Photo 29000630 © Xuejingwen | Dreamstime.comBy Gavin van Marle

 18/04/2024

With the Red Sea crisis continuing to artificially prop up container spot rates, carriers have largely abandoned the tactic of using blank sailings to adjust supply to suit demand, according to new analysis from Sea-Intelligence.

The structural overcapacity faced by the liner industry has, to a large extent, been mitigated by the Houthi attacks on Red Sea shipping forcing vessel diversions around the Cape of Good Hope.

And while these have directly hit Asia-North Europe, Asia-Mediterranean and a selection of Asia-US east coast services, a ripple effect has seen the impact stretch to other trades.

“On Asia-North America west coast there is a clear systematic trend, since 2022, of a gradual reduction in blank sailings, which has continued and shows a level now approaching almost zero,” said Sea-Intelligence CEO Alan Murphy.

“Even if we take a four-week running average to smooth out the volatility, the underlying trend is the same – a sharp drop in blank sailings in recent weeks,” he added.

Given that blank sailings had been the industry’s prime tool to address sharply declining freight rates, their absence indicated that carriers appeared to have prioritised short-term revenue gains, argued Mr Murphy.

“This suggests that the spot rate decline in itself is not the focal point, as present spot rates are significantly higher than pre-Red Sea crisis, as well as pre-pandemic,” he said.

“Keeping this in mind, and by looking at the blank sailings data, it seems that in the present market environment shipping lines are attempting to capitalise as much as possible from the relatively higher rates, by not curbing capacity.

“The likely result, however, will be continued downwards pressure on spot rates,” he added.

Numbers from the eeSea liner database support his assertion: of the 180 advertised sailings on the Asia-North America west coast for April, 11 have been blanked, and 11 of the 190 advertised for May are set to be blanked.

On the Asia-North Europe trade, just five sailings this month are set to be blanked, out of 84, while for next month, so far not a single blanking has been announced out of the 92 advertised sailings.

It is a similar picture on the Asia-Mediterranean trade: six blankings in April, out of a proforma 95 sailings, and six blankings of 102 sailings so far announced for May.

There are still some blanked sailings – or slidings – taking place, however these largely appear to be due to issues in ports rather than attempts to affect spot rates.

Today, MSC announced that next week’s sailing of the 2M’s Asia-Europe AE55/Griffin sweeper service would be subject to sliding, due to “the ongoing challenging market situation generating congestion and schedule delays across the supply chain”.

The key question of course is what carriers will do should the Red Sea crisis ends, and the true depth of overcapacity is revealed – although given the seizure of the MSC Aries over the weekend, resolution of the conflict appears further away than ever.

MSC Orion Photo: Vessel finder By Martina Li in Taiwan

 30/04/2024

Tight availability of boxships and equipment, last seen during Covid, is replaying as more and more vessels reroute round the Cape of Good Hope.

Linerlytica’s latest report, issued yesterday, says the capacity of boxships diverted to the Cape route will pass the 5m teu mark within weeks, as avoiding the threat of Houthi attacks continues to absorb record newbuilding deliveries.

Yesterday it was reported that the Houthis claimed to have attacked the MSC Orion, in the Arabian Sea, as well as two US naval ships, but the reports have not been confirmed.

Containership fleet capacity stands at 29.37m teu, and will reach 30m teu by the end of June. Although nominal fleet growth has reached 10% year on year, diversion to the Cape has rendered effective capacity growth on the Asia-North Europe, Asia-Mediterranean and transpacific routes at just 3% this year.

Globally, effective capacity on all 33 inter-regional linehaul routes tracked by Linerlytica has shrunk 4% from last year, with reduced capacity deployed on Red Sea/Middle East/Mediterranean routes dragging down the overall average, despite the growth in the main east-west trades.

Demand for ships has filtered through the charter market, which, according to Linerlytica, went into overdrive last week. Liner operators have committed to securing ships at higher rates for longer periods.

CMA CGM, Hapag-Lloyd, Maersk and SeaLead were the most active charterers, extending existing charters while fixing more ships.

SeaLead agreed to charter the 2010-built 6,758 teu Racine from Danaos for $32,500/day for two years, while Hapag-Lloyd chartered Euroseas’ newly built 2,782 teu Leonidas Z for $20,000/day for 23-25 months.

