World Maritime News
WMNF 11/01/2023
Lines struggle to push up rates amid weak market fundamentals
Container shipping lines are facing an uphill battle to increase rates as market prospects remain bleak. The recent traditional cargo rush ahead of the Chinese New Year holiday improved vessel utilization and boosted carriers’ confidence for a price hike. But the reality is less upbeat than expected.
Container freight markets are expected to head further south despite a stabilizing spot rate index seen ahead of the Chinese New Year, according to analysts. They predict shipping lines will remain under pressure with a high newbuilding order book and a tepid cargo growth. BIMCO expects vessel supply growth to outpace demand growth in 2023 when piles of new building vessels are due to hit the water. It said cargo volume might recover from the current level once businesses start replenishing their inventories. But it is unlikely sufficient to improve the supply-demand balance unless all liner operators take action to match the capacity offered to market developments.
Read more: Lloyd’s List1 | Lloyd’s List2
New mega container ships deliveries in 2023
The Alliance (Hapag-Lloyd, Ocean Network Express, HMM, and Yang Ming) will reconfigure the network in April 2023. As a part of the reconfiguration, larger ships will be deployed on the Asia-Europe and trans-Atlantic trades. According to the announcement on 20 Dec. 2022, a series of new fuel-efficient ships of 23,500 TEU — part of a 12-ship order by Hapag-Lloyd — will begin to replace smaller vessels on the Asia-North Europe trade lane as the ships are delivered from April and will be integrated with mega-ships from ONE and HMM.
Container carriers are entering a global economic downturn in an exceptionally profitable position they believe will allow them to ride out the difficult market ahead. But uncertainties around demand and supply are piling up, obscuring the potential depth of the downturn and its duration. A massive increase in new ship deliveries will outstrip weak demand growth in 2023, and the impact of new ship efficiency and carbon intensity regulations from the International Maritime Organization (IMO) on vessel supply remains unclear.
Boxships on Europe-Asia trade rerouted to avoid Suez Canal fees
The Alliance started routing containerships deployed on services between Europe to Asia via the Cape of Good Hope rather than the shorter route via the Suez Canal. The diversion around southern Africa adds between nine and 14 days to transit times, but this saves carriers big money in Suez Canal transit fees. Reduced cargo demand and the consequent plummeting of spot freight rates, together with a looming overhang of containership capacity, prompted consortium members to make a move, according to Alphaliner.
Read more: Lloyd’s List
Other topics on shipping lines
Mediterranean Shipping Company (MSC) completed its acquisition of Bolloré Africa Logistics. The Swiss container giant said the deal underscored its commitment to investing in Africa. Bolloré Africa Logistics is the largest transport and logistics operator in Africa, with 250 subsidiaries and about 21,000 employees in 49 countries, of which 47 are in Africa.
MSC pipped Maersk to become the most reliable carrier for the first time this year, according to the monthly schedule reliability statistics published by container consultancy Sea Intelligence. With schedule reliability of 63.4%, MSC was the most reliable carrier in November 2022, followed by Maersk with 61.7%. Maersk and MSC were the only carriers above 60% reliability last month. However, the top 14 carriers have recorded a month-on-month schedule reliability improvement.
CMA CGM has signed a long-term agreement with Shanghai International Port Group to expand the use of onshore power supply to cut emissions. The company expects its 13 vessels to use onshore power at the port of Shanghai by the end of 2022 and a further 50 by mid-2023.
Read more: Lloyd’s List1 | Lloyd’s List2 | Lloyd’s List3
Modest predictions for freight transportation as the winds of 2023 begin to blow
Various factors will influence the direction of global supply chains in 2023. Barring another black swan event, forces ranging from labor to shipper–carrier power dynamics will shape the freight transportation sector in the coming year, both on the ocean and land.
Read more: JOC
Vessel delays due to China’s easing Covid rules at ports
China relaxed its coronavirus restrictions at ports, including new rules that benefit crew changes, as part of a broader policy U-turn that will see the country co-exist with the virus. In a newly published guideline for domestic port operations, the transport ministry removed the mandatory requirement of nucleic acid tests for port workers, except for those on posts exposed to high risk of infection.
