Friday, 12 July 2024 / Published in Blog, News

 

The Red Sea crisis has rejuvenated the sales and purchases of container ships as vessel demand soars, according to Alphaliner’s latest report.

Some 141 ships of 572,600 TEUs were bought and sold between January and June, an average of 23 units per month. This compared to an average of 15 sales per month in the second half of 2023.

When Iran-backed Houthi rebels began attacking ships in response to Israel’s invasion of Palestine in November 2023, container ships began avoiding the Suez Canal and rerouted round the Cape of Good Hope.

At the time, liner operators believed the situation was temporary and did not immediately seek to expand their fleets. However, their attitudes changed when the crisis dragged on and more ships were needed to maintain regular sailings.

Despite 1.6 million TEUs of newbuildings hitting the water in the first six months of 2024, the tonnage shortage has absorbed all these new ships. Alphaliner observed, “Carriers sought even more tonnage in the secondhand market in or der to plug schedule holes and capitalize on firm rates.”

MSC continued to be the most active buyer of secondhand ships as it sought to safeguard its position as the largest operator. The Swiss-Italian operator acquired 33 ships between January and June this year.

On 5 July, Shanghai-based regional carrier BAL Container Line disclosed that it had sold its two under-construction 14,000 TEU ships to MSC, which is forking out US$330 million for the vessels being built at Jiangnan Shipyard in China. This effectively hands BAL a US$49 million profit on the vessels, which were contracted in 2022 and due for completion in 2025.

After a very active year in 2023, French carrier CMA CGM was more subdued, with only five acquisitions in the period. The biggest sellers of ships were Maersk (eight vessels), V Ships Hamburg (eight ships), NSB Niederelbe (seven ships), Capital Ship Management (six ships) and Shoei Kisen Kaisha (five ships).

Prices also firmed in response to the rising demand. Tonnage provider Peter Doehle paid US$51 million for the 9,954 TEU Aristomenis in March. Meanwhile, in May, CMA CGM reportedly paid US$22.5 million and US$26 million respectively for the 3,651 and 4,294 TEU Mendelssohn and Northern Guild.

Alphaliner remarked, “Going into July, sales prices continue to rise, although there are signs that the market may become less active as carriers put fewer ships up for sale, preferring to make the most of the charter market rather than dispose of assets.”

 

Source: www.container-news.com

Thursday, 11 July 2024 / Published in Blog, News

 

Global demand for ocean freight container shipping hit an all-time record in May amid soaring spot rates and severe port congestion.

The 15.94 million TEUs transported by ocean in May beats the previous record of 15.72 million TEUs set in May 2021, according to data released by Xeneta and Container Trades Statistics.

The record levels of demand in May brings year-to-date volumes to just under 74 million TEUs, which is an increase of 7.5% compared to the first five months of 2023.

“More containerized goods are being shipped by the ocean than ever before at a time when available capacity is impacted by diversions around Africa due to conflict in the Red Sea and severe port congestion in Asia and Europe,” stated Emily Stausbøll, Xeneta Senior Shipping Analyst.

“This is a perfect storm of pressure on ocean supply chains which has resulted in the chaos of recent months. In many respects, it is impressive that global shipping networks have been able to transport this enormous volume of containers under such challenging circumstances.”

The record-breaking level of global demand is largely driven by volumes out of the Far East, with China seeing an all-time-high 6.2 million TEUs exported in May (including 853,000 TEUs of intra-China container demand). This accounts for 39% of global container trade in May and coincided with spiralling spot rates on major fronthaul trades.

The latest data from Xeneta, the ocean and air freight rate benchmarking and intelligence platform, shows average spot rates from the Far East to US West Coast stood at US$7,840 per FEU on 9 July, up by 200% since 30 April.

On the US East Coast, average spot rates have increased by 130% in the same period to stand at US$9,550 per FEU. Into North Europe and the Mediterranean, spot rates have increased by 148% and 88% respectively to stand at US$8,030 and US$7,830 per FEU.

Stausbøll added: “Given we are already seeing record-breaking volumes in May ahead of the traditional peak season in Q3, you can understand why shippers are so concerned.

“The spot market is still climbing, the conflict in the Red Sea shows no signs of ending and the port congestion we are seeing in Asia and Europe will take time to de-pressurise.

“The big question for the market is whether the record volumes in May will mean reduced volumes in the traditional peak season. Numerous factors come into play, not only underlying consumer demand but also nervous shippers frontloading imports and the potential for further tariffs on China imports.

