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.

Photo: VesselFinderBy Mike Wackett The Loadstar

 07/06/2023

Ocean carriers constantly reassess network coverage to cope with the impact of demand fluctuations but, post-pandemic, this has translated into widely different trading patterns for the top-ranked lines.

A survey by Alphaliner reveals that, compared with a year ago, most of the top ten carriers have reduced their fleets trading between Asia and North America – MSC in particular having cut the percentage of its tonnage deployed on the transpacific from 16% to just 9%.

The consultant noted that MSC deployed the majority, 23%, of its massive five-million teu capacity on the Asia-Europe route, while next, in terms of capacity operated, is across its Middle East and Indian subcontinent loops, at 14%, followed closely by African services at 13%.

“Furthermore, the transatlantic fleet of MSC (10%) and its activities to and from Latin America (12%) are now more important than its transpacific operations,” said Alphaliner, adding that MSC was also the ocean carrier with the highest proportion of its fleet deployed on intra-European trades (7%).

Meanwhile, current 2M partner Maersk’s trading profile for Asia to Europe, 22% of its 4.1m teu fleet, is similar, but in contrast it still deploys 18% of its tonnage on the transpacific. The Danish liner also dedicates 18% of its capacity to Latin American trades as a result of its takeover of South American trade specialist Hamburg Süd.

Elsewhere, Alphaliner said, Latin America trades had overtaken Asia-Europe as the mainstay for Hapag-Lloyd, following the merger with CSAV and its investment in new neo-panamax 13,000 teu ships.

Indeed, during the Hamburg-based carrier’s first-quarter results presentation last month, CEO Rolf Habben Jansen said the services were proving “more robust” than other regions and running “choc-a-bloc full”.

Looking at the total containership fleet, Alphaliner said 21% of all liner capacity, including the largest 24,000 teu vessels, was deployed between Asia and Europe, with Asia-North America second with 18%.

However, the comparison is somewhat skewed by the much shorter transit from Asia to the US west coast, thus those loops require less tonnage.

Nevertheless, if container spot and contract rates on the Asia-Europe and transpacific tradelanes settle at just above breakeven levels, more carriers may decide to rethink their exposure to east-west routes and look in the direction of Latin America, Africa and the Middle East, or endeavour to seek out niche trades.

Taiwanese carrier Wan Hai is one such that has reduced its coverage across international routes in favour of boosting activity in intra-Asia. Always a strong player in the sector, the 11^th-ranked carrier, which slipped into the red in Q1, has renewed its focus there.

According to Alphaliner data, Wan Hai’s intra-Asia liftings are now some 65% of its total volumes, having contracted to 57% after the line took advantage of strong demand on the transpacific to increase its coverage.

Article-Container export dwell time at Chinese ports falls 62%

Port of LA

Dwell times for export containers at China’s ports have fallen to under five days while import dwell times have risen in recent weeks.

Gary Howard | Jun 05, 2023 Seatrade

According to data from FourKites, ocean dwell times – the difference between gate times and vessel departure/arrival times – fell to 4.8 days for China’s exports, a figure which has held steady since March. Import dwell times have been slowly rising since the start of March, reaching 5.2 days.

FourKites said it tracked a 44% decline in the volume of shipments to the US from China between April 2022 and April 2023, along with falling transit times.

Related: APM Terminals ceasing operations at the Port of Itajaí

Using a 60-day rolling average, days in transit for ocean shipments from China to the US was 35.6 days for April, falling from a peak of 55.4 days in March 2022. The trend of falling transit times may soon hit headwinds though, as average transit speeds reached a low in March 2023 and have risen sharply since, likely reflecting reduced sailing speeds to manage capacity.

Glenn Koepke, GM of Network Collaboration at FourKites, said: “As the global economy has softened, ocean capacity is plentiful, though there is still significant activity in global supply chains. Shippers are weighing their options and determining what their inbound networks need to look like, including where global supply should come from.

Related: Dockworkers disrupt US West Coast ports as contract talks drag on

“China will always be a dominant player in global trade – however, we have seen many shippers look to Southeast Asia, India, and LATAM as alternatives while still keeping Chinese suppliers for the local market. Shippers, forwarders and BCOs know that we are one event away from chaos, so while supply chains are seeing easing demand and logistics professionals are relieved to have a slight mental break, volume will pick back up as we head into peak season of Q3 and Q4.

Koepke expects global container volumes will rise in the third and fourth quarter, but lower than seen in 2022 “which should equate to an easing of delays and available capacity heading into peak trade seasons.”

