladesh there is little or no production in the sphere to meet the demand. Moreover, the increasing number of commercial vehicles and affluent consumers are also fuelling more tyre sales. Therefore, foreign players have entered into the market to fill the demand supply gaps in the Bangladesh tyre market. 

Tags : CEAT,

Up Above the World So High, We want the cargo in the Sky

Up Above the World So High, We want the cargo in the Sky

Global corporate giants such as General Electric (GE), Nestle, Abbott and others are not hesitating to take the aerial route to rush out of stock products for meeting market demand across geographies, unlike the usual seaborne shipment mode, one can sit up and take note of the current congestion, costs and timelines involved with regular shipping lines, containers terminals and ports world over.

Amid acute infant formula shortage in the USA, Nestle is flying in additional supplies from across the Atlantic to replenish supermarket shelves. Likewise, owing to work suspension at its Shanghai factory in zero Covid strategies implementing China, GE’s healthcare wing employed air freight to deliver a dye in short supply in the US, which is crucial for medical scans and tests. Similar was the case with Abbott, which was flying in powdered infant formula from Ireland, following contamination shutting down its plant in Sturgis, Michigan, even as the US Department of Defense is utilising contracts with commercial air cargo lines in ‘Operation Fly Formula’.

Meanwhile, top shipping lines such as CMA CGM, Maersk and Mediterranean Shipping Company (MSC) have eyed a plum business opportunity of catering to this rising air cargo demand by catapulting their shipping capabilities from the high seas into the blue skies as well. 

After record multi-billion dollar profits in the ensuing Covid years, ocean carriers are eager to capture the freight pie from the sky.

To better comprehend the emerging phenomenon, let us look at - 

What’s buoying freight from the sea to sky?

Emerging shipping line – airline collaborations

Boeing bullish on cargo aircraft demand

Advantages of air freight

What’s buoying freight from sea to sky?

According to a World Bank note, air freight is 12 – 16 times more expensive than sea transport and 4 – 5 times pricier than road transport. However, the Coronavirus pandemic, unprecedented e-commerce demand, congestion at ports, shortage of shipping containers and several other factors skyrocketed shipping costs through ocean carriers.  

A Nasdaq report noted that container management is still sub-optimal with continuing lag in container ships’ movement at ports, resulting in limited availability of containers as well as a delay in loading and unloading operations. Amidst these conditions, demand is still high, which is fuelling the surge in prices.  

Maersk also observed that up to 15 percent of global containership capacity was out of circulation in 2021 due to congestion. Similarly, Kuehne + Nagel highlighted that nearly 80 percent of global sea freight was disrupted due to congestion in north American ports. 

Shipping costs shot up to unprecedented levels, so much so that the gap between ocean freight and air freight has drastically narrowed, opening windows of opportunities for shippers and shipping lines.  

According to Ti Research, a strategic advisory services provider to the logistics sector, cargo owners have increasingly shifted from sea to air, bolstered by narrowed price gap which led to the air freight market doubling. 

Incidentally, global freight forwarding market sprung up to its strongest growth in a decade, logging 11.2 percent growth, valued at around $285 billion while the global tradeshow was up by 13 percent to $28.5 trillion. For further insights, consider the Cargolux case. After struggling for years to break even, air cargo player Cargolux witnessed revenues of $4.4 billion and a profit after tax of $1.3 billion in 2021, as much as 70 percent greater than in 2020. 

Moreover, easing global Coronavirus lockdown restrictions, booming demand for goods, propelled by economic stimulus packages in several countries, expanding e-commerce, rise in free trade agreements and other factors drove up growth and ultimately global digital freight forwarding market. 

Despite these favourable conditions, ocean carriers missed out on a chunk of this demand to air cargo due to a shortage of carrier capacity and port congestion, including a mismatch between supply and demand.

Compared to sea freight’s growth of 6.6 percent, estimated around $156 billion, airfreight growth was gauged to have doubled up to 15 percent, amounting to $128 billion while the latter’s rates rose up by nearly 70 percent. 

Amid this backdrop, air cargo dropped from being 12 times more expensive than ocean freight to just 2.5 times or ocean freight correspondingly became dearer in the past couple of years to narrow the gap so much, pushing traditional ocean shippers to not mind the slight premium on air freight. 