The consultancy said: “Tonnage demand is still not fully covered, despite the high level of new ship deliveries, as the surging freight market is supporting the rise in charter rates in all segments except for the 1,100 teu and smaller sizes. Container equipment and prompt vessels remain in short supply. New containers produced in China are booked until the end of June, while charter rates are rising sharply for ships above 1,700 teu.”

Mai Boliang, chairman and CEO of China International Marine Containers, the world’s largest container manufacturer, said in March that a rebound in container demand had been seen since Q4 23, when the Red Sea crisis started.

And the shortage of ships and containers is forcing carriers to increase vessel speeds again, with ships on the Cape route doing 18-20 knots currently.

The 24,188 TEU capacity OOCL Spain pictured at the Nantong COSCO KHI Ship Engineering (NACKS) shipyard in Nantong, China. Photo courtesy OOCL

Alphaliner reports a record month for containership newbuild deliveries in April, surpassing the previous record set in March.

A staggering 50 new ships were delivered in April, adding up to a remarkable 333,000 twenty-foot equivalent units (TEUs) of capacity, compared to the previous high of 41 new vessels and 260,000 TEUs delivered in March, according to Alphaliner.

Chinese shipyards led the surge in deliveries, with 37 ships representing 221,000 TEUs delivered in April. Korean yards followed closely with nine ships and 94,100 TEUs, while Japanese yards delivered four newbuildings representing 17,900 TEUs.

China’s COSCO Group led in terms of carriers, adding five ships representing 58,700 TEUs to its COSCO SHIPPING and OOCL brands. MSC closely followed with an addition of five ships and 58,600 TEUs.

Despite overcapacity concerns heading into 2024, Alphaliner notes that the liner shipping market has been able to effectively absorb the new capacity due to diversions via the Cape of Good Hope and additional slow-steaming from to stricter environmental regulations.

Alphaliner numbers showed previously that, as of January 1, 2024, the cellular container fleet stood at 5,977 ships with a capacity of 28.13 million TEUs following the delivery of 350 newbuilds and 2.3 million TEUs in 2023.

A separate analysis by BIMCO showed that in 2024, a whopping 478 containerships with a capacity of approximately 3.1 million TEUs are scheduled for delivery this year, increasing the the global fleet by 10%.

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 Adis Ajdin May 2, 2024 (by Splash 247.com)

Danish liner giant Maersk has lifted the lower end of its full-year guidance as it expects the robust box market amid Red Sea disruptions to continue into the second half of the year.

The Copenhagen-based shipping and logistics group said its first-quarter profit of $208m on revenue of $12.4bn against last year’s $2.3bn and revenue of $14.2bn was in line with its expectations. The company’s share of net earnings stood at $177m.

The Vincent Clerc-led company, still standing second in the contanerline rankings, has diverted ships around south of the Cape of Good Hope since December to avoid attacks by Houthi militants on vessels in the Red Sea, sending rates higher due to the longer sailing times.

“This not only supported a recovery in the first quarter compared with the previous quarter, but it also provided an improved outlook for the coming quarters. We now expect these conditions to stay with us for most of the year,” Clerc said in a release.

With the Red Sea crisis still ongoing, Maersk noted that the Africa re-routing it to be extended potentially for the remainder of the year, suggesting an uplift in earnings.

Maersk said it now expects full-year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) this year between $4bn and $6bn, againts its previous guidance starting at $1bn. First-quarter EBITDA fell to $1.59bn from $3.97bn a year earlier, beating market expectations by some $130m.

Nevertheless, the company reiterated its previous warning that a wave of new boxships entering the market in the coming years would cause overcapacity and potentially impact its bottom line.

“We still anticipate the high number of new vessels being delivered during this and next year to eventually offset these factors and put ocean markets under renewed pressure,” Clerc added.

in International Shipping News (Hellenic Shipping News)

The global trade landscape saw positive growth in the first quarter of 2023, as both goods and services trade rebounded from the downturn experienced in the previous year, according to the June 2023 UNCTAD Global Trade Update. Yet while trade volumes and values increased during this period, the forecast for the second quarter of 2023 suggests a slowdown and a challenging outlook for the rest of the year.

After a decline in the second half of 2022, trade in goods made a strong recovery in Q1 2023, adding approximately $100 billion compared with Q4 2022. This growth was primarily driven by a revival of economic activity in China and increased trade in road vehicles and pharmaceuticals. Similarly, the trade in the services sector displayed resilience throughout 2022 and experienced 2.8% growth in Q1 2023, partly attributed to the ongoing rebound in tourism and travel following the Covid-19 pandemic.

