In the presence of the Egyptian prime minister, a memorandum of understanding was signed on Monday between Maersk and Egyptian authorities in a joint bid to further accelerate the supply of green fuels.

This partnership follows six fuel sourcing partnerships announced earlier this month, and with it Maersk joins forces with the General Authority for Suez Canal Economic Zone (SCZone), the Egyptian New and Renewable Energy Authority (NREA), the Egyptian Electricity Transmission Company (EETC), and the Sovereign Fund of Egypt for Investment and Development (TSFE).

“Egypt has excellent conditions for renewable energy production and ambitions to become global leader in the green energy value chain. We are very excited to be able to explore options together, drawing on our more than 100 years of business relations in the country,“ said Henriette Hallberg Thygesen, CEO, fleet and strategic brands at Maersk.

The parties will be conducting a feasibility study before the end of 2022 to examine an Egypt-based hydrogen and green marine fuel production, powered by renewable energy with Maersk as committed offtaker.

Ayman Soliman, CEO of The Sovereign Fund of Egypt, said; “Maersk’s bid to accelerate the supply of green fuels and the global transformation to net-zero shipping will expand the Suez Canal’s service offering as a main global hub for green bunkering in the region.”

Maersk said yesterday it intends to explore similar opportunities in other regions with strong potential for renewable energy development.

Sam Chambers.

UMAS, a commercial advisory service affiliated with the UCL Energy Institute at University College London, has issued a report commissioned by The Ocean Conservancy that shows the scale of US shipping fleet emissions and opportunities to decarbonise the sector. In 2018, carbon emissions from all US-flagged vessels amounted to around 26m tonnes, approximately 2.4% of global shipping emissions. Domestic shipping voyages accounted for about 70% of carbon emissions from the US-flagged shipping fleet, which presents a unique opportunity for US actions to effectively decarbonise the American maritime sector.

The report, titled The Maritime Fleet of the USA—the current status and potential for the future, says that more than 40% of the energy used by the US fleet could be replaced with zero-emissions solutions this decade.

It estimates that 17% of the current US fleet’s energy demands could be substituted with electrification. This would include, for example, ships relying on battery electrification for short voyages or ships running off onshore electric power sources when in harbour.

A further 24% of the fleet’s energy demands, coming from longer voyages than battery power alone can support, could be met with zero-emissions fuels, such as green hydrogen. These technologies are already available and adopting them would require minimal infrastructure updates. They could happen within the existing renewal schedule and would not require scrapping and rebuilding ships ahead of schedule.

Existing regulations under the Jones Act provide the US with an opportunity to drive decarbonisation of domestic shipping and the adoption of zero-emission fuels and electrification. By already relying on US production, the domestic fleet can introduce new zero-carbon vessels as older vessels are decommissioned or retrofitted on already existing schedules.

By transitioning the domestic fleet away from fossil fuels, the US could become a global leader in shipping decarbonisation, says the report, and kickstart the international transition to zero-emissions shipping.

Kim Biggar.

Six companies, including Danish carrier Maersk, have formed a partnership that aims to establish Asia’s first green e-methanol plant which converts captured biogenic carbon dioxide (CO2) into green e-methanol. The pilot plant will be set up in Singapore pending successful conclusion of feasibility studies by the end of 2022 and forms another part of the global fuelling jigsaw for Maersk’s raft of methanol-fuelled boxships under construction in Asia.

PTT Exploration and Production Public Company Limited (PTTEP), Air Liquide, YTL PowerSeraya, Oiltanking Asia Pacific and Kenoil Marine Services are working with A.P. Moller – Maersk on the green e-methanol pilot plant, with a minimum production capacity of 50,000 tons per annum, the first of its kind in Southeast Asia.

Maersk has 13 landmark dual-fuelled container vessels able to operate on carbon neutral methanol under construction with delivery dates in 2024 and 2025. The Danish carrier has been busy securing fuel supplies around the world for this new ship type.

Sam Chambers.

China’s most-populous city has yet to give an indication of when lockdown measures will lift, fuelling greater uncertainty for those involved in global logistics.

Shanghai’s daily Covid-19 infections set a record for the sixth straight day on Thursday, as citywide mass testing identified 19,982 cases in China’s financial and commercial hub.