Despite the tailwinds for air freight, it continues to suffer from capacity constraints. Forwarders have concentrated on augmenting air freight capacity on key trade lanes as demand outstrips supply. Its capacity is estimated to be still nearly 11 percent lower than 2019. It is estimated that sea freight moves about 2 billion tonnes of global cargo when juxtaposed with 60 – 70 million tonnes flown through air freight.

Emerging shipping line – airline collaborations

On realizing the rise in air cargo demand, following the historic narrowing down of cost between sea freight and air freight, many shipping lines are inking pacts with airlines to cash in on the demand. Let’s take a look at these developments: 

CMA CGM – Air France – KLM 

The French shipping firm has signed an exclusive long-term strategic partnership in air cargo with Air France– KLM, flag carriers of France and Holland, to combine and complement their cargo networks for offering end-to-end logistical solutions, spanning the sea, land and air with a global footprint. 

In a decade long partnership, Marseille-based CMA CGM will strive to take a 9 percent stake in Air France – KLM, valued at $252 million. In addition to ‘significant revenue synergies, the collaboration boosts the ocean carrier’s non-maritime logistical capacities by augmenting an air cargo division it started a year ago. 

The three partners will operate an initial fleet of 10 full-freighter aircraft which will be augmented by 12 more on order. Six of them will be based at Paris-Charles de Gaulle airport and Amsterdam Airport Schipol, including the airlines’ existing belly capacity in 160 long-haul passenger aircraft.  

Both the partners will leverage their respective global sales teams under one voice, including Air France – KLM’s vast franchise, air freight capabilities and global cargo network, alongside CMA CGM’s large commercial network and global logistics platform for multi-modal freight services. 

Equipped with an extensive full freighter and wide-body belly aircraft network, Air France– KLM serve 295 destinations across 110 countries via Paris and Amsterdam airports, fitted with cutting edge cargo facilities. 

With teams manning 116 stations and covering a network of 390 handling stations spread across the globe, Air France – KLM’s commercial network happens to be one of the most resilient in the air freight realm, including expertise in lifting pharmaceuticals, perishables, express and others, plus one of the most advanced digital service solutions. 

According to the International Air Transport Association (IATA), air cargo operations of Air France, KLM and Martin air, a subsidiary of KLM rank them at the eighth spot in global air cargo traffic. Earlier, CMA CGM acquired CEVA Logistics in 2019, which also offers air freight with an annual capacity of 3.6 lakh tons through 14 international gateways and 1,000 facilities in 160 countries. 

Recently, CEVA Logistics won a prestigious multi-year contract from Italian Formula 1 racing ace Ferrari to be its team partner, which entails flying Ferrari equipment to Formula 1 races cross-country and cross-continent in a very short time-spaces.

In March 2021, CMA CGM created a new airline, CMA CGM Air Cargo, based out of Paris-Charles de Gaulle airport and dedicated to air freight. CMA CGM Air Cargo is equipped with four A 330 aircraft with a payload of 61 tonnes each, two B777s with a payload of 102 tonnes each and four more A350 aircraft slated to join its fleet in 2025. 

The French ocean carrier is a unique shipping line whose air freight operations are spread across three entities: CMA CGM Air Cargo, CEVA Logistics and Air France– KLM. It also acquired Ingram Micro’s Commerce & Lifecycle Services (CLS), Colis Prive and GEFCO.

Maersk Air Cargo

On April 8th, 2022 Maersk announced Maersk Air Cargo as its primary air freight offering to serve the logistical needs of its customers. Maersk Air Cargo is expected to operate full-fledged from the second half of 2022. 

The Danish carrier’s new air freight company emerged after transferring in-house aircraft operator Star Air, whose operations have been subsumed into Maersk Air Cargo. 

Maersk’s dedicated air cargo airline chose Billund, Denmark’s second-largest airport as its freight hub, from where it will deploy a controlled capacity of five aircraft, which include two new B777F and three leased B767 – 300 cargo aircraft. 

It will also add three new B767 – 300 freighters to serve US-China operations. These operations will initially be run by a third party operator. Eventually, Maersk aims to carry one-third of its annual air tonnage within its own controlled freight network. 

