Europe & International

Q1 2024 Report

Market Summary update

Q1 2024 Report
Welcome to the Q1 2024 report by KUKLA Beverage Logistics, which overviews key developments and challenges in the logistics sector, focusing on road, sea, rail freight and market trends across various regions.
Our Regional Market Updates provide insights into market conditions and challenges across various regions, including North America, South America, Oceania, South Africa and Asia. Highlighting specific incidents, including the Francis Scott Key Brid collapse, which has impacted vessel operations in the Port of Baltimore and disruptions in the Bab al-Mandab Straight have affected commercial shipping routes.


Road Freight
The Ti, Upply & IRU European Road Freight Rate Development Benchmark Q4 2023 key data highlights:
Rail Freight
The unanimous adoption of the European Parliament’s TRAN (Transport and Tourism Committee) proposals on railway capacity marks a significant step forward for rail freight in the Single European Railway Area.
The proposed Regulation aims to enhance railway capacity and reliability by establishing an international, digital, and flexible system for managing and allocating railway capacity….
Sea Freight
New tolls on top of the high-cost base will keep upward pressure on rates, likely to sustain contract rates and limit further falls in spot rate growth. A shipping alliance, often called an ocean alliance, is a group of ocean carriers that create a cooperative agreement. This agreement covers several trade routes through collaboration among its members globally.
These groups of carriers commit to vessel-sharing agreements to help cover as much of the shipping market as possible. This means they gain access to vessels owned by other carriers. Often, carriers also agree to move containers on behalf of one another…


ROAd freight summary
The Ti, Upply & IRU European Road Freight Rate Development Benchmark Q4 2023 key data highlights:
Improving Safety on EU Roads: Whose Responsibility is it?
FitDrive, a project funded by the EU, exemplifies AI’s potential to monitor driving performance and mitigate real-time risks. However, the widespread adoption of AI and connected vehicles remains challenging, particularly in regions with high road fatality rates. Education and behavioural shifts are essential to mitigate risks effectively, especially for professional drivers and other road users.
The system, which has received funds from the EU, monitors and evaluates “driving performance, cognitive load, physical or mental fatigue and reaction time, providing information to drivers, intelligent road systems, and police roadside controls.” The EC stated that the project is focused on professional drivers and their real-time fitness to drive: “A new monitoring AI-based system will profile the driving behaviour of a specific user after one month of driving; then it will be able to detect anomalous behaviour and to provide early warnings.”
However, AI can also act as a preventative measure for accidents. For example, using an AI-based planning tool, road freight transportation companies could divert their trucks away from the riskiest – urban ––areas, significantly reducing the risk for truck drivers, pedestrians, and cyclists. The latter two are some of the most at-risk groups for getting into a fatal collision with a truck since the height of the cabin can prevent a driver from seeing either of the two. At the same time, proper education about safe driving within cities can go a long way, considering that these are typically low-speed zones.


sea freight summary
Shipping Alliances 2024-5
2M – Maersk and Hapag Lloyd ending 2025
Gemini Cooperation – Maersk and Hapag Lloyd starting January 2025
Ocean Alliance – CMA-CGM, Cosco Group, OOCL and Evergreen
THE Alliance – Hapag Lloyd, ONE, HMM and Yang Ming. Hapag Lloyd, in 2025, will no longer be part of THE Alliance.
Alphaliner reports that 431 container ships were trading between Asia and Europe at the start of February, representing a capacity of 6.33 Mteu (or 22% of the cellular container fleet). During the past twelve months, the Asia-Europe fleet has grown 19%.
While volumes on the headhaul trade (westbound) rose 7.8% in 2023, the 19% capacity increase on the route is obviously due to the addition of the extra ships, which are needed to maintain a weekly sailing frequency for all the loops that are diverted via the Cape of Good Hope due to the crisis in the Red Sea.
However, not all the extra needed ships are in place, and carriers taking delivery of new buildings are better positioned to maintain a weekly sailing frequency and grow their market share.
There have been significant changes in the market shares of some carriers in the past twelve months. The most striking evolution is the 54% growth of the MSC fleet deployed between Asia, North Europe and the Mediterranean.


Rail freight summary
The unanimous adoption of the European Parliament’s TRAN (Transport and Tourism Committee) proposals on railway capacity marks a significant step forward for rail freight in the Single European Railway Area.
The proposed Regulation aims to enhance railway capacity and reliability by establishing an international, digital, and flexible system for managing and allocating railway capacity. While the draft proposal from the European Commission has been generally well-received, gaps have been identified, particularly concerning user consultation and regulatory oversight. The Parliament’s adoption of these proposals addresses these concerns and moves the legislation positively.
Key aspects of the proposals include the creation of the European Railway Undertaking Platform (ERP), which will facilitate ongoing consultation between Infrastructure Managers and railway undertakings to meet freight users’ evolving needs better. Additionally, enhancing the role of the European Network of Regulatory Bodies (ENRRB) will provide greater regulatory supervision over Infrastructure Managers, ensuring adequate checks and balances.
Furthermore, by advancing the implementation dates of the Regulation, the European Parliament ensures that it can contribute to achieving modal shift objectives by the end of this decade. However, it is crucial to ensure that any new provisions added to the Regulation, such as the creation of “systematic train paths,” are subject to ENRRB supervision and consultation with ERP.


