Truck capacity reductions reach record for 2008
More grim news on top of falling air and ocean traffic: the amount of truck capacity getting yanked out of the market has reached record levels:
The latest bankruptcy report by investment bank Avondale Partners shows 785 trucking company failures in the third quarter, bringing the total number of companies shutting down in 2008 to 2,690. The rate of failures is almost 50 percent higher than last year’s third quarter. The number of individual trucks exiting the market due to bankruptcies so far in 2008 now tops 127,000, or 6.5 percent of the nation’s capacity.
“If the fourth quarter continues to develop at current pace, 2008 will become the worst year to be a marginal trucker and could be the best year to have survived,” said Avondale Partners managing director Donald Broughton. “If these trends continue, when demand returns it will have an even more powerful impact than it did last cycle and capacity will get very tight, very quick.“
Emphasis ours.
Transportation infrastructure initiatives to boost employment?
October 31, 2008 by SwizStick
Filed under Misc Logistics, QuickNews, logistics
Infrastructure was front and center yesterday at a hearing held by the House Committee on Transportation and Infrastructure, “Investing in Infrastructure: The Road to Recovery.” The hearing primarily focused on how transportation infrastructure investments can jumpstart the nation’s fledgling economy through job creation at a time when the U.S. construction agency’s unemployment rate is at 9.9 percent, which the House T&I Committee Chairman James L. Oberstar (D-Minn.) said in his opening statement is the highest among any industrial sector.
What’s more, the American Association of State Highway and Transportation Officials (AASHTO) said in January that there are 3,071 transportation infrastructure projects—like maintenance and the repair of existing facilities—that could be kicked off for $17.9 billion that could be under construction within 90-120 days if funding were available. And an editorial in the Tuesday, October 28 edition of the Boston Globe noted that “each $1 billion invested in mass transit and highways leads to 47,500 well-paying jobs.”
They also not the CSCMP’s comments:
At the Council of Supply Chain Management Professionals (CSCMP) Annual Conference held in Denver earlier this month, Janet Kavinoky, Director, Transportation Infrastructure, at the U.S. Chamber of Commerce, said in a presentation on transportation infrastructure that much is at stake when it comes to transportation infrastructure initiatives, and if the necessary steps are not taken in the U.S. congestion will continue to worsen.
Container lines slash capacity from Asia-Europe trade lanes
October 31, 2008 by SwizStick
Filed under Seafreight
Update: 10-31-08
APL is slashing capacity in Asia-Europe and the Transpacific as well:
APL’s capacity in the Asia/Europe trade would be reduced by nearly 25 percent, with about 20 percent of the company’s transpacific tonnage also to be removed from service, said Ron Widdows, chief executive officer of APL’s parent, Neptune Orient Lines. Key changes are also underway in the intra-Asia trades, he added.
For quite some time carriers have been pinning their hopes for growth and profits on the fast growing Asia-Europe trade lanes. Indeed, carriers were planning on putting much of their new capacity coming online in 2009-2010 into the Asia-Europe trade lanes. Now with Asia-Europe demand collapsing, along with carrier rates, not to mention they are entering their seasonal winter slack period, carriers are pulling out. Maersk is removing nine containerships from Asia-Europe:
The Danish line confirmed this morning that its AE8 service will be temporarily suspended from mid-November, but has made no decision about when it may be reinstated.
The slack period usually lasts from about now to May, when cargo volumes pick up in preparation for the pre-Christmas sales, but that seasonal upturn never occurred this year.
The latest withdrawal of capacity from this route follows the termination of Maersk’s AE5 loop in May.
Maersk is one of a number of carriers to axe Asia-Europe services in the face of depressed demand and plunging freight rates.
Earlier this week, New World Alliance lines APL, Hyundai Merchant Marine and MOL announced plans to reduce capacity on this route by about 20%.
Maersk’s cuts are a little less draconian. Stopping the AE8 and AE5 services will nominally remove around 15% of slots. However when taking into account larger ships introduced on some other Maersk Line Asia-Europe strings, the line will have made a net reduction of about 10% of westbound capacity.
“The current Asia-Europe market is characterised by unsustainable rate levels, said Maersk Line’s group senior vice-president Robert Steen Kledal.
“The changes will support our market position and ensure that our network is sustainable in the long-term.”
As far as Transpacific is concerned we’re expecting capacity to be pulled out of the market as part of carriers’ winter deployment schedules. However, unlike last year, I expect cuts in capacity and service to be deeper and last longer, and some services won’t be coming back at all. So far I’m only aware of two carriers who have announced cuts in their winter services and at first glance they appear to be minor. However we’re expecting more.
Hat tip to World Trade Magazine.
Airline traffic : further declines in September
IATA reports more dire news on worldwide airline traffic in September:
“The deterioration in traffic is alarmingly fast-paced and widespread. We have not seen such a decline in passenger traffic since SARS in 2003,” said Giovanni Bisignani (pictured), IATA’s director general and chief executive officer. “Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand. At this rate, losses may be even deeper than our forecast US$5.2 billion for this year,” said Bisignani.
Cargo
This is the worst decline since the technology bubble burst in 2001.
Declines in airfreight have slowed year-to-date growth to 0.1 per cent, with all regions except the Middle East and Africa, reporting negative results.
Just plain ugly.