It is targeting to achieve this by a melange of owned and leased aircraft, mirroring the existing structure in its ocean fleet while the balance capacity will be met by chartered flight operators and strategic commercial airlines.

MSC & Lufthansa eye ITA Airways

Swiss ocean carrier heavyweight MSC and German Lufthansa airline together are interested in acquiring a stake in ITA Airways. Both the companies evinced interest with the Italian government to this end in January. 

The Italian government wants to sell the airline by June end and has set a deadline to receive binding offers by May 23. Besides MSC –Lufthansa, The U.S. Certares Fund along with Delta and Air France, and Indigo Partners investors have shown up as suitors. 

Though MSC and Lufthansa had asked for a 90-day exclusivity period back in January for fine-tuning their acquisition attempt, Italy did not relent and went ahead with a market-based approach. According to the Mediterranean nation’s economy minister Daniele Franco, a new buyer is expected to be at least 52 percent owned by a European entity. 

Incidentally, the German airline wants a minority stake in the purchase while the Swissshipping line is expected to take the majority stake in their bid. On fructification of this deal, Lufthansa envisages creating close commercial cooperation with ITA. Privatisation of ITA, successor airline of erstwhileAlitalia, will result in a reduced financial burden on the Italian state.

Boeing bullish on cargo aircraft demand

After a prolonged downside to demanding due to the Coronavirus pandemic and 737 Max model woes, Boeing, the top American aircraft manufacturer, is zeroing in on cargo business in the light of increasing airfreight demand. From 12 lines transforming passenger aircraft into freight planes, as many as 22 have proceeded to be so since the start of the Coronavirus pandemic. 

Alaska Air Group, America’s fifth-largest airline, made preparations to convert two midlife Boeing 737 – 800s into cargo aircraft, even as three Boeing 737 – 700s have been earmarked for freight in its fleet. 

According to an Investopedia report on Boeing, aircraft volumes have accelerated in the past six months, building on the initial demand driven by e-commerce in the early stages of the pandemic. 

Avalon Holdings Ltd, an aircraft leasing company highlighted that air cargo is expected to reach $150 billion in the current year, even as traffic is expected to double by 2040. Similarly, the Bureau of Transportation Statistics in the UShas projected the share of domestic and international airfreight to rise to 10percent in 2020 from 6 percent in 2018. 

In January, Boeing struck a $20 billion deal with Qatar Airways for nearly 50 of its 777-8, a new dual aisle jetliner, when it unveiled the model’s cargo version. Hindered by delays, Qatar airways is not likely to receive the cargoplanes until 2027, which prompted Boeing to salvage that order by agreeing to transform a third of an existing order of 60 777 – 8 passenger aircraft into cargo planes.

Advantages of air freight

It is the fastest mode of freight transport. As transit times are shorter, cargo must move quickly through the airport, unlike other forms of shipments. 

Air freight is generally deployed for time-sensitive commodities which may also carry high value per unit merchandise such as production samples, pharmaceuticals, fashion garments, documents, electronic consumer goods and perishable agricultural and seafood products among others.  

Air freight is also deployed to ship emergency spare parts and inputs needed for just-in-time production. 

Deploying air freight gives competitive advantages such as producers agreeing for short order times to avoid traditional shipments which may face delays in production or cargo clearance. 

Empowers diversifying strategy as manufacturers can ship products with shorter shelf-life, including offering bankable delivery of smaller volumes. On successfully establishing a market, manufacturers can set up supply chains using a mode of transport inexpensive than air freight. 

In some airports, all transactions are conducted electronically to clear cargo within a couple of hours round the clock.

Gangavaram Port to debut box terminal

Gangavaram Port to debut box terminal 

Gangavaram Port in India will build its first container terminal, which is scheduled to be operational by next year. The port stated the terminal is intended to offer momentum to the expansion of freight operations in the hinterland of Andhra Pradesh and neighboring industrial areas. 

With a cutting-edge terminal, the port said it will be able to provide significant advantages to the hinterland industries such as metal and minerals – ferroalloy, finished steel, aluminum, as well as seafood, agriculture, chemical, and pharma among others. With the arrival of the equipment, the project is likely to be fully commissioned by the second quarter of the fiscal year 2023.