What is the European Union Emissions Trading System?
On July 14th, the European Commission unveiled a pivotal legislative proposal as part of the Fit for 55 package: a revision of the European Union Emissions Trading System (EU ETS), extending its reach to maritime transport emissions. This move aims to align the shipping sector with the ambitious target of reducing European net greenhouse gas (GHG) emissions by 55% by 2030, compared to 1990 levels.
About the EU ETS for Maritime Transport
Effective January 1st, 2024, the revised EU ETS mandates the formal recording of emissions from maritime companies. This entails the submission of annual reports on GHG emissions for verification purposes. The scope of the system encompasses CO2 emissions from maritime transport for all ships exceeding 5000 gross tonnage, encompassing all merchant vessels.
It will operate on a “cap and trade” principle. The system imposes a global GHG cap tolerance that diminishes annually to meet the stipulated target. Emission allowances serve as the currency of compliance, with one allowance equating to one ton of CO2 emission. Trading covers 100% of emissions from voyages between two EU member state ports and 50% of emissions involving a port within an EU member state and one outside EU jurisdiction.
The share of emissions covered by allowances increases progressively, from 40% in 2024 to 70% in 2025, reaching full coverage (100%) from 2026 onwards. Non-compliance attracts penalties.
How does the European Union Emissions Trading System impact you?
This expansion of the EU ETS into maritime transport has broad implications. Shipping companies face heightened accountability for their emissions, necessitating robust reporting mechanisms and compliance with emission allowance requirements. There may be indirect impacts as the lines could pass compliance costs to shippers. (Link to blog)
What are the Next Steps?
With the implementation phase underway, stakeholders must swiftly adapt to the new regulatory landscape. Shipping companies must ensure compliance with reporting and allowance surrender obligations, while policymakers and regulators will monitor implementation effectiveness and address any emerging challenges.

Sea Freight

Trade Lanes Overview
North America
Vessel operations in and out of the Port of Baltimore have ground to a halt after a containership collision resulted in the collapse of the Francis Scott Key Bridge. The incident has prompted authorities to suspend all vessel operations, severely limiting port terminal activities to import pickups, with no empty container returns permitted.
The ramifications of the bridge collapse extend beyond port operations, as a state of emergency has been declared, impacting transportation in the Baltimore port area. The full extent of the disruption and the timeline for restoration of normal operations remains uncertain as authorities assess the damage and work towards a solution.
A downward trend in Transatlantic Westbound shipping is impacting the return leg from the US, resulting in reduced capacity and fewer options for shippers. Adding to the complexity, implementing the EU ETS in January has further affected rate levels, with increases ranging from EUR 15 to EUR 50 per TEU depending on the port pairs and equipment used.
Compounding these challenges is the Panama Canal’s low water levels, causing disruptions to connections from the US West Coast. THE Alliance AL5 schedule has been particularly affected, with delays experienced at ports such as Rodman and Caucedo. Transshipments may become necessary if the levels deteriorate further, potentially requiring carriers to load cargo onto smaller vessels.
South America
Space is currently available for shipping from the West Coast of South America to Europe. Due to the Panama low water situation, there are issues with connections. On average, vessels are waiting 1-2 days off the coast of Balboa before transiting the canal.
The reefer season is robust from both the East and West Coasts of South America, with exceptionally high demand from the East Coast. Ships departing from Brazil are sailing at full capacity, reflecting strong market conditions and increased regional shipping activity. This heightened demand underscores the importance of timely booking and planning for shipping operations to ensure efficient transportation of goods to Europe.
However, it’s important to note that rates have increased rapidly due to higher operational costs associated with longer routes and the implementation of the EU ETS (Emissions Trading System).


Ongoing challenges persist in Oceania’s shipping sector, impacting operations and logistics. In addition to schedule disruptions and rising freight surcharges, there is a problem with imbalances in container availability. Rates have surged rapidly, driven by increased operational costs associated with longer routes and the implementation of the EU ETS (Emissions Trading System).

The reefer season in New Zealand is expected to be one of the strongest ever in the second quarter. This will lead to limited space for dry cargo, exacerbating schedule disruptions and potentially increasing freight surcharges, such as the Suez Canal Contingency surcharge. Additionally, there may be an increase in port charges impacting suppliers, and equipment imbalances or shortages could further complicate shipping operations.

There are still concerns due to services avoiding the Suez Canal for relay services via Asia from New Zealand, although there have been no changes to the direct service, which transits Panama.

From Australia, direct services have omitted Suez transit since January 1st and recent attacks have intensified, leaving little hope for a return to a regular routine soon.

South Africa
2023 presented significant challenges for South Africa’s export sector, with export volumes plummeting by 17%. Infrastructure and equipment constraints at the Port of Cape Town compounded these difficulties, adversely affecting all products reliant on the port. Unfortunately, current departure delays in Cape Town suggest minimal improvement in 2024, with immediate relief seeming unlikely.
Meanwhile, rising bunker costs and the implementation of the EU ETS have impacted costs ranging between EUR 26 and EUR 36 per TEU for dry containers in Q1 2024. The repercussions of the Red Sea situation, which led to vessel rerouting around the Cape of Good Hope, remain uncertain for this trade. However, prolonged disruptions could significantly affect equipment flows if the situation persists for weeks or months.
As of January 30th, 2024, commercial shipping in the Bab al-Mandab Strait has been disrupted by attacks from Houthi rebels, prompting carriers to suspend most services via the Red Sea. Vessels are being rerouted via the Cape of Good Hope, resulting in an average increase in transit times to North Europe by 10 days and a distance increase of approximately a third.
This change in the routing has led to concerns regarding equipment supply as more containers are delayed or being used due to the additional vessels deployed and longer transits.
Despite these challenges, demand remains robust in the Asian trade route, with volumes up by 5.7% from January to September 2023 compared to the previous year.
Consequently, rates have surged rapidly, with the spot rate reaching $5000 per 40ft container, three times higher than the previous month. As carriers adapt to the evolving situation and shippers navigate increased transit times and equipment shortages, proactive planning and collaboration will be essential to mitigate disruptions and ensure the continued flow of goods.
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