EU Chamber of Commerce in China members estimated yesterday that Shanghai port volumes are down by about 40% week-on-week, despite the port’s operator insisting that it is business as usual at Yangshan and Waigaoqiao thanks to a bubble working environment at the quayside.

The issue, as has repeatedly been stressed since the lockdown came in 11 days ago, is down to limited trucking availability and the shuttering of many factories and warehouses. Many of the entry and exit points on the highways between provinces are also blocked causing severe supply chain issues.

Cargo volumes through the port tracked by FourKites, a supply chain data firm, had dropped by about a third since March 12 as shippers reroute freight elsewhere.

“The indefinite extension of the Shanghai lockdown is causing a significant slowdown of operations at the city’s major air and ocean ports due to labor shortages as well as a drop in the availability of goods as manufacturing and warehouses close, and trucking availability is significantly disrupted,” an update from online freight platform Freightos earlier this week stated.

Last week, a survey of American businesses in China found that 54% of respondents have lowered 2022 revenue projections for the year due to the latest Covid-19 outbreak. Among manufacturers, more than 80% reported slowed or reduced production, as well as supply chain disruptions.

An update from Japanese containerline Ocean Network Express (ONE) yesterday said that the limited trucking availability has impeded the clearance of import cargoes.

The resulting impact is that Yangshan and Waigaoqiao Phase 2, in particular, have “critically high” dangerous goods and reefer yards utilisations, ONE warned.

“Due to operational constraints in the yard side, there is a possibility that certain DG Classes and Reefers may not be allowed to discharge if the quantity cannot be accommodated,” ONE cautioned.

While Shanghai is hogging the headlines, the fallout from Beijing’s pursuit of a zero-Covid strategy is causing lockdown havoc across vast swathes of the world’s most populous nation.

Japanese bank Nomura estimated on Tuesday that a total of 23 Chinese cities have implemented either full or partial lockdowns, which collectively are home to an estimated 193m people and contribute to 22% of China’s GDP.

“These figures could significantly underestimate the full impact, as many other cities have been mass testing district by district, and mobility has been significantly restricted in most parts of China,” said Ting Lu, chief China economist at Nomura.

The lockdowns are taking their toll on the national economy. The China Caixin service PMI recorded the worst month-on-month contraction in March since early 2020.

Christian Roeloffs, the CEO of online marketplace Container xChange, described the situation in China as being akin to a traffic jam.

“Some people now stepped on the brakes really heavily and the problem is that this will lead to a significant sort of bulk up in demand for freight services which will essentially be unleashed once the factories reopen. And when the demand is back, the carriers will again not have enough equipment on the ground because not enough equipment went into China during the port lockdowns and not enough vessels are available,” Roeloffs said.

Sam Chambers.

Will China handle this outbreak differently and keep export cargo flowing?

COVID is not done with shipping yet. China is suffering its worst outbreak since the pandemic began. Shenzhen (population: 17.5 million) went into lockdown Sunday, closing factories. Cases have surged in Shanghai, where new restrictions are in place.  

Shanghai is the site of the world’s largest port, Shenzhen the third largest. When a COVID outbreak hit the Yantian terminal in Shenzhen last June, twice as many vessels were delayed as in the Ever Given accident in the Suez Canal.

How the new COVID outbreak affects trans-Pacific container shipping depends on whether ports close along with factories, and if so, for how long, said George Griffiths, managing editor of global container freight at S&P Global Commodity Insights.

The worst-case scenario was described by Container xChange as “a major shockwave to an already crippled supply chain.” Bjorn Vang Jensen, vice president of Sea-Intelligence, warned in an online post that if Yantian closes, “the whiplash effect when it reopens will lay waste to all the progress (maybe being) made in the U.S.”

Positives and negatives

The worst case may still happen, but it hasn’t yet. Liner giant Maersk reported Monday that all ports in China, including those in Shenzhen, were operating normally and “remain business as usual.” Warehouses in Shenzhen are closed through Sunday. Warehouses in Shanghai and Qingdao remain open, although truckers require negative COVID tests to pick up cargo.

Griffiths told American Shipper, “If no ports shut down but volumes coming out of factories are reduced [by lockdowns] that actually would be pretty good for ports.” It would allow more backlogs at Chinese export terminals to get loaded on ships, and help to normalize supply chain flows without forcing carriers to “blank” (cancel) sailings.

