Green Energy Growth
The world added 50 percent more renewable energy capacity in 2023 over last year, per the International Energy Agency.
Additional renewable energy capacity reached nearly 510 gigawatts, with solar PV accounting for three-quarters of additions worldwide.
LOGISTICS
Most Asian carriers, including Evergreen, HMM, Yang Ming, OOCL and COSCO, are not diverting container vessels that are still using the Suez. However, the total fleets of the carriers that are diverting represent 62% of global capacity, per Freightos.
Maersk announced that “ vessels that used the Panama Canal before will now omit the Panama Canal and use a ‘land bridge’ that utilises rail to transport cargo across the 80 km of Panama to the other side.
Market demand on Asia to Europe routes is increasing in January and all ships are filling up. Spot rates for the second half of January are expected to continue to increase due to the Lunar New Year rush and the Red Sea threat, per Flexport.
Demand is likely increasing as shippers try to ship further in advance to accommodate longer transit times and get orders out of China before the Lunar New Year holiday that starts February 10th, per Freightos.
Transit times for vessels rerouting around the Cape of Good Hope are currently 2-4 weeks (round trip). Hence, there will be more blank sailings expected in February coupled with a spot rate level similar to January, as equipment shortages can be expected, per Flexport.
Even if rates do climb to the $6k- $8k/FEU range, these would be 50-70% below the extreme surges seen during the pandemic.
PODCAST
Sharpening End-to-End Visibility (without huge Capex spending)
Greater data integration will give us greater transparency – and enable us to make better and faster decisions.
However, challenges in terms of disruption to your organization and what is seen as a massive capex budget has prevented many companies from moving forward on this.
In this podcast Jonathan Porter, founder and CEO of PorterLogic, a world class supply chain tech stack, talks about how companies can build a customized supply chain solution that aligns with their business needs – without requiring millions of dollars in capex
You’ll Learn:
- Strategies for identifying and addressing pain points in supply chain management systems.
- The significance of integration and connectivity between various supply chain systems for effective communication.
- Techniques for predicting customer demand and making informed strategic decisions based on scenario analysis and data integration.
MATERIALS
The price of oil fell sharply after Saudi Arabia cut its own prices, countering concerns of supply constraints that might arise from political unrest in the Middle East.
Cotton prices inched up on concern over tighter supplies.
MARKETS
Higher shipping costs due to carriers rerouting to avoid the Red Sea could boost the cost of goods thus keeping inflation elevated, warned Andrew Bailey, Governor of the Bank of England. This would make it difficult to cut interest rates, per the BoE.
US headline inflation rose to 3.4% for the year to December, from 3.1% in November. The upward trend is dampening hopes of rate cuts any time soon.
Investors have scaled back their bets on interest rate cuts this year after economic data and warnings from central bank officials, per the Financial Times.
- The US is seen as cutting rates by 5-6 points (instead of 6-7 points as previously forecasted) with cuts coming as soon as March.
- The European Central Bank is now predicted to cut rates by 1.46 points this year, with the first cut in June, but possibly as early as March.
- The Bank of England is predicted to reduce rates to 4% by the end of the year.
CURRENCIES
Indications that the US Fed might not cut rates as soon or as sharply as previously expected has supported the dollar.
The yuan remained down for the week as investors felt that Chinese authorities will have to ease policy further this year to support growth.
The Indian rupee appreciated amid data showing the Indian GDP grew by 7.3% in the 2023-24 fiscal year, more than markets expected.
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