Good day,
Despite a spate of steep losses announced by steamship lines in their second quarter/interim earnings reports, maritime executives are signaling cautious optimism moving forward and have offered guidance for a return to profitability in the back half of 2018. Transpacific container rates posted another week of strong gains, and notably the spread between China – West Coast and China – East Coast lanes widened beyond about $1,000 to $1,163.
The widening of the ‘Panama spread’ indicates a greater relative demand for container capacity from China to the North American East Cost, which has several potential causes. FreightWaves has heard reports that much of the intermodal capacity from west-to-east during the fall season has already been locked up—fears of a capacity crunch moving freight out of Los Angeles and Long Beach could be behind the shift to East Coast ports. We think that strengthening trucking contract and spot rates may have given container lines the green light to charge a premium for East Coast destinations, because the more expensive it is to truck freight across the country, the more the steamship lines can charge and still maintain a healthy discount.
Did you know?
The FreightOS Baltic Index (China to North America West Coast) rose to $2,082 this week, while the China to North America East Coast containers rates climbed to $3,245, widening the spread between the two destinations.
Quotable:
“PepsiCo and SodaStream are an inspired match. SodaStream is an extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated.”
-Indra Nooyi, Chairwoman and CEO of PepsiCo, in a statement on the acquisition of SodaStream for $3.2B
In other news:
UPS eyes blockchain in bid to track global shipping data
Entitled “Autonomous services selection system and distributed transportation database(s),” the concept involves storing numerous types of data within a distributed ledger network, including information about a package’s destination, its movement and transportation plans for shipment units. (CoinDesk)
Uber’s vision of self-driving cars begins to blur
While one camp is pushing Mr. Khosrowshahi to seek partnerships or even a potential sale of the unit, known as the Advanced Technologies Group, a rival contingent is arguing that developing self-driving technology is crucial to Uber’s future, the people said. (New York Times)
Elon Musk defends punishing pace as Tesla saga enters third week
Elon Musk sees no option but to keep working at his current relentless pace, no matter the deepening concerns of board members and investors about his health and stability as he propels Tesla Inc. toward a possible rebirth as a private company. (Bloomberg)
Cautious optimism for U.S.-China trade talks lifts shares
Shares rose worldwide on Monday on hopes of a resolution to the U.S.-China trade row at talks this week, while Turkey’s lira fell after cuts to the country’s credit ratings and shots were fired outside the U.S. embassy in Ankara. (Reuters)
The worst is over, claim box carriers that see signs of a profit in Q3
After posting heavy losses for the first six months, ocean carriers believe the worst is over and are optimistic of profitability in the third quarter. (The LoadStar)
Final Thoughts:
While Waymo is the obvious current leader in autonomous vehicle technology, two other early pioneers are facing increasing uncertainty. Tesla, whose Autopilot was groundbreaking when it first appeared, but has lost ground against its competitors in recent years, has been in turmoil since Elon Musk’s fateful tweets about taking the EV manufacturer private.
Meanwhile, Uber still doesn’t know what to do with its Advanced Technologies Group: according to the New York Times, CEO Dara Khosrowshahi is still undecided about whether to shutter the effort to build self-driving cars. Last fall, Uber struck a deal with Volvo to supply up to 24,000 XC-90 SUVs to be used to populate a fleet of autonomous vehicles. The NYT reported that Uber’s self-driving car project has been losing $100-200M per quarter, and that “Khosrowshahi has been shedding money-losing businesses since he joined Uber.”
Hammer down everyone!
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