India’s largest private ports and logistics company, Adani Ports and Special Economic Zone (APSEZ), completed the buy-out of Gangavaram Port last year with the acquisition of the Andhra Pradesh government’s stake of 10.4% for Rs 645 crore ($87.4m). The port handles a diverse mix of dry bulk commodities and it is the gateway port for a hinterland spread over eight states across eastern, western, southern and central India. 

Advantage Gangavaram Port : Location Location Location

Over the last decade, 30 km off the coast of Visakhapatnam, the outline of a vast infrastructure project has taken shape. Gangavaram Port has emerged as a prominent minor port on India’s eastern coast. Its 60 million tonnes in installed capacity is more than half of the 110 million tonnes that Kandla Port, the country’s largest handled last year; it is now rapidly scaling up.

At the several terminals of Gangavaram Port, ships laden with coal, limestone and fertilisers deposit their cargo without any of the delays associated with larger Indian ports. A dedicated railway line connected to the Howrah-Chennai route ensures that the cargo  reaches end customers quickly; finished steel makes up its main export.

It’s one of India’s few private sector port success stories and is testament to how a methodically built business backed by patient capital can generate significant returns for investors.  It was in 2003 that Raju secured a concession from the Andhra Pradesh government to develop a deep water port at Gangavaram. The location, with its deep draught, provided a unique advantage. Once developed, large ships of up to 200,000 dead weight tonnage (DWT) could enter and exit the harbour. This meant that large customers like the Vizag Steel Plant could import coal on larger ships, thus reducing the per-tonne cost, while the port could charge higher docking charges for the ships. The port also ensured that there were enough berths available round the clock, and marketed the fact that ships don’t have to wait.

In a short period of time Gangavaram Port was able to draw away significant business from the nearby Visakhapatnam Port that is run by the central government. The port also has a natural monopoly, as Kakinada Port is too far south.

According to an analyst who tracks port companies, Gangavaram Port benefited significantly due to the inability of domestic coal production to keep pace with demand in the last five years. He pointed out how little control port companies have over the pace of growth in cargo. The only areas they can control are making sure that vessel operators are served promptly and capacity is expanded ahead of demand. The next round of capacity expansion will probably include an LNG terminal to cater to the growing gas imports to cater to city gas distribution companies.

At present, coal imports comprise 63 percent of cargo handled and a decline in imports could pose a risk. Total imports of all types of cargo rose by 25.78 million tonnes in FY18 to 15.08 tonnes in the first half of FY19. Revenues for FY18 rose 29.6 percent to ₹812 crore, while profit after tax rose 196 percent to ₹269.56 crore. The company has been able to prepay its loans out of internal accruals.

 

What are APIs in Freight and Logistics? Everything You Need to Know

What are APIs in Freight and Logistics? Everything You Need to Know

APIs changed the E-commerce landscape. API integrations digitally automate processes and data across applications to make the flow of information for businesses and customers seamless and instantaneous.

Since Salesforce launched the first widely acknowledged API in 2000, APIs have proliferated to revolutionize how we do business.

From Facebook Messenger, PayPal payment options, to booking a holiday online, you’ve likely used APIs without even realizing it. That’s how fundamental they are to eCommerce and the development and dissemination of information on Web 2.0.

“What are APIs in shipping?”

What are Shipping APIs in Freight and Logistics?

API is an acronym that stands for Application Programming Interface. APIs are generally cloud-based intermediaries that allow applications with different designs and code to exchange data and information with each other.

While there are standard industry integrations that make it easier to share data and information, there are still many Transport Management Systems (TMS) that are independently built in-house.

This presents a challenge as both proprietary and in-house systems aren’t usually built to exchange data. This presents a logistical problem, particularly globally, where big data can be overwhelming for businesses with manual processes.

APIs act as an intermediary between systems to allow them to communicate between businesses and their customers.

How do Ocean Freight and Logistic APIs Work?

APIs are middle-men between applications that are unable to speak to each other.

According to MuleSoft, an easy way to imagine how APIs operate is to think about them as a bilingual waitstaff in a restaurant.

There are customers, a cashier, and chefs. All are independent of each other, and to ensure effective communication between all these parties, waitstaff is required.

Let’s also add another element to this analogy and say all parties speak different languages, and only the waitstaff can speak all three languages.