If Chinese ports do close, causing ships to drop calls or blank entire sailings, it would be short-term positive for U.S. ports. But they’d pay the piper later.

“Any respite [U.S.] ports can be offered in terms of imports will be positive, given the number of containers that are currently quayside and the number of issues in the hinterland. It will allow an easing of those problems,” said Griffiths.

2021 Yantian closure

Data from project44 shows how average container dwell times in Yantian surged to over 20 days in the wake of last year’s shutdown, far above dwell times seen during Lunar New Year and Golden Week holiday periods.

The more containers stuck in China, the less bottleneck pressure in California. When Yantian shut down last year, the ship queue off the ports of Los Angeles and Long Beach dwindled to the single digits.

“But the demand was still there,” said Griffiths. “Just because it couldn’t move didn’t mean it went away. It just meant that the demand had to be compensated for at a later date.”

After Yantian reopened, the queue of ships waiting offshore of Southern California shot up throughout the second half of 2021. Rates rocketed to new heights. “Yantian was really the big driver last year. When we saw rates go stratospheric, it was because of the release of all that pent-up pressure that had built up in the market,” said Griffiths.

“If we see the [Chinese] ports start to close now, we could see what happened in 2021 start to play out again.”

Demand differences

There are important differences between market conditions today and at the time of the Yantian closure. Some could reduce the impact of a Chinese port closure this time around, others could increase it.

One difference is U.S. import demand. It was historically high in 2021 and appears to have at least temporarily slackened in 2022, beyond the normal Lunar New Year lull.

“We haven’t seen large volumes being booked for February or March, although April’s looking fairly tight. We’re seeing some improvement from where we were immediately post-Lunar New Year, but it’s still fairly tepid,” said Griffiths.

Going forward, the war in Ukraine could be a demand headwind. American spending is no longer being juiced by government stimulus and the war has increased inflation.

“With surging commodity prices and heightened inflation worries, there is growing concern that consumer spending will be impacted,” said Clarksons Platou Securities analyst Omar Nokta last week. “We see an uncertain outlook emerging, particularly for demand.”

2022 vs. 2021: Port congestion

Another difference versus the last big COVID incident in China: Port congestion is worse now.

In May 2021, prior to last year’s Yantian closure, there were 19 container ships per day, on average, waiting for berths in Los Angeles and Long Beach. As of Monday, there were 43 (including ships both inside and outside port waters).

The good news is that this is less than half the record high of 109 ships waiting on Jan. 9. The bad news, according to Sea-Intelligence, is that the drop was driven by fewer ship arrivals from Asia, a trend it says is about to sharply reverse.

Volume has also switched to other North American ports. During the quarterly conference call last week, executives of ocean carrier Zim (NYSE: ZIM) highlighted market shifts toward Vancouver, British Columbia, as well as East Coast ports.

Vessel-positioning data from MarineTraffic showed that as of Monday morning, 11 container ships were waiting off New York/New Jersey; one off Philadelphia; 11 off Virginia; two off Savannah, Georgia; 24 off Charleston, South Carolina; one off Mobile, Alabama; 11 off Houston; one off Seattle/Tacoma; 14 off Oakland, California; and 19 off Vancouver. Five container ships (including a Zim ship) declaring Vancouver as their destination were anchored off Hokkaido, Japan.

Add that to the Los Angeles/Long Beach queue and there are still over 140 container ships off North American ports at a time when COVID is once again threatening to disrupt the trans-Pacific supply chain.

Greg Miller.

With the cargo business blasting, financier firms are bouncing from organization to organization quickly, prompting high paces of turnover. Regularly, agents are beginning the work with the guarantee…

With the cargo business blasting, financier firms are bouncing from organization to organization quickly, prompting high paces of turnover. Regularly, agents are beginning the work with the guarantee…

With the cargo business blasting, financier firms are bouncing from organization to organization quickly, prompting high paces of turnover. Regularly, agents are beginning the work with the guarantee…

With the cargo business blasting, financier firms are bouncing from organization to organization quickly, prompting high paces of turnover. Regularly, agents are beginning the work with the guarantee…

With the cargo business blasting, financier firms are bouncing from organization to organization quickly, prompting high paces of turnover. Regularly, agents are beginning the work with the guarantee…