Various negative factors contribute to this outlook, including geopolitical tensions, the war in Ukraine, weakening global economy, potential rise in trade restrictive measures, slowing industrial output, inflationary pressures, and concerns of debt sustainability.

Mixed trade growth

On a yearly basis, both imports and exports of developing countries experienced an average growth rate of 6%. However, excluding East Asian economies, the growth rate for developing countries reached approximately 14%. While most regions displayed positive trade growth on a yearly basis, trade growth in East Asia remained below average. On a quarter-over-quarter basis, Q1 2023 saw a decline in trade values in most regions, except for the Pacific region, North America, and Africa. Notably, intra-regional trade in Africa outperformed other regions, showing a 3% increase.

During 2022 and Q1 2023, the geographical proximity of international trade remained relatively stable, indicating a lack of significant nearshoring or far-shoring trends. However, there was an increase in the political proximity of trade, suggesting a shift towards prioritising countries that share similar political values, described as ‘friend-shoring’ by UNCTAD.

The war in Ukraine, the US-China trade decoupling, and Brexit played significant roles in shaping these bilateral trade trends.

The International Monetary Fund has warned of the risks of ‘friend-shoring’. Pinelopi K Goldberg, Elihu Professor of Economics and Global Affairs and an affiliate of the Economic Growth Center at Yale University, and Tristan Reed, an economist with the World Bank’s Development Research Group, said that while trading exclusively with “friendly” countries may imply greater resilience to geopolitical risks—at least in the near term—the concept of friendship is itself subject to “constant change”. It may, they said, lead to less resilience to other types of shocks, such as the recent health shock.

Added to which, restricted trade could lead to greater inequality within countries. “Greater trade barriers lead to higher prices, which mean lower real wages,” they said. “Globalisation may have contributed to more spatial inequality, but protectionism is not the cure: it will likely make the problem worse. Across countries, there is a risk of increased global inequality.”

Geoeconomic fragmentation could, they said, lead to more trade between high-income economies that are “friends”. Increasing emphasis on environmental and labour standards in trade agreements would raise entry barriers for very poor countries that find it difficult to meet these requirements. “Without access to lucrative foreign markets, there is no clear path for poverty reduction and development in such economies.”

Energy’s role

UNCTAD’s Global Trade Update noted that the energy sector has had a notable impact on global trade trends over the past year, with higher energy prices leading to increased trade values. Other sectors that experienced trade growth included agri-food products, apparel, chemicals, and road vehicles. Conversely, trade declined in the office and communication equipment as well as the transport sectors. In Q1 2023, the energy sector and office and communication equipment saw a reversal in trade values, while sectors like metals, chemicals, minerals, pharmaceuticals, and motor vehicles witnessed increased trade.

The IMF economists have, meanwhile, looked in more detail at globalisation’s impact on trade.

When measured in US dollars, global trade growth slowed after the global financial crisis in 2008–09 and declined sharply at the onset of the pandemic in 2020. But since then, trade has rebounded to the highest value ever.”

They added: “As a share of GDP, global trade has fallen modestly, driven mostly by China—which for years has pursued a ‘dual circulation’ strategy of prioritising domestic consumption while remaining open to international trade and investment—and India.”

Their analysis revealed a decline in global trade as a percentage of GDP, mainly due to China and India’s shift in priorities. These countries have experienced an end to the exceptional export booms they previously enjoyed, along with a decrease in imports of intermediate goods compared with previous years.

However, the economists emphasised that “as a share of GDP, imports of intermediates by the rest of the world are still growing”. This highlights that despite the decline in trade as a percentage of GDP in some countries, the rest of the world continues to experience growth in both imports and exports of intermediates.
Source: Baltic Exchange

in International Shipping News (Hellenic Shipping News)

Global trade remained in the doldrums during the second quarter as China’s post-lockdown rebound proved slower than expected and was offset by continued weakness in North America and Europe.

Seasonally-adjusted trade volumes were no higher in the three months from February to April 2023 than they had been 17 months earlier in the three months from September to November 2021.

Volumes were down in three of the first four months of 2023 compared with a year earlier, according to the Netherlands Bureau of Economic Policy Analysis (“World trade monitor”, CPB, June 23).

Growth from China and to a lesser extent other emerging markets in Asia was offset by a small contraction from the United States and much larger ones from Japan, the European Union and especially the United Kingdom.