Waitstaff can communicate orders between customers and chefs, deliver the food, communicate the meal cost, and transact money.

This is essentially how an API operates. They speak the various languages needed to communicate between applications, and what are the correct actions needed to deliver data and a meaningful user-experience.

Without this core element in eCommerce, business would grind to a snail’s pace.

Just like the waitstaff analogy, the  API is the middle-man between customers, freight forwarders, NVOs, carriers, and third-party logistics providers through the Freight Commerce Platform.

The API allows shipper TMS’s to communicate directly with ocean carriers and other partners in shipping. Integration with the Freight Commerce Platform also offers visual displays of real-time data directly from carriers in a user-friendly manner.

Advantages of APIs for Freight and Logistics

Now that we've established that APIs connect business applications, you still might be wondering what the advantages of using APIs for your shipping business are. BBVA outlines some benefits of APIs, and they include:

Automation - APIs create automated workflows that mostly eliminate the need for manual input

Customization - APIs can be personalized to create custom user experiences to match customer expectations

Embedding Functions - APIs can embed content on any website more easily providing a better user experience

Adaptation - APIs have a lot of flexibility to be updated as organizations and processes change

What’s the Difference Between APIs and EDIs in Shipping?

Before jumping into what these two forms of electronic exchanges are, let’s first breakdown what they stand for:

API - Application Programming Interface

EDI - Electronic Data Interchange

First, EDIs and APIs are both used to electronically exchange data and information between enterprises in Shipping. The first commercially used EDI was established in 1975, and shippers, freight forwarders, NVOCCs, ocean carriers, and 3PL providers all utilize them.

While both EDIs and APIs serve the purpose of exchanging data, there are differences between their applications.

EDIs can only transmit data with formats such as ANSI, EDIFACT, TRADACOMS, VDA, XML, or UBL. However, APIs can transmit data between systems and do not need to change their data format, like EDIs, to transmit information

EDIs may not be available for small to medium-size businesses as the cost and time to implement them is significant, while APIs are generally fast and cheaper

EDIs are slowly becoming obsolete and will eventually be replaced with APIs as they’re easier to implement, maintain, and update

Another important difference is that despite APIs being web applications that act as middle-men, they're often marketed as products. API customizability gives businesses the ability to turn something as slow and inefficient as sharing PDFs and Excel documents into a meaningful real-time process that can be viewed instantly online.

EDIs, as useful as they are now, will probably hold you back from realizing your company’s potential to digitalize operations for greater success.

Example of Ocean Shipping API

A contract management solution can use APIs in shipping. These APIs act as aggregators for ocean carrier rates, inventories, and schedules and present all this data to shippers and freight forwarders.

Shippers and BCOs - By connecting their TMS with an API, such as the BlueX Rate Management System, Shippers, and BCOs can directly review rates and book shipments with ocean carriers

Freight Forwarders - These APIs can provide forwarders with customer spot and contract rates in real-time, allowing them to book freight more efficiently in less time

Ocean Carriers - Carriers can instantly relay spot and contract rates and inventory and schedules, without the need for manual data entry, which can delay the dissemination of updates

What to Consider When Designing an API

With so many APIs in the marketplace and industry, simply offering your integration to customers and businesses might not be enough.

While the ocean freight industry was slow to adopt APIs, it won’t be long until enterprises figure out that they can market and treat their API as a product instead of just integrations.

According to IBM, there are three considerations you should think about when designing an API.

API Branding and Positioning - Enterprises need to consider the technical experience of the developers they market to and what their end-user experience wants. Positioning the branding with this in mind is essential

API Awareness Promotions Strategy - With so many competing API solutions in the market, raising awareness among developers is essential for your API's success

Nurture API Lifecycles - You should consistently enhance your service level agreements and testing environments with version upgrades, support, and other operations as your API matures along its life cycle

A final consideration is also to review Digital Container Shipping Association (DCSA) definitions for open source API development. These definitions can aid enterprise APIs to be DCSA standard-compliant in tracking and tracing on for customers.

APIs are what drive online ecosystems. Without them, connecting applications and services would be a nightmare. While EDIs have served their purpose well since the 1970s, freight and logistic APIs in ocean shipping offer an experience to streamline and innovate how we all do business.