Broader trends include container lines cutting capacity and cancelling sailings to maintain profitability, and the huge potential trade changes should China take action in the war in Ukraine.

Copyright © 2023. All rights reserved.  Seatrade, a trading name of Informa Markets (UK) Limited.

 Sam Chambers June 16, 2023 Splash247.com

Beijing is readying a stimulus package to boost its stuttering economy following the central bank’s interest rate cuts earlier this week. How much of a boost the increased spending will be to the deflated global dry bulk scene remains to be seen. 

JPMorgan Chase, UBS and Standard Chartered all trimmed their 2023 gross domestic product growth forecasts to 5.5% or lower this week after official figures for retail sales growth and fixed asset investment slowed in May and undershot expectations. 

“While we expect China to introduce additional policy support to safeguard a continued economic recovery, we think the likelihood of a big stimulus is low,” economists at Standard Chartered cautioned in a note to clients yesterday. 

The scale and scope of any stimulus remains a secret with UBS pointing to a Politburo meeting in July as a likely time for measures to be announced, including how to resuscitate the ailing real estate sector.  

Over the past 10 years, China has accounted for about half of the growth in seaborne dry bulk trade. A large part of the growth from China can be attributed to the high investments in the real estate sector, something that has been battered in the last 18 months.

The International Monetary Fund currently projects the Chinese economy to grow by 4% from 2022 to 2027. However, much of this growth is expected to come from private consumption and not fixed investments, such as real estate. Investments in the real estate sector experienced – for the first time since 1997 – negative growth of 10% in 2022, as a result of the ongoing real estate crisis.

“Little seems to indicate that government stimuli will lift the real estate sector. The rebound in the Chinese economy may therefore not benefit capesize and iron ore carriers to any great extent, although they carried around 90% of total iron ore volumes to China in 2022,” a recent report from Danish Ship Finance argued.

Analysts at investment bank Jeffferies lowered their estimates and targets for listed dry bulk firms 10 days ago, citing the weaker China steel outlook.

“So far in 2023, charter rates have averaged similarly to those seen in the tough years pre-2021. China’s re-opening has led to higher steel production and iron ore imports, but a sustained recovery seems farther away given the correction in steel prices recently. An expected China stimulus could be a positive near-term trigger, however,” Jefferies noted in a report issued on June 6.

Analysts at shipbroker Arrow noted yesterday that over the past few weeks, the souring economic outlook from China has very quickly fed into the dry bulk spot market.

“The sentiment and selling pressure is flowing from the macro environment into the chartering market via the FFA market,” Arrow explained. 

This poor sentiment in the chartering market is evident in Arrow’s Dry Bulk Sentiment Index (see below), which is around the lowest level on record since the index was created at the start of 2021. This index is built using daily chartering reports, analysing the positivity/negativity of the language used.

“Weakening China-related commodities, property stocks selling off, economic data disappointing all combined to generate poor sentiment, whilst FFA market activity perhaps accelerated this trend. The spot market moved much faster than we expected,” Arrow admitted. 

“2023’s recovery in China’s industrial sector has clearly continued to stall and youth unemployment in China also continues to set new records,” a new report from dry bulk advisory Commodore Research observed. 

“Speak to dry bulk owners, and there is a morose temperament setting in, the market has failed to fire, despite seemingly benign supply fundamentals – the rest of the year could prove a damp squib, hence the decision by big names such as Swire Bulk and Pacific Basin to start closing regional offices. As ever, when it comes to dry bulk, all eyes are on China,” a report carried in the May issue of Splash Extra noted. 

 Sam Chambers May 16, 2023 Splash 247.com

Dubai-listed logistics company Aramex has signed a joint venture agreement with Abu Dhabi’s fast expanding AD Ports Group to create a non-vessel owning common carrier (NVOCC).

The new entity, in which Aramex will have a 49% stake, will provide ocean-bound container cargo services, with a target of 10,000 containers in the short-term, with further growth over the medium to long term.

AD Ports has been very busy expanding its revenue streams in recent months, forming logistics tie-ups with a number of Central Asian nations, entering the tanker sector, bolstering its dry bulk fleet, alongside a host of new port concession agreements. 

 Sam Chambers May 29, 2023 Splash 247.com

Container shipping has been relying on one of its top tricks in its playbook to rein in the worst of the markets by going super slow. 

According to Clarksons Research, the container fleet moved at all-time slow speeds in Q1, with analysis from BIMCO suggesting that ships could go slower still. 

During the covid pandemic liner operators increased the average sailing speed by up to 4% due to strong demand and widespread port congestion. Today, the situation is very different and in the first quarter of 2023 the average sailing speed slowed to 13.8 knots, down 4% year-on-year, with BIMCO suggesting this speed could drop by 10% before 2025.