“While this combination could keep demand high moving through the next few months, there must be a limit to how long the record levels of demand can last.”

The impact of the record levels of demand combined with longer sailing distances around the Cape of Good Hope is demonstrated through TEU-mile calculations. This data reflects the distance each container is transported globally.

TEU-miles have increased by 17.9% globally in 2024 to date compared to the same period in 2023. This is mostly driven by the Red Sea diversions and longer sailing distances around the Cape of Good Hope.

However, the trades most impacted by the Red Sea diversions are the major deep-sea trades out of the Far East, which are also the trades which are driving record-breaking levels of ocean container shipping demand.

Had ocean container carriers continued to utilize the Suez Canal, TEU-miles would have increased by a lesser, but still significant, 8.6% in 2024 to date.

Stausbøll mentioned: “Earlier this year we saw increasing ocean freight shipping spot rates and wondered if there really was a capacity crunch or whether it was a case of the market panicking unnecessarily following the escalation of conflict in the Red Sea.

“We can now clearly see in the data the squeeze on capacity was very real, especially when you factor in the TEU-mile increase on top of the record-breaking global volumes and port congestion.

“It also demonstrates how much oversupply of capacity there would have been in the market in 2024 had the Red Sea conflict not occurred.”

 

Source: www.container-news.com

Wednesday, 10 July 2024 / Published in Blog, News

 

Trade from the Far East to a bloc of developing economies, especially South America, Africa and the Middle East/Indian Subcontinent, has risen dramatically and has emerged as a key driver of global container trade, according to a new report from Clarksons.

The world’s largest shipbroker said that trade between the Far East and these developing economies was up 16% year-on-year in the first four months of the year, and showed a 30% growth compared to 2019, the year before the Covid-19 pandemic hit.

After a stagnant 2023, in which container trade grew by just 0.6% from 2022, container shipments came up to 58 million TEU between January and April, an 8% increase from the year-ago period. This also marked the strongest start to container shipping in any year.

Clarksons analyst Thomas Grant noted that several factors have supported trade between the Far East and this emerging bloc.

Grant wrote, “Far East-Latin America trade has been aided by a notable increase in the exports of industrial goods, as well as strong vehicle/vehicle parts imports (partly ahead of planned tariff hikes in Brazil), while trade growth on the Far East-Middle East/Indian Subcontinent has been driven by firm economic growth in the region as well as increased investment in manufacturing facilities in India as US companies look to relocate manufacturing processes amid a focus on ‘friendshoring’.”

Far East-Africa volumes have been boosted by Africa becoming a new market for China’s finished goods exports, while the continent is growing as a source of raw materials.

Grant wrote, “So, container trade appears to be on track for a stronger year after a challenging 2022-2023, with economic headwinds easing in key regions. Red Sea rerouting is having a profound impact in TEU-mile terms, but for underlying trade volumes, a number of rapidly emerging trade lanes are clearly coming to the fore.”

 

Source: www.container-news.com

Friday, 05 July 2024 / Published in Blog, News

 

A union proposal seeking to blunt China’s growing dominance in the maritime, logistics and shipbuilding sectors is finding bipartisan support among U.S. Congressional lawmakers, based on remarks made at a recent U.S. House of Representatives committee hearing.

The Congressional hearing, as well as the unions’ petition before the U.S. Trade Representative (USTR), reflect a growing concern among lawmakers and the private sector that China’s exponential growth in shipbuilding and in producing ship-to-shore cranes and shipping containers ultimately threatens U.S. national security.

Unions had petitioned USTR in March, arguing that the Chinese government “has funneled hundreds of billions of dollars” toward bolstering its shipbuilding industry so that now China dominates the world’s production of commercial vessels while the U.S.’s share is only 1%. The unions are pressing the USTR to take action against China’s practices under Section 301 of the U.S. Trade Act of 1974 by enforcing measures such as assessing a port fee on Chinese-built ships that dock at a U.S. port and creating a shipbuilding revitalization fund.

Congressional lawmakers affirmed the unions’ request at the June 26 hearing held by the  House Select Committee on the Chinese Communist Party and entitled “From High Tech to Heavy Steel: Combatting the PRC’s Strategy to Dominate Semiconductors, Shipbuilding and Drones.”

“This committee should support unequivocally [the unions’] petition and demand that the USTR have remedies. I mean, it is unconscionable what we’ve allowed as a country,” said Rep. Ro Khanna, D-Calif.

