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Asia gateways scramble as Gemini alliance plans big shift to feeder port network

Gemini Cooperation, the Maersk/Hapag-Lloyd alliance due to launch next February, is set to downgrade some of the carriers’ current key cargo gateways in Asia to feeder ports under its proposed “hub-and-spoke” network linking Asia with Europe, the Mediterranean and North America.

The new partnership will consolidate calls at just five main hubs in Asia — Shanghai, Ningbo, Yantian, Singapore and Tanjung Pelepas in southern Malaysia.

The move has already prompted Busan, one of the ports most affected by the downgrade, to urge Maersk and Hapag-Lloyd to rethink their Gemini vessel schedules and restore some calls at the South Korean gateway. Sources hope that other carriers or alliances can fill some of the gaps in direct calls left by the Maersk/Hapag-Lloyd alliance.

Under the preliminary Gemini network, Busan will lose all its main line calls by Maersk and Hapag-Lloyd on Asia-Europe, Asia-Mediterranean and trans-Pacific services. Direct calls on two Asia-US East Coast and one Asia-Middle East services will be retained, preliminary schedules show.

Hong Kong will also cease to be a gateway, with cargo trucked or feedered to Yantian, one of the four Shenzhen terminals.

Highlighting the shift, Hutchison Port Holdings Trust (HPH Trust), the Singapore-listed subsidiary of the global operator, said as a major export hub for the US and European export markets, Yantian has been selected by the Gemini Cooperation as a main port of call in South China.

“For [Hong Kong’s] Kwai Tsing Terminals, it is anticipated that some of Maersk’s and Hapag-Lloyd’s throughput currently handled in Hong Kong may shift to Yantian when the operation starts,” Hutchison said in its annual results commentary on Feb. 7. “HPH Trust will work closely with Gemini Cooperation to identify any new opportunities which the new cooperation may bring.”

HPH Trust controls Hongkong International Terminals and Yantian International Container Terminals.

Xiamen, Kaohsiung also losing direct connectivity

Other ports that will lose direct connectivity include Xiamen in eastern China, which has calls by eight existing Maersk Asia-Europe and trans-Pacific services; Dalian in northeast China; Kaohsiung in Taiwan, which has calls by five Hapag-Lloyd trans-Pacific services; and Ho Chi Minh/Vung Tau in Vietnam. Vung Tau is a significant port for both Maersk and Hapag-Lloyd, with a total of 10 services, including eight on the trans-Pacific, calling there.

Several ports in Japan, notably Tokyo and Kobe, will also become feeder ports.

“We’re hoping shippers, forwarders and the ports themselves can persuade Maersk and Hapag-Lloyd to retain some direct calls on the main trades as the network plan is confirmed,” a senior executive at an Asia-based freight forwarder told the Journal of Commerce.

Lee Eung-hyuk, director of international logistics at the Busan Port Authority, said the port handles about 1 million TEUs of export and import cargo on the European trade lane alone with between 14 and 16 weekly services, depending on the time of year. Four are operated by the Maersk-Mediterranean Shipping Co. 2M Alliance and five by THE Alliance, of which Hapag-Lloyd is part.

“Maersk and Hapag-Lloyd’s announcement that they will not call at Busan Port on their Europe services will be a significant disadvantage for their existing customers, [such as] Korean import and export shippers,” Lee told the Journal of Commerce.

“For this reason, we think the decision may still be reversed in the future,” he added.

In Hong Kong, Hapag-Lloyd is currently the second-largest carrier behind Cosco Shipping in terms of scheduled capacity on Asia-Europe and North American services, deploying approximately 615,000 TEUs a quarter, according to figures from British maritime consultancy MDS Transmodal.

Maersk, meanwhile, deploys about 261,000 TEUs of capacity per quarter on North American-related services calling at Hong Kong, MDS Transmodal senior consultant Antonella Teodoro, told the Journal of Commerce.

All that volume would potentially shift to nearby Yantian in eastern Shenzhen under the Gemini service revamp.

Further deep-sea decline for Hong Kong

Maersk’s Asia-Europe and Mediterranean services are handled by the carrier’s hub at Nansha, about 60 miles northwest of Hong Kong and the main international gateway for Guangzhou.

Roberto Giannetta, chairman of the Hong Kong Liner Shipping Association, said the move by the Gemini Cooperation to drop Hong Kong mainline calls continues the decline in deep-sea services that has been seen for some time. This is reflected in total container volumes, which fell to 14.3 million TEUs last year, the lowest since 1998.

Giannetta said the slide was exacerbated by COVID-19 pandemic restrictions which largely prohibited truck traffic from moving between Hong Kong and adjacent Shenzhen, with carriers encouraging shippers to use Shenzhen port rather than Hong Kong.

“The lack of strategy on the part of Hong Kong port to intentionally promote and attract services compared to significant and meaningful planning on the part of all other regional ports has also contributed to the decline,” Giannetta told the Journal of Commerce.

Commenting on the sidelining of Hong Kong by the Gemini alliance, a spokesperson for the Hong Kong Transport and Logistics Bureau said the government will actively work with the industry to explore new external markets.

“Specifically, we need to expand the international connections of the port and increase the volume of origin and destination cargo handled by the port, so as to solidify our status as the transshipment hub in Asia,” the spokesperson told the Journal of Commerce.

Customers ‘skeptical’ at this point

Maersk said Gemini’s 26 mainline services across seven trades including Asia-Europe, the US East and West coasts, Asia-Middle East and trans-Atlantic will be complemented by 32 feeder shuttle services, including 13 in Asia.