Britain’s reputation as the sick man of the global economy was cemented by the fastest contraction in both import and export volumes from February to April, more than twice as fast as any other major economic area.

China’s freight movements have rebounded as the country emerged from lockdowns and the exit wave of the epidemic, though not as fast as anticipated at the start of the year.

China’s coastal ports reported container throughput rose by 4% in the first four months of 2023 compared with the same period in 2022, according to the Ministry of Transport.

The port of Singapore, which acts as one of the major transshipment hubs between China, the rest of East Asia and Europe, also reported an increase in container throughput of 3% in the first five months of 2023.

But in other regions freight remained lower than a year ago, as consumer spending rotated from merchandise back to services after the pandemic, and rising interest rates hit spending on durable goods by both households and firms.

Traffic at seven of the nine major U.S. container ports (Los Angeles, Long Beach, Oakland, Houston, Charleston, Savannah and Virginia excluding Seattle and New York) was down 16% in the first five months of 2023.

The number of shipping containers hauled on the major U.S. railroads, many en route to and from the ports, was down by 10% in the first four months of 2023, according to the Association of American Railroads.

Truck tonnage movements were also down by a little under 1% compared with the same period a year earlier, based on data from the American Trucking Association.

At Japan’s Narita airport, international air cargo was down 25% in the first five months of 2023 compared with a year ago.

Freight through London’s Heathrow airport was down 8% in the first five months of 2023 at the lowest level since the pandemic in 2020 and before that the financial crisis and recession in 2009.

Some freight is likely to have been shifted from air to sea as supply chain bottlenecks ease and shippers focus on cost control, but the downturn in merchandise shipments is unmistakeable across the advanced economies.

The most optimistic interpretation is that freight volumes have stabilised, after declining sharply in the second half of 2022, but there is no sign yet of a recovery outside China.
Source: Reuters (By John Kemp, Editing by Barbara Lewis)

 Sam Chambers Splash247.com

Small entrants into the transpacific container tradelanes during the pandemic boom times are beating a retreat. 

Analysts at Linerlytica note CU Lines and Pasha are the latest carriers to exit the trade, following the earlier departure of niche carriers such as Transfar, TS Lines, SeaLead, BAL, CIMC and Jinjiang Shipping where with rates at $1,500 per feu it has become impossible to make a profit using 2,500 teu class ships.

“Transpacific freight rates are expected to drop further as the Asia-US trade has become the new battleground for carriers as the rate war intensifies while casualties have already started to pile up,” Linerlytica noted in its latest weekly report. 

Last week’s Drewry World Container Index saw spot rates to the US west coast slide by another 8%, leading Lars Jensen, founder of container advisory Vespucci Maritime, to comment via LinkedIn: “This is at a point where we ought to begin to see the first small impact of peak season. If profitability is a priority for the carriers we should see a ramp-up in blank sailings.”

Niche carriers on the transpacific trade are forecast to drop below the 1% mark soon by Linerlytica, from a peak of 5% in December last year. 

The Asia-North America trade, including to the east and Gulf coasts, remains the second largest tradelane after Asia-Europe, with latest data from Alphaliner showing 18% of world fleet deployed on the fleet.

Among the global carriers, Linerlytica data shows COSCO, CMA CGM and Evergreen continue to battle for the top spot after MSC, ONE and Maersk slipped down the rankings.

 Sam Chambers Splash247.com

New draft restrictions from the drought-stricken Panama Canal will mean that from next month the waterway will have slashed its draft by more than 2 m, with authorities warning daily transits may have to be cut by up to 25% in order to save water. 

Panama has been suffering one of the worst dry spells in its history this year, with repeated announcements of draft restrictions on the canal, something likely to worsen with the onset of El Niño, a weather pattern that tends to bring dry weather to Central America. 

As of yesterday, ships transiting the newer neopanamax locks must have a maximum draft of 13.41 m, going down to 13.26 m next week and to just 13.11 m on July 19, a significant drop from the maximum draft of 15.24 m. By July 19, the old panamax locks will be able to welcome ships with drafts of just 11.73 m. 

Further restrictions are possible with meteorologists warning water depths in Lake Gatun, which is in the centre of the canal, could hit historic lows by July. 

It requires 200m litres of water to allow the passage of a single vessel along the canal, water that is largely generated from Lake Gatun, which is drying up fast.

The Panama Canal Authority said it “will continue to monitor the level of Gatun Lake and will announce future draft adjustments in a timely manner.” 

