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European market review and group developments

Aug 7, 2024 | , , , , , , , , , , , , , , , ,

The European freight market continues to face a complex landscape, characterised by fluctuating demand and evolving capacity challenges. In this review, we examine the current state of the road freight market and highlight recent group developments, including the acquisition of a Portuguese intermodal specialist and the launch of a new container shipping service.

Road Freight Market
Despite some positive economic developments, the road freight sector remains challenged by uncertain demand, with no indication of a trend reversal over the summer. This persistent issue is also evident in the capacity trends reported by TIMOCOM’s index. Significant capacity bottlenecks were noted in the first quarter, primarily due to reduced truck fleets.

This trend persisted into the second quarter, with the ratio of freight to cargo space standing at 77:23, dropping further to 73:27 in July, which is typical for the summer months. Despite these challenges, freight rates remain high. Although diesel prices have moderated, other costs, such as driver wages, continue to rise.

The TEG Index tracked a 6% year-on-year increase in haulage prices in July 2023, reflecting the rising costs that hauliers face. This index typically shows prices stalling over the summer before recovering in September, indicating that current trends are in line with historical patterns.

Acquisition of Portuguese Intermodal Specialist
We are pleased to announce the acquisition of Portuguese intermodal specialist KLOG. This acquisition allows us to enhance our intermodal transport capabilities, particularly for customers with significant continental volumes or those aiming to meet decarbonisation targets.

KLOG is renowned for its efficient, reliable, and cost-effective intermodal services to and from the Iberian Peninsula, serving some of Europe’s largest retailers, brands, and manufacturers. Their established rail services to and from Germany and Poland, via hubs in Spain and France, present significant opportunities for shippers trading between Northern Europe and Iberia.

KLOG currently operates two block train departures a week to and from their Portuguese rail hub to Poznan in Poland and Duisburg in Germany, routing via France and Spain. 

These services are complemented by short sea/rail connections. Additionally, four block trains run weekly between Entroncamento (Portugal) and Tarragona (Spain), with a further three block trains operating weekly in Spain between Tarragona, Bilbao, Valladolid, and Sevilla.

A wide range of 45’ equipment is available for all services, including curtain-side, dry container, and refrigerated containers, as well as 20’ ISO tanks. Last-mile delivery and/or collection from the Tarragona hub is available with e-trucks as an option.

Key Benefits:
– 24/7 Control Tower Service
– High rail frequency with daily departures
– Reliable lead-time comparable to road transport
– Sustainable solutions available year-round
– Reduction in truck usage and reliance on scarce driver resources
– CO2 emission reductions of 90% compared to road alternatives

New container shipping service connecting Spain, Portugal, and Northern Europe
Ellerman City Liners, a group container shipping line with over 120 years of history, has introduced a new joint service with CMA CGM, connecting Spain, Portugal, and Northern Europe. This service aims to address ocean freight capacity shortages on key trade lanes, providing speed, service, and certainty to supply chains.

The first vessel of the new iNEX service departed Rotterdam on 9th July 2024. This service enhances efficiency, expands geographical scope, and reduces the carbon footprint for shippers. Operated with two 1,400 TEU vessels, the weekly sailing schedule includes the ports of Cadiz, Setubal, Leixoes, Ferrol, Tilbury, Dunkirk, and Rotterdam.

By working closely with partners Ellerman and KLOG, we are expanding the intermodal options available to our customers, delivering cost-effective and sustainable services as part of our commitment to decarbonising the supply chain.

Metro’s integrated transport services streamline import and export product flows across Europe, North Africa, and Turkey. By combining road, intermodal, and short sea modes, we ensure more efficient cargo transportation, reduced delivery times, and cost savings.

Our extensive partner network, multi-modal transport solutions, and MVT supply chain platforms are designed to meet even the most complex requirements across multiple regions, vendors, and customers.

Discover how we can enhance your trans-continental trading. EMAIL our Chief Commercial Officer, Andrew Smith, to arrange a consultation and scoping discussion.

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Rising lorry thefts prompt calls for government action

Aug 7, 2024 | , , , , , , ,

The Road Haulage Association (RHA) has urged the government to establish a specific offence for freight crime and to develop more secure truck stops. This call comes in response to organised crime gangs (OCGs) increasingly targeting cargo, with over £1 million worth of goods stolen in a single incident this year.