Hapag-Lloyd said 95% of the Asia-Europe volume would get faster or stay the same using the hub and shuttle network, although that would drop to 85% on the trans-Pacific based on forecast transit times. Schedule reliability would be 90% across four of the main trades, Hapag-Lloyd said in a Gemini presentation.

“The potential saving in time and cost made on their core loops will be translated into more third-party feedering,” a senior executive at an Asia carrier told the Journal of Commerce. “From what we hear at this stage, customers, overall, are rather skeptical it will work.”

The Gemini combination will comprise a pool of about 290 vessels with a combined capacity of 3.4 million TEUs, of which Maersk will deploy 60% and Hapag-Lloyd 40%.

Both Hapag-Lloyd and Maersk said the service details provided when the Gemini alliance was announced last month were “preliminary.” The carriers said they were also studying the possibility of operating their own services outside the alliance on Gemini’s seven main trades.

“The Gemini Cooperation will cover most of our services on these trades, however, we may choose to continue to operate or participate in a few parallel services outside Gemini, just like we do today,” a Maersk spokesperson told the Journal of Commerce.

Added a Hapag-Lloyd spokesperson: “We are currently reviewing our network outside Gemini Cooperation but have not finalized our plans yet.”

Source:

Wallis, K. (2024, February 23). Asia Gateways Scramble as Gemini Alliance plans big shift to Feeder Port Network. Journal of Commerce. https://www.joc.com/article/asia-gateways-scramble-gemini-alliance-plans-big-shift-feeder-port-network_20240223.html

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Canada’s two major railways could see strike in May: Teamsters

Tensions between the Teamsters Canada Rail Conference (TCRC) union and railways Canadian National and Canadian Pacific Kansas City (CPKC) are ramping up after the Dec. 31, 2023 expiration of three major collective agreements.

About 9,300 workers at the railways are covered by the agreements.

“CN and CPKC aim to eliminate all safety-critical rest provisions from our collective agreements. These provisions are necessary to combat crew fatigue and ensure public safety. We want to reach a negotiated settlement, but their demands are non-starters for the Teamsters. Safety is non-negotiable,” national president of Teamsters Canada, François Laporte, said in a release.

“Canadian railroads don’t care about supply chains, farmers, or small businesses. They care about their bottom line, and squeezing everything they can out of their employees. If they need to manufacture a work stoppage to get there, they won’t think twice,” added the president of the TCRC, Paul Boucher.

Negotiations have come to a standstill and CN and CPKC have filed notice of disputes with the federal government, requesting government mediators be appointed. Teamsters points out the notice of dispute starts the legal countdown to a possible strike or lockout, which could come as soon as 81 days after government mediators are appointed. This could lead to a labor disruption as early as May.

Source:

Menzies, J. (2024, February 20). Canada’s two major railways could see strike in May: Teamsters. Truck News. https://www.trucknews.com/human-resources/canadas-two-major-railways-could-see-strike-in-may-teamsters/1003182139/

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NY-NJ marine terminal chief expects new ILA labor contract before October

The chief of the largest container terminal at the Port of New York and New Jersey said he’s confident a new contract with longshore workers can be reached before the current deal’s expiration, something that would avert a potential strike later this year at East and Gulf coast ports.

Gary Cross, president of Maher Terminals, said the current leadership of the International Longshoremen’s Association (ILA) “are the most business-minded” union officials that he’s dealt with during his tenure in logistics. Cross delivered the remarks last week at the New York-New Jersey Foreign Freight Forwarders and Brokers Association’s annual dinner, where he was honored for his 45 years in the industry.

His message came after the governor of South Carolina struck a more defiant tone about ceding more power to unionized dockworkers at one of the largest ports in the Southeast.

Maher, which handled about 2 million of the approximately 4.2 million containers that crossed the New York-New Jersey docks last year, is also the port’s largest employer, with some 1,500 ILA members and management staff.

While not directly involved in current labor negotiations, Cross said the ILA and the United States Maritime Alliance (USMX), which represents port employers, “are dedicated to making sure cargo flows and they are dedicated to getting a deal done.”

“There’s no doubt in my mind that we’ll have a new deal before the expiration of the current contract,” Cross said. “I’m not losing any sleep over whether we’ll have a contract before the expiration of this one.”

Cross delivered the remarks as shippers begin to plot which ports and service routes they’ll use in their 2024 contract negotiations with ocean carriers. The ILA and USMX started informal talks on a new six-year collective bargaining agreement in 2022 in hopes of reaching an agreement before expiration of the current contract on Sept. 30.

The National Retail Federation (NRF), though, said recently it was “concerned that the discussions have been on hold for months and talk of potential disruptions has increased.” The NRF urged both sides to “return to the table as soon as possible and resume negotiations.”

John Nardi, a USMX director and president of the Shipping Association of New York and New Jersey, said his group and the ILA are still negotiating a master contract that would cover all 45,000 longshore workers at East and Gulf coast ports.

“We are talking and trying to find a way forward,” he said.

Nardi did not comment on what’s holding up further progress on contract talks. However, ILA officials have said publicly that alongside higher wages, they want local agreements that would add supervisory and foreman roles for union longshore workers at ports along the Southeast and Gulf coasts.

Details please refer to JOC news.

Source:

Angell, M. (2024, February 6). NY-NJ marine terminal chief expects new ILA labor contract before October. Journal of Commerce. https://www.joc.com/article/ny-nj-marine-terminal-chief-expects-new-ila-labor-contract-october_20240206.html