Estimated $1 billion deal accelerates shipping line’s movement into port and logistics operations.

German container shipping line Hapag-Lloyd AG is stepping up its push into inland logistics with the acquisition of the shipping terminal and logistics businesses of Chile’s Sociedad Matriz SA AM SA for around $1 billion.

Under the agreement unveiled Tuesday, the German shipping company will acquire SAAM Ports SA and SAAM Logistics SA, as well as a real-estate portfolio from Sociedad Matriz. The ports business comprises terminals in Chile, as well as other countries in South and Central America and in Florida.

The logistics business is concentrated at five ports in Chile, Hapag-Lloyd said.

The acquisition follows Hapag-Lloyd’s purchase last month of a 49% stake in Italian terminal operator Spinelli Group and an investment a year ago in Germany’s JadeWeserPort Wilhelmshaven, which operates port and rail facilities.

The Sociedad Matriz deal is in line with Hapag Lloyd’s strategy to expand involvement in the terminal sector, the shipping line said.

“The purchase agreement that has today been signed will further strengthen Hapag-Lloyd’s business while building up a robust and attractive container terminal portfolio,” the company said.

A congressional advisory body is urging legislators to strengthen U.S. defenses against China’s growing control of digital information related to global shipping and cargo, warning it could undermine national security and businesses, reports The Wall Street Journal.

The U.S.-China Economic and Security Review Commission, in a report to be issued before the end of September, focuses on Chinese cargo-data network Logink, which aggregates information about freight and shipping lines in China and other countries.

The commission’s concern cuts across commercial and military logistics because both use port facilities worldwide. Chinese state-controlled companies over recent years have become significant players in logistics, building on the country’s manufacturing dominance. As the world’s largest exporter, China has fostered some of the world’s biggest shipping operations, including China Cosco Shipping Corp. and China Merchants Group Ltd.

The shipping lines also control port facilities, warehouses and related infrastructure on almost every continent.

Even cargo that isn’t carried by Chinese sea-shipping companies — or data about it — can move through their warehouse or other subsidiaries, such as ground-transportation lines, or through separate systems, such as Logink. In doing so, information about the shipments can be captured by the Chinese companies’ data systems.

US and European importers of merchandise like bags, apparel and jewellery are asking their Indian suppliers to ship cheaper products, as the purchasing power of inflation-battered consumers in those markets has declined.

Shoes and bags made of synthetic leather are increasingly replacing items of natural leather in export orders for Indian suppliers, as they are as much as 35% cheaper than the original. While buyers are seeking a cut in export prices for apparels, demand has increased for lab-grown diamonds, which cost less than half the natural ones.

A half-century-high inflation in the eurozone has led the European Central Bank to increase interest rates by three quarters of a percentage point last week from zero and warn about further rate hikes. Recessionary concerns are also high, weighing on consumer sentiment. The bloc's big four economies - Germany, France, Italy and Spain - have all had their growth forecasts for 2023 cut by the International Monetary Fund, with rising interest rates and uncertainties from the Russia-Ukraine war being the key reasons.

Supply-chain snarls are persisting, with more than 2% of all global shipping capacity at a standstill outside Germany’s North Sea ports.

Congestion continued to climb in September at Bremerhaven and Hamburg, where there are now 19 container vessels waiting to unload, up from 17 two weeks ago, according to the latest Kiel Trade Indicator. About 11% of all shipped goods are stuck, the report said.

Germany’s outlook for trade deteriorated, with imports and exports slipping by 0.2% and 0.7% from the previous month, it said.

“Congestion is preventing a return to pre-pandemic levels,” said Vincent Stamer, head of the Kiel Trade Indicator. “High transportation costs are hindering a further recovery in global trade.”

In China, meanwhile, holdups outside some ports are easing as President Xi Jinping’s “Covid Zero” approach to combating the pandemic continues to shut down some of the world’s largest manufacturing hubs.

“In the Red Sea, the most important sea trade route between Europe and Asia, 16% fewer goods are currently being shipped than would be expected under normal circumstances,” according to the report.

Cargo has turned out to be the difference maker for airlines navigating the pandemic, says The Wall Street Journal. Just look at Korean Air.

South Korea’s flag carrier has prospered since taking an initial sharp hit in the early days of the global health crisis, and that’s largely because it expanded its substantial cargo business.

Many airlines turned to cargo as a savior as travel virtually shut down in 2020, but Korean Air was starting from a strong position as one of the world’s largest cargo-carrying passenger airlines and the owner of a big fleet of freighters.

Korean Air counted 42% more freight traffic in the second quarter compared with spring 2019, and cargo revenue was up 44% year over year. Airfreight rates now are pulling back, but the carrier is building up passenger business at the same time.