Funded by the logistics industry, the National Vehicle Crime Intelligence Service (NaVCIS) collaborates with police forces across England and Wales to tackle regional lorry theft issues. An officer from NaVCIS described the situation to the BBC as “serious and organised crime,” explaining that these gangs have a deep understanding of supply chains, surveillance, and policing. They use underground networks to handle large quantities of stolen cargo for substantial sums of money.

OCGs often target motorway service stations and truck stops on major routes and their methods include slashing curtains or using bolt cutters on trailer doors until they find valuable loads. Popular items targeted include alcohol, tobacco, electronics, and clothing, which are then sold online, in wholesalers, backstreet cash-and-carries, car boot sales, and markets.

While precise figures for lorry thefts in the UK are unavailable, NaVCIS reported over 5,000 incidents in 2023, equating to about 14 thefts per day and nearly £70 million in losses. Industry experts believe the real figure could be up to seven times higher. Even unsuccessful theft attempts are costly, with each curtain tear repair costing around £100, ultimately driving up consumer prices as these costs ripple through the supply chain.

The need for secure truck stops
NaVCIS, RHA, hauliers, and drivers all emphasise the need for more secure truck stops and upgrading existing sites’ security measures. Only ten sites have received the Park Mark Freight accreditation, launched by the British Parking Association (BPA) in 2022, which requires extensive security measures such as secure perimeters, CCTV, and on-site security staff.

Despite assessing nearly 50 sites, the BPA has only accredited ten truck stops, claiming these sites experience “zero to little crime”, while the low number of accredited sites is reflective of the generally poor standards of truck stops.

In March, the government announced a joint investment of £16.5 million to provide lorry drivers with more parking spaces, better welfare facilities, and safer rest areas. This investment aims to enhance security and reduce the risk of cargo theft.

Our approach to reducing cargo theft
To mitigate the risk of cargo theft during transit, we operate our own fleet of vehicles, deploy two or three-man crews, and use box trailers. Our drivers are trained to:

– Leave vehicles unattended as little as possible
– Choose well-lit, guarded parking areas
– Inspect vehicles and loads after each stop
– Report any deviations from the route or delivery address
– Avoid discussing the route, destination, or load
– Not pick up hitchhikers

We prioritise the safety of your cargo with secure parking areas and advanced trackers for high-value shipments. However, all types of cargo can be targeted by criminals, and standard carrier liability often falls short of covering actual losses.

Protect your investment with our comprehensive All Risk insurance. Metro partners with leading providers to offer All Risk marine insurance, ensuring your cargo is safeguarded throughout transportation and storage, available per-shipment or annually.

For more information on our marine insurance and how to protect your cargo, EMAIL Laurence Burford, CFO at our Birmingham HQ.

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South Korea factory fire underline danger of lithium batteries

Jul 19, 2024 | , , , , , ,

In June, a catastrophic factory fire erupted after several lithium batteries exploded, killing 22 people in South Korea. As a leading producer of lithium batteries, South Korea’s Aricell factory housed an estimated 35,000 battery cells, used in products ranging from electric vehicles to laptops.

The fire started with a series of battery cell explosions and due to the highly flammable nature of battery materials like nickel, the blaze spread rapidly, leaving workers with little time to escape. Officials stated that victims likely succumbed to toxic gases within seconds.

Lithium fires react intensely with water, forcing firefighters to use dry sand to extinguish the blaze, which took six hours to control.

Handling lithium batteries safely
Metro specialises in the safe handling, storing, and transporting of lithium batteries by road, air, and sea, with qualified personnel providing documentation and logistics solutions for hazardous cargoes.

Transporting dangerous goods is regulated based on the UN classification system, structured by mode of transport: IATA’s Dangerous Goods Regulations (DGR) for air; the International Maritime Dangerous Goods (IMDG) Code for sea; and the International Carriage of Dangerous Goods by Road (ADR).

When clients ship dangerous goods, including lithium batteries, Metro’s dangerous goods (DG) team advises on classification, quantity limits, documentation, packaging, and labelling requirements, as well as the best transport modes. Team members have completed health and safety training for transporting dangerous goods, supported by dangerous goods safety advisers (DGSA).

Proper documentation is crucial when shipping dangerous goods. Non-compliance can be dangerous and costly, with significant penalties for incorrect paperwork. Metro assists with necessary labelling and documentation, including Dangerous Goods Notes/Declaration and Material Safety Data Sheets (MSDS), ensuring hazardous cargo is handled safely and transported appropriately.