Jan Tiedemann, an analyst with Alphaliner, confirmed that liner services had been slowing down, partly to absorb capacity that would otherwise be surplus. Nevertheless, in recent weeks, in line with falling bunker prices, there has been a slight uptick in the average speed of the global liner fleet, according to the latest data from Alphaliner.

Over the entire world box fleet in the last two years, average speeds went down by about one knot, according to Alphaliner data. 

“That does not sound like much, but from a 16.5 knot global average, that is about 6% slower meaning, you need X% more tonnage to carry the same cargo volume,” Tiedemann told Splash. 

“The slowing down of services is a well-used tool in the carriers’ toolbox. For the past couple of decades we have seen this used whenever there is either structural overcapacity or high fuel prices – or both. Presently the industry is facing both issues,” explained Lars Jensen, the founder of container consultancy Vespucci Maritime.

Significant amounts of new capacity are being delivered into a market with sluggish demand growth. 

At the same time, Jensen pointed out that new environmental regulations as well as coming carbon taxes have the same impact as increasing fuel prices.

The record avalanche of newbuilds coming from yards in Asia are being injected into services, which are moving slower and slower. 

Maersk and MSC, for instance, announced this month they would be injecting nine additional vessels into the Asia-Europe trade, while at the same time adding that these services would be moving up to three days slower than before, thus absorbing all the new capacity. 

With liners expecting challenging conditions to persist for a significant amount of time thanks to sluggish demand, and an extraordinary orderbook to deliver, carriers have been adjusting their fleets to go slower. South Korea’s HMM, for instance, announced last month a decision to replace the propellers of six containerships with more efficient ones specially designed for slow steaming. 

The transition to new fuels such as LNG, methanol and ammonia also favours slow speeds, since these fuels will be much more expensive than current ones, observed Tiedemann from Alphaliner.

“This shifts the capital cost / bunker cost balance, so that it makes sense to deploy extra ships but save fuel,” he explained.  

Following record profits throughout the pandemic, liner shipping’s fortunes have been on the slide for the last 11 months. Israel’s ZIM and Taiwan’s Wan Hai became the first large liners to post a quarterly loss since 2020 this month. Overall, however, the slow streaming kept the red tide at bay for most carriers with John McCown, the head of Blue Alpha Capital, reporting on Friday that the container shipping industry made a net income of $13bn in Q1. 

 Sam Chambers May 25, 2023 Splash247.com

Stagnating trade and a ballooning surplus of shipping containers, following easing of pandemic era supply chain constraints, has led to a collapse in newbuild container output, which is forecast by UK consultants Drewry to slump to its lowest level in 14 years.

Drewry estimates that global box production contracted 71% year-on-year to 306,000 teu in the first quarter of 2023, the lowest level since the same period of 2010. While some recovery is anticipated through the remainder of the year, full-year output is not expected to exceed 1.8m teu, the lowest level since the recession-ravaged year of 2009, according to Drewry’s Container Equipment Forecaster.

Currently, several factories in China are either closed or operating on significantly reduced working hours, with full-scale production expected to commence in June. Meanwhile, commercial production at two new plants in Vietnam is not expected to start before Q3 this year with output scaled back from original expectations. The Hoa Phat Group factory in Cai Mep and the joint venture plant between Ace Engineering and Seojin Systems in Haiphong together will have the capacity to produce 600,000 teu a year by 2026.

Meanwhile, this year has seen record returns of containers to leasing companies, while carriers have been busily disposing of ageing and surplus boxes in their owned fleets. Currently, the priority for most container owners is to adjust their equipment pools to better match current trading and vessel supply parameters, and to remove ageing or damaged boxes that have accumulated as a consequence of supply chain congestion over the period of the pandemic.

Drewry expects such retirements to match last year at around 2.8m teu in 2023. Despite high levels of disposals into the secondary market, used dry freight container prices have held up well and are expected to remain steady through the year.

As a consequence, the global fleet of containers is forecast to contract 2% this year to 49.9m teu, representing the first fall in 14 years. The global container shipping trade is expected to remain weak, expanding just 1% in 2023, but a recovery in cargo demand is anticipated in subsequent years as the global economy gathers momentum.

This together with an expanding vessel fleet will drive increased demand for newbuild shipping containers, with output forecast to more than double next year, according to Drewry’s latest assessments. This will return the global shipping container fleet to modest growth, which is forecast to expand at an average annual rate of 2.9% over the period to 2027.