“China started with 5% of the global market in shipbuilding in 1999. They’re up to 50%. They’re producing 1,000 ships every year. The United States, which used to lead, is producing 10 ships every year. This committee is for American leadership. We should be for ensuring that we’re not losing 100 to one on shipbuilding to China,” Khanna said. “The request for a docking fee of about US$1 million would translate into about less than US$50 per container.“

In response to Khanna’s statements, Rep. Andy Barr, R-Ky., said at the hearing, “I’m open to what [Khanna is] saying about a fee because I think China is an exception case… I do not think we should try to counter China by imitating Chinese industrial policy. … I think it would be a mistake to try to copy Chinese industrial policies because that’s actually the best way to misallocate resources. Free markets are the best answer in our competition with China, generally.”

Scott Paul, president of the Alliance for American Manufacturing, testified at the hearing that existing policy measures are not enough to address China’s “predatory market distortions,” adding that his trade association supports the counteracting measures that the unions proposed under Section 301 of the Trade Act.

Paul said that China controls over half the world’s shipbuilding today, beginning construction on nearly 1,800 large ocean-going vessels in 2022. The United States, in contrast, was constructing five vessels that year, he said. The decline in U.S. shipbuilding since the 1970s and the rising dominance in China’s shipbuilding efforts have also led to a situation where the U.S. Navy relies on Chinese-made dry docks in certain circumstances.

“We currently have a tonnage advantage, but it’s not sustainable. We don’t have a surge capacity,” pointed out Paul.

As congressional leaders debated what actions Congress should take to bolster U.S. shipbuilding capacity, USTR has been undergoing its four-year review of Section 301 of the Trade Act.

In addition to receiving the March petition from the unions, USTR said in May that it plans to raise the tariff rate on ship-to-shore cranes from China from zero percent to 25% in 2024.

However, that plan is getting pushback from U.S. port interests, who argue that the tariff could cost at least US$131 million for seven U.S. ports that have preexisting orders with Chinese manufacturers for 35 ship-to-shore cranes.

President and CEO of the American Association of Port Authorities (AAPA) said the association “is confident that the tariff, if imposed, will not meet its stated objectives.”

He emphasized that “it will only result in negative outcomes, including grave harm to port efficiency and capacity, strained supply chains, increased consumer prices, and a weaker U.S. economy.”

 

Source: www.container-news.com

Wednesday, 03 July 2024 / Published in Blog, News

 

Sea-Intelligence has released the Global Liner Performance (GLP) report, which includes schedule reliability data up to May 2024.

The report provides detailed insights across 34 trade lanes and over 60 carriers.

In May 2024, global schedule reliability saw a month-over-month increase of 3.8 percentage points, reaching 55.8%. This marks the highest reliability figure for 2024, surpassing the previous peak of 54.6% by 1.2 percentage points. However, compared to May 2023, schedule reliability was down by 11 percentage points.

Despite this improvement, the average delay for vessels arriving late worsened, rising by 0.34 days month-over-month to 5.10 days. This figure now approaches levels seen during the pandemic peak rather than the lower delays seen before the pandemic. Year-over-year, the delay in May 2024 was 0.73 days longer.

CMA CGM was the most reliable top-13 carrier in May 2024 with schedule reliability of 57.1%, according to the report, while there were another seven carriers above the 50% mark, with the remaining five box lines in the 40%-50% range.

PIL was the least reliable carrier with schedule reliability of 44.5%. Ten of these carriers were able to record a month-to-month improvement in schedule reliability in May 2024, with Maersk and CMA CGM recording the highest improvement of 6 percentage points.

Wan Hai recorded the largest decline of 4.5 percentage points.

On a year-to-year level, none of the 13 carriers recorded an increase in schedule reliability, with eight carriers recording double-digit year-to-year declines, according to the analysis.

 

Source: www.container-news.gr

Monday, 01 July 2024 / Published in Blog, News

 

As of mid-2024, there were six services between North Europe and the West Coast of South America, the same number and composition as a year earlier. However, due to the deployment of smaller ships, average vessel capacity shrank from 5,900 TEU to 5,200 TEU. As a result, Annual Trade Capacity decreased by 11% to reach 722,500 TEU.

MSC stayed on top of the annual trade capacity ranking with 321,100 TEU from two services, ahead of a consortium of CMA CGM, CoscoSL and Hapag-Lloyd, with Maersk third. The other two services are provided by conventional reefer ship operators carrying containers on deck, Seatrade and Baltic Reefers/Cool Carriers. The latter operates a service between Ecuador and St. Petersburg.

