Trends and News for SMBs | Mid-June

Trends and News for SMBs | Mid-June
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Keep your business up to speed with the latest news.

Ocean shipping prices continue to rise  

Ocean shipping prices are nearing pandemic-era highs due to congestion caused by vessel diversions around the Red Sea, among other factors, The Wall Street Journal reports. The Port of Singapore, a global container hub, is experiencing significant delays and increased costs. Similar backups are happening off the coasts of Singapore, Malaysia, South Korea, China, and in European ports like Spain. 

Houthi rebel attacks in the Red Sea have closed the Suez Canal since late last year, extending voyage times and stranding containers. Consequently, logistics for retail and manufacturing goods are complicated, with fears that peak season demand will worsen the situation and push freight rates closer to the pandemic levels, where costs surged past $20,000 per container. 

The average cost of shipping a 40-foot container has already tripled from last year. Supply chain challenges are compounded by other factors, such as U.S. importers pulling orders ahead of new tariffs, droughts affecting the Panama Canal, and potential dockworker strikes in the U.S. 

Freight specialists predict that early cargo bookings to avoid higher costs and delays could exacerbate congestion. Meanwhile, the costs of leasing sea containers have surged, making it a challenge to businesses to plan and guarantee their holiday inventory.  

Thailand’s Leading Port Accelerates Expansion to Boost Imports and Exports 

Thailand has accelerated work on Laem Chabang Port to get the project back on schedule after experiencing delays, Pattaya Mail reports. The port, Thailand’s largest, handles over 11 million TEUs annually compared to just 1 million at Bangkok Port. Currently undergoing its $927 million Phase 3 expansion, Laem Chabang’s capacity will increase to 18 million TEUs per year upon completion in 2029. 

The pollution caused by trucks traveling to Bangkok Port has led Bangkok Governor Chadchart Sittipunt to propose relocating Bangkok Port to Laem Chabang. This move would eliminate an estimated 1 million freight truck trips from the city annually, reducing air pollution and easing traffic congestion in the notoriously congested city. 

Relocating the port would also ensure that container ships no longer need to use the Chao Phraya River, allowing flood prevention projects to proceed. Unlike Bangkok, Laem Chabang is considered an environmentally friendly port with a railway connection to an inland container depot in Bangkok. 

However, Thailand’s central government appears to disagree with the plan, the publication reports. The transport ministry has stated it has no plans to relocate Bangkok Port, and no government agency has adopted the proposal. The transport ministry also noted that any port relocation would have far-reaching effects on Thailand’s imports and exports. 

Laem Chabang Port is currently developing a single rail transfer operator system to improve links with the rest of Thailand. The port also plans to adopt autonomous electric trucks to boost sustainability. Land reclamation work, vital for the expansion project, is progressing, with contractors increasing excavation rates. Thailand hopes to establish itself as a regional logistics hub thanks to the expanded port. The enhanced capacity is set to reduce national logistics costs from 14% of GDP to 12% of GDP. 

 

Asian Ports Dominate World Bank Rankings 

Asian ports continue to dominate the World Bank’s annual Container Port Performance Index, Maritime Executive reports. This index, which ranks ports based on the duration vessels spend in port, placed Shanghai’s Yangshan at number one for the second consecutive year. Malaysia’s Tanjung Pelepas Port secured the fifth spot, with many of the highest rankings going to efficient second-tier ports rather than the largest ports worldwide. 

Asia’s export-driven economies accounted for 13 of the top 20 ports in the index, which was also created by S&P Global Market Intelligence. Six Chinese ports were among the Top 20. Turloch Mooney, Head of Port Intelligence & Analytics at S&P Global Market Intelligence, noted, “The highly interconnected nature of container shipping means the negative effect of poor performance in a port can extend beyond that port’s hinterland and disrupt entire schedules. This increases the cost of imports and exports, reduces competitiveness, and hinders economic growth and poverty reduction.” 

Singapore took the 17th position, while Antwerp and Rotterdam ranked 76th and 91st, respectively. As in previous years, US ports performed poorly in the report, with Long Beach and Los Angeles ranking 373rd and 375th, respectively. Not a single US port made the top 50; Charleston was the highest-ranked at 53rd place, and New York ranked 92nd. 

The authors emphasized that efficient container ports are crucial for an export-led growth strategy. Martin Humphreys, Lead Transport Economist at the World Bank, told the publication, “Major ports need to invest in resilience, new technology, and green infrastructure to ensure the stability of global markets and the sustainability of the shipping industry.” 

 

Jokowi Urges Batik Designers to Diversify Range and Seek New Markets Abroad 

Indonesia’s “batik” printed textiles have garnered many admirers beyond the archipelago. When South African leader Nelson Mandela visited Indonesia in 1997, he delighted Indonesians by wearing a batik shirt. Mandela continued to wear these shirts, making them his signature look during his time in office. 

Now, Indonesia’s outgoing President Joko “Jokowi” Widodo has urged the country’s batik designers to innovate their designs to boost fabric exports, South China Morning Post reports. “For novelty, let’s go back to the designs, to new colors. I believe our batik could be used for carpets and interior designs, and these innovations would elevate the batik brand to the next level,” said Jokowi, according to the publication. 

According to Statistics Indonesia, the batik export value in 2022 reached $64.56 million, a 35% increase from 2021. In a recent article for SCMP, Andrew Sheng drew parallels between the skills required to create prized fabrics and Asia’s integrated circuit chip industry. Silicon Valley pioneers initially created chips by covering a block of germanium with black wax and then selectively removing it to generate positive/negative signals. 

Sheng noted that many of Asia’s chip-making powerhouses, such as Japan, South Korea, Taiwan, and mainland China, have long traditions of wax tie-and-dye textiles. These techniques involve using wax to create intricate designs and demand great attention to detail. “The best semiconductor chips require the finest workmanship and dedicated human engineering, as well as clustering or collective social groupings. The same passion that produced the best batik or ikat textiles for centuries is now producing the best semiconductor chips,” said Sheng. “It does not matter whether the best-integrated circuit designs are from the United States; the fact that such designs can be engineered in Asia is a testament to long traditions of dedicated craftsmanship.” 

We at Ship4wd are dedicated to helping small and mid-sized businesses get the most out of their shipping processes. Regardless of their experience in logistics, business owners can count on us to get their shipments to where they need them.

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