Shipping dangerous goods is inherently hazardous, which is why automotive brands, chemical suppliers, and manufacturers rely on Metro’s expertise to ensure correct classification and documentation. Attention to detail is paramount, as even a minor mistake can have severe consequences.

Metro prioritises the safety of products, people, and the environment during storage and transit. An emergency response plan is in place for accidents at any point. Metro operates a specialised distribution centre at Felixstowe, equipped with state-of-the-art safety features, dedicated to the secure storage of lithium batteries, whether in transit or awaiting call-off.

For further information on hazardous, chemical, and automotive capabilities, please EMAIL Ian Tubbs.

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Europe may experience its own near-shoring boom

Jul 10, 2024 | , , , , , , , , , , , , ,

As planes descend into Monterrey airport, an expanse of warehouses and manufacturing complexes stretches out for miles, exemplifying the near-shoring boom that has swept through Mexico in recent years, as Asian companies and their supply chains move closer to the United States.

Drivers of Mexican Industrial Growth
One might argue that this surge in Mexican industrial production and exports to the US is part of a 30-year evolution, initially driven by the North American Free Trade Agreement (NAFTA), which established a free trade area among Canada, the US, and Mexico.

However, additional factors have recently propelled Mexico to replace China as the US’s most important trading partner.

1. US-China Trade War: Trade has shifted from China to countries like Mexico due to the ongoing trade conflict
2. Biden Administration’s Supply Chain Strategy: Emphasis on near-shoring has highlighted Mexico’s role in the China+1 strategy
3. Production-Sharing Schemes: Mexico’s longstanding expertise in these schemes makes it a valuable partner in regional manufacturing and trade
4. Low Labor Costs: Average manufacturing wages in Mexico are lower than those in China

Ironically, many of the companies that are being set up for manufacturing and transition to Mexico are actually owned by Chinese entities and companies. It is a migration of Chinese manufacturing to Mexico and this also has the benefit of lowering supply chain and shipping costs and the big one – reducing some of the duty and anti-dumping duty that has been, and will likely continue to be, levied on Chinese origin goods and raw materials.

Lessons for Europe
A critical element is the presence of a long-standing free trade agreement, because near-shoring thrives in an environment that fosters supply chain relationships and networks over time and effective near-shoring relies on a regulatory and trading environment that supports such activities. 

Expecting near-shoring to emerge without a developed and supportive environment is unrealistic. The EU, with its well-developed internal free trade and regulatory framework, together with external trade agreements with countries like Egypt and Morocco is well-positioned to adopt near-shoring strategies.

In Europe, geopolitical relations with China are a concern, but recent supply chain disruptions are increasingly driving the adoption of China+1 strategies. Europe has been shifting its manufacturing and supply chain activities eastward and into North Africa.

Opportunity
Countries like Turkey, Hungary, Egypt, Morocco, Poland, and Romania offer compelling near-shoring opportunities due to their lower wage rates and higher productivity compared to Western Europe.

The EU is well-positioned to capitalise on near-shoring activities and so too is the UK, with its close EU ties and inherited trade agreements. This has already been highlighted by the new UK government, as a goal to re-negotiate trade agreements with the EU and could make closer sourcing a more prevalent and cost effective strategy going forward in the next few years.

We are seeing regular migration of manufacturing and sourcing closer to the UK and EU and this has many benefits, as long as the material price is comparable with Far East manufacturing costs, which have been the big incentive.

Metro and our associate companies, are well positioned to give advice, recommendations and adapt supply chains regardless of the areas that you are sourcing from or selling to.

We have a variety of services and solutions covering overland trucking, rail freight, short-sea containerised solutions on our own vessels and local warehousing and distribution at most industrial hubs throughout Europe and North Africa. 

Please arrange a call/meeting and we can go through the current and future options, to add value to your global development strategy. We can guarantee that it will not be time wasted!

Stable, well-regulated trading environments and cost-effective, high-productivity production locations in Central and Eastern Europe and North Africa provide a strong foundation for supporting near-shoring initiatives.

Metro’s integrated transport services are designed to support JIT manufacturing requirements across the EU, North Africa and Turkey and are ideally positioned to support new near-shoring requirements.

Our partner network, multi-modal transport solutions and MVT supply chain platforms are all geared towards supporting an evolving sourcing programme and on-boarding new suppliers. 

If you would like to learn how we can boost your ability to source from alternative manufacturing regions, EMAIL our Chief Commercial Officer, Andrew Smith, to arrange a consultation and scoping discussion.

Category: Road

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