*Annual trade capacity is adjusted for non-core ports and puts the homogeneous capacity at 70% of the nominal space

Operating alliances/individual lines in full:
1. MSC

2. CMA CGM, CoscoSL, Hapag-Lloyd

3. Maersk

4. Baltic Reefers/Cool Carriers

5. Seatrade

Slot charterers have not been considered

In a historical context, with the smaller vessels and resultant contraction of annual trade capacity, the latter fell back for the first time since 2020. Even so, it was still in between the levels of 2021 and 2022.

7-year development of North Europe-West Coast South America trade capacity

In addition to North Europe, there are two services between the West Coast of South America and the Mediterranean. This is the same number as a year earlier. Overall Annual Trade Capacity stands at 202,400 TEU, compared to 212,100 TEU, despite a marginal growth in ship size. This contradiction is explained by the addition of intermediate wayports outside the trade and which also receive an allocation of annual trade capacity.

*Annual trade capacity is adjusted for non-core ports and puts the homogeneous capacity at 70% of the nominal space

Over the last three years, changes in North Europe-West Coast South America average vessel and trade capacity have been small.

3-year development of North Europe-West Coast South America trade capacity

 

Source: DynaLiners 26/24 – 28 June 2024

Friday, 28 June 2024 / Published in Blog, News

 

The unstable geopolitical conditions in the Red Sea have forced container ships from Asia to circumnavigate Africa, approaching Cosco Port terminals in Spain and northern Europe instead of Piraeus, Greece’s biggest port.

A drop was reported in the handling of containers at Piraeus in May due to a reduction in transits but not in domestic cargo, which remained at satisfactory levels, maintaining profitable results for the Piraeus Port Authority (PPA).

According to data published by Cosco Shipping Ports, in May a total of 319,000 containers were handled from piers II and III managed by the Piraeus Container Terminal (PCT), compared to 420,000 in the corresponding month of 2023, a sharp drop of 24.1%. Further, between January and May 2024, the handling of containers from piers II and III fell by 13.5% compared to the same period in 2023.

Overall, in the first five months of 2024, 1.591m teu were handled at piers II and III, compared to 1.840m teu in the same period of 2023. A significant drop in the handling of containers of approximately 13% on the PPA-run Pier I was recorded during the same five months.

Meanwhile, the total container traffic at the 36 ports controlled by Cosco Shipping Ports continued its upward trend in May, rising 5.4% to 9.6m teu compared to 9.1m teu in May 2023. In the five-months, a total of 44.4m teu were handled by Cosco’s 36 ports, compared to 41m teu in the corresponding period of 2023, an increase of 8%.

Source: www.seatrade-maritime.com
Wednesday, 19 June 2024 / Published in Blog, News

 

Importing goods can be a complex and costly endeavor, particularly when dealing with large volumes or diverse product ranges. One effective solution for many importers is Less than Container Load (LCL) shipping, a method where multiple shippers’ goods are consolidated into a single container. This approach offers numerous advantages that can enhance efficiency and reduce costs. Here are five key benefits of LCL transport for importers, plus an additional bonus benefit that underscores its value.

1. Cost Efficiency

LCL transport allows importers to share container space with others, which means they only pay for the space their goods occupy. This is particularly beneficial for small to medium-sized businesses that do not have enough cargo to fill an entire container. By splitting the cost of container space, LCL can significantly lower shipping expenses compared to Full Container Load (FCL) shipping.

2. Flexibility and Scalability

One of the standout benefits of LCL shipping is its flexibility. Importers can ship smaller quantities more frequently, which can be crucial for businesses that need to manage inventory levels closely. This flexibility also allows companies to adapt quickly to market demands, scaling their imports up or down without the commitment of a full container.

 

3. Reduced Storage Costs

Since LCL shipping allows for more frequent and smaller shipments, importers can better manage their inventory levels and reduce the need for large storage spaces. This can lead to significant savings on warehousing costs, as goods are imported as needed rather than stored in bulk for extended periods.

4. Lower Risk and Improved Cash Flow

Shipping smaller quantities more frequently can lower the risk of damage or loss per shipment. Additionally, it allows businesses to maintain a steadier cash flow. Instead of investing a large amount of capital upfront to fill an entire container, importers can spread their expenses over multiple smaller shipments. This approach can also help in managing supply chain disruptions more effectively.

5. Access to Diverse Suppliers

LCL shipping makes it easier for importers to source products from multiple suppliers without the need for large orders from each. This opens up opportunities to diversify product offerings and build relationships with a broader range of suppliers. It also allows businesses to test new products in smaller quantities before committing to larger orders.