Carriers and analysts said that bad weather and a surge in COVID-19 cases were hitting productivity at major ports in China and South Korea, making wait times and vessel queues longer.
Read more: Lloyd’s List | JOC
Situations in US ports
For the first time since July 2020, the ports of Savannah, Virginia, and Charleston have all reported year-on-year declines in imports. Key east and US Gulf coast ports have sustained growth, while US imports increasingly declined in the second half of the year.
The container dwell fee in the US, introduced in the past year but never implemented, is to be scrapped at Los Angeles and Long Beach ports. Two ports saw a combined decline of 92% in aging cargo on the docks from October 2021, when they introduced the fee program.
US West Coast ports are eyeing a steadier flow of cargo as vessel backlogs have evaporated and port operations returned to something approaching normal. But against those positive signs, there are worries about overall US import demand in 2023 and a lack of clarity around how much market share has been lost to US Gulf and East Coast ports due to still-unresolved longshore labor negotiations and memories of operational delays in early 2022.
Read more: Lloyd’s List1 | Lloyd’s List2 | JOC
Topics on IMO discussion
China failed in a last-minute bid to water down references to stricter climate change targets in global shipping at the end of a key International Maritime Organization meeting on 16 Dec. The country’s delegate called for the omission of text in the Marine Environment Protection Committee’s final report that referenced a “strengthened level of ambition” in revised targets for reducing greenhouse gas emissions.
The IMO’s revised climate ambitions, the roll-out of CII, and the details of what emerges from the European Union’s emissions regulations will be the headline regulatory issues for 2023. With only a couple of inter-sessional working groups between now and the July 2023 deadline, propelling the notoriously glacial pace of change within the IMO is going to be an uphill struggle — but what emerges will set the regulatory landscape for shipping’s future.
Read more: Lloyd’s List1 | Lloyd’s List2
Liner sector continues to lead in alternative fuel-capable ships
Liquefied natural gas remains the alternative fuel of choice for most shipowners, with 81% of new building contracts placed last year for ships capable of non-conventional fuel propulsion being of this fuel type. Containerships continue to dominate the order book for alternative-fuel ships, according to data tracked by Lloyd’s List, with non-operating boxship owner Seaspan leading in the Top 10 shipowners’ list for alternative-fuel vessels, in terms of gross tonnage, on order. Hydrogen fuel has already begun to make an appearance in the order book for non-conventional fueled ships. “Perhaps surprisingly, a total of 18 ships capable of running on hydrogen fuel were ordered. They range from small crew transfer vessels for the offshore wind industry to operate fully on hydrogen to large cruise vessels installing hydrogen-powered fuel cells to cover a smaller portion of the energy demand on board,” said Martin Wold, principal consultant at DNV’s maritime advisory business.
Read more: Lloyd’s List
Regulations for shipping decarbonization put a burden on shipping companies
Ocean carriers from across the cargo spectrum dismissed as “imbalanced and unusable” an operations clause for time charterers adopted by the shipping association BIMCO covering compliance with new vessel carbon ratings. It is the latest broadside by the shipping industry against the Carbon Intensity Indicator (CII) due to be imposed by the International Maritime Organization (IMO) from 1 Jan. Carriers have already expressed displeasure at how to calculate the CII and the lack of enforcement measures to ensure compliance.
On 18 Dec. 2022, the European Council and Parliament reached a provisional deal to gradually phase in the EU’s Emissions Trading System (ETS) for maritime emissions, with 40 percent for verified emissions in 2024, 70 percent in 2025, and 100 percent from 2026. Although the precise cost of the EU ETS for container shipping is not fully known — to some degree, the ultimate cost depends on the cost of carbon emission allowances, which over time have fluctuated quite a bit — it will likely exceed $10 billion annually.
Small forwarders and technology vendors link up in pursuit of new products
A traditional “fork in the road” decision for forwarders has been around whether to build their technology or use existing off-the-shelf software. But with a proliferation of early-stage software vendors aiming their products squarely at small and midsized forwarders, a third option has emerged in recent years: partnering with an early-stage vendor to drive the direction of the product.
Read more: JOC