The canal’s administrator, Ricaurte Vasquez, said he had not ruled out taking the “extreme measure” of limiting daily transits on the waterway from today’s 36 vessels to 28 vessels. 

Dry weather is hampering navigation in many other important waterways this year. Ships are unable to travel fully loaded on the Rhine in Germany, for instance, a river that was hit by severe draft restrictions last summer. 

 Bojan Lepic Splash247.com

Dubai-based terminal operator DP World is set to begin management and a major expansion of Indonesia’s Belawan New Container Terminal (BNCT).

DP World said that it finalised an agreement with the Indonesia Investment Authority and Indonesian state-run port operator Pelindo.

The partnership between the three entities will create Indonesia’s most direct link with the Malacca Strait, one of the world’s busiest shipping routes.

The agreement was signed by the CEO of DP World Ahmed Bin Sulayem, president director of PT Pelabuhan Indonesia Arif Suhartono, and the CEO of the Indonesia Investment Authority Ridha Wirakusumah.

In the longer term, the agreement aims to increase BNCT’s capacity to 1.4m teu, up from 600,000 teu currently. BNCT will also aim to attract more direct calls, reducing North Sumatra’s reliance on regional hub ports to access regional and global markets.

The BNCT currently serves as a local hub for the neighbouring provinces in Sumatra. The expansion and modernisation programme will strengthen its position as a major trade and logistics gateway in the Malacca Strait.

“We are proud to help Indonesia expand the Belawan New Container Terminal and support its ambitions to develop the economy of Sumatra through infrastructure,” Ahmed Bin Sulayem said.

DP World already signed deals with several terminals around the world this year. The company launched the development of a new edible oil terminal at the Port of Berbera in Somaliland and agreed to a long-term lease for the facility in March.

Earlier in the same month, DP World announced a $35m investment to expand and modernise its facilities located on the left bank of Brazil’s Port of Santos while in February it landed a concession to develop, operate and maintain the ‘mega-container terminal’ at Deendayal port on India’s west coast.

By Martina Li in Taiwan The Loadstar

RusCon, the container multimodal arm of Russian logistics company Delo Group, has teamed with Mountain Air Shipping, a Dubai-based container shipping company, to launch a liner service linking Turkey with the Baltic Sea port of St Petersburg.

The service will operate monthly and turn in 36 days, with a transit time of 15-17 days between Ambarli and St Petersburg.

Until this month, Mountain Air was headed by Alexander Isurin, who joined the company in October from TransContainer , where he was president.

Mr Isurin was at TransContainer from March 2020 to September 2022. Prior to that, he was FESCO president from February 2016 to February 2020.

The collaboration between RusCon and Mountain Air, may have been facilitated by Mr Isurin whose connection with Delo Group’s intermodal freight unit, TransContainer may have smoothed the partnership.

Delo claims to have moved more than 100,000 teu last year, using 14 chartered ships.

The news comes as other newcomer operators, unperturbed by sanctions, are expanding their Russian offerings to St Petersburg, and have been buying and chartering ships to fulfil demand, according to Linerlytica’s latest report.

On 30 March, Russian operator Transit Line launched a direct China to St Petersburg service with the 2,193 teu Xin Long Yun 86 , the largest ship it has operated so far. Only one sailing has been advertised so far.

Linerlytica noted that carriers active in the Russian market had been dominating ship purchases for this region. Safetrans Logistics, which began China-Russia liner services in February, has ventured into ship owning with the purchase of the 2003-built 4,253 teu CMA CGM Algeciras, renaming it SFT Turkey.

In the past fortnight, Yangpu New New Shipping, part of China-based Torgmoll Group, has acquired the 1997-built 3,834 teu Zhong Gu Liao Ning from compatriot C Logistics, renaming it Xin He Lu 2, and the 2007-built 3,534 teu Northern Debonair (renamed Newnew Star) from Northern Shipping for $14.18m, bring the number of ships acquired by the group this year to eight.

Hong Kong-incorporated OVP Shipping has acquired the 1998-built 2,464 teu Buxhansa from NSB Niederelbe, and renamed it OVP Aries. It is OVP’s second purchase, after the 2003-built 2,824 teu OVP Taurus (ex-AS Carinthia) last month.

OVP, originally an LNG tank shipping business established in 2020, began container shipping operations connecting Vladivostok and Novorossiysk with China last June and, in February, began offering connections to St Petersburg through slot purchases on Safetrans’s service.