 

5+1. Environmental Benefits

An additional, often overlooked benefit of LCL transport is its positive environmental impact. By consolidating multiple shipments into a single container, LCL shipping optimizes space and reduces the number of containers needed for transport. This leads to fewer shipments, which can help reduce overall carbon emissions. Importers who are conscious of their environmental footprint will find this aspect of LCL shipping particularly appealing.

 

LCL transport offers a compelling range of benefits for importers, from cost savings and flexibility to reduced storage costs and lower risk. The ability to ship smaller quantities more frequently enables better inventory management and improved cash flow, while access to diverse suppliers enhances market responsiveness. Additionally, the environmental advantages of LCL shipping align with the growing emphasis on sustainable business practices. For many importers, LCL transport is not just a cost-effective option but a strategic choice that supports growth and sustainability in the global marketplace.

Tuesday, 18 June 2024 / Published in Blog, News

 

The World Shipping Council (WSC) has released its annual report on containers lost at sea, revealing a significant decrease to 221 boxes lost in 2023.

This marks the lowest number recorded since the survey began in 2008. Despite this improvement, the WSC emphasizes the ongoing necessity for rigorous safety measures and constant vigilance.

  • Reduction in Losses: In 2023, 221 containers were lost at sea out of 250 million transported, down from the previous record low of 661 containers in 2022.
  • Recovery Efforts: Approximately 33% of the lost containers were successfully recovered.

While progress in 2023 is promising, the WSC stresses the industry must remain proactive. The year’s achievements underscore the continuous commitment needed to uphold safety protocols and preventive measures.

Furthermore, TopTier has yielded significant insights into the causes of containers overboard, along with recommendations and training materials to prevent and manage parametric rolling. A final report based on extensive research and analysis is expected later this year, outlining best practices, updated safety standards, and regulatory recommendations.

Mandatory Reporting of Lost Containers: Recently adopted by the IMO’s Maritime Safety Committee (MSC 108), new mandatory reporting requirements for lost containers will come into effect on 1 January 2026. WSC has collaborated closely with member nations, contributing to the development of these requirements aimed at enhancing navigational safety, enabling prompt response actions, and minimizing environmental risks.

As for regulatory enhancements, there will be ongoing efforts to revise and strengthen safety guidelines, including updates to the SOLAS Convention and CTU Code.

“The reduction in containers lost at sea in 2023 is a positive development, but it does not diminish the urgency of our work. Every container lost at sea represents a potential hazard, and our commitment to preventing these incidents must be unwavering,” stated John Butler, CEO of the World Shipping Council.

 

Source: www.container-news.com

Thursday, 13 June 2024 / Published in Blog, News

 

Spot rates have continued to soar this week, causing significant concern among shippers about how high these rates might climb.

However, the reality is that no one can predict the exact ceiling. Prices will keep rising until a sufficient number of shippers are unable to afford to transport their goods, which will subsequently reduce container demand to align with available vessel capacity. The precise threshold at which this balance will occur remains unknown.

According to Sea-Intelligence, the simplest response to the question of “how high can rates go?” might be to reference the peak levels observed during the pandemic. However, this does not take into account the increased sailing distances around Africa, which were not a factor during the pandemic.

“Source: Sea-Intelligence.com, Sunday Spotlight, issue 668” 

To account for the longer sailing distances, we can analyze rates relative to the distance travelled, measured in US cents per FFE per nautical mile. Figure 1 illustrates this for the pandemic period. While Figure 1 merely presents historical data, it also establishes a precedent: during periods of severe distress, freight rates per nautical mile can reach exceptionally high levels.By extrapolating the data from Figure 1, we can estimate how high the market could potentially climb based on the pandemic surge in rates. Applying the new, longer sailing distances allows us to calculate the possible spot rates per FFE if the current crisis continues.

“Source: Sea-Intelligence.com, Sunday Spotlight, issue 668” 
“The result of this calculation is shown in Figure 2. And here we arrive at the scary scenario for shippers. If the rate paid per nautical mile reaches the same level as during the pandemic, we will see spot rates of 18,900 USD/FFE from Shanghai to Rotterdam, 21,600 USD/FFE from Shanghai to Genoa, and 2,200 USD/FFE on the back-haul from Rotterdam to Shanghai. This is not to say that the rates couldn’t go any higher, this is just to say that rates per nm go as high as during the pandemic, then spot rates would go as high as shown in Figure 2,” stated Alan Murphy, CEO, Sea-Intelligence.

 

Source: www.container-news.com