AUGUST 2023 - SNAPSHOT

• Drewry's composite World Container Index increased by 12.23% in the past month to $1,768.33 per 40ft container as at 24 August 2023. It is now 83% below the peak of $10,377 reached in September 2021 and 34% lower than the 10-year average of $2,684. This indicates a return to more normal prices, but remains 24% higher than average 2019 (pre-pandemic) rates of $1,420.

         

• ANL announce Rate Restorations
  • from September 15th, 2023 at USD100/teu for all shipments from South East Asia, India Sub Continent and Middle East to Australia Main Ports
  • from September 1st, 2023 at USD150/teu for all shipment from North East Asia to Australia East Coast, Fremantle & New Zealand
• ANL announce THC increases effective 15th September
• MSC announced Rate Restorations
  • from 15th of September 2023 at USD150/teu China, Hong Kong, Japan, Korea, Taiwan, Bangladesh, Malaysia, Singapore, Indonesia, Thailand, Vietnam, Myanmar, Cambodia and Philippines to Australia and New Zealand.
• MSC announce revision of Telex Release Fee ex Australia to AUD$110 per B/L effective 22nd of September 2023
• ZIM/MSC Vessel Sharing Agreement 
  • ZIM is pulling its own service out of the Asia-Australasia trades to instead enter a vessel-sharing agreement (VSA) with MSC on its Panda loop. To be branded ZAX by ZIM, the service will deploy seven 5,000 teu ships, with ZIM contributing three. The news is off the back of ZIM posting a US$213m net loss in Q2 despite the carrier topping Alphaliner's half-year capacity change table, with growth of 13.3% since January, narrowly pipping top-ranked MSC's 12.2% capacity growth.
• New Carrier Alert -
  • Dubai-based CStar Line has entered the global market led by former Maersk executive Zsolt Katona. It is unclear who is backing the company, however with 18 vessels on charter, they appear to be linking Asia, Indian sub-continent, and the Middle East with Russian ports, largely un-serviced since the Russian invasion of Ukraine.
• Shipping Line Q2 Financial Summary - 
  • In the second quarter of 2023, carriers' operating profits took a major hit, with a combined EBIT (earnings before interest and taxes) drop of 90% compared to the previous year, totalling just over USD 3 billion. Notably, both ZIM and Wan Hai experienced operating losses. While ZIM has faced profitability challenges in previous Q2 periods, this was the first instance of such an occurrence for Wan Hai between 2012 and 2023. The primary reason for this decline in profitability was a substantial reduction in freight rates, ranging from -48% to -67% across relevant shipping lines. Moreover, a decrease in transported volumes also played a role in this issue. Interestingly, ZIM, despite reporting an EBIT loss, managed to achieve a 0.5% growth in global volume and around 13% growth on Transpacific and Asia-Europe routes.
• Shipping Line Q2 Financial Results - 
  • OOCL - saw its revenue slump 63% in Q2 compared with the same period of 2022 with $1.98bn, compared with $5.28bn the year before.
  • CMA CGM - recorded a $1.3bn net profit in Q2 despite revenue being down 37% compared to previous year.
  • MAERSK - posted a Q2 profit (EBITDA) of $2.91 billion, well below the record $10.3 billion for the same quarter in 2022. Revenue sank by 40% year-on-year, from $21.65 billion in the second quarter of last year to $12.99 billion.
  • ZIM - reported Revenues of $1.3 Billion, Net Loss of $213 Million, adjusted EBITDA of $275 Million and adjusted EBIT Loss of $147 Million
  • ONE - reported a total revenue of USD 3.76 billion and an operating profit (EBIT) of USD 386 million. Unfortunately, this represented a colossal 93% decline compared to the same period in the previous year, amounting to a loss of over USD 5 billion. The carrier's EBIT margin now stands at a mere 10.3%
  • HAPAG LLOYD - Revenue decreased by 40.9% to EUR 10.0 billion in the first half of 2023 (prior year period: EUR 17.0 billion) in light of lower transport volumes and freight rates. EBITDA fell sharply by 65.1% to EUR 3.5 billion in the first half of 2023 (prior year period: EUR 10.0 billion). At EUR 2.6 billion, EBIT was also far below the previous year's figure of EUR 9.1 billion.
  • YANG MING - reported a second-quarter after-tax net loss of $4.27 million. It's first quarter was better than the second, propelling it to an after-tax net profit for the first six months of 2023 of $107 million. Still, that's a $3.9 billion decrease from the first half of 2022. Consolidated revenues were $1.15 billion for Q2 and $2.36 billion for the first half of the year.
  • COSCO - reported preliminary net income of 12.5 billion yuan ($1.7 billion) for Q2 2023, up 76% from the first quarter of this year.
  • EVERGREEN - in Q2 reported sales was TWD 67,384.62 million compared to TWD 174,999.2 million a year ago. Net income was TWD 5,092.25 million compared to TWD 102,293.21 million a year ago.
  • HMM - Q2 net profit plunged 89% year over year. Q2 net profit was KRW 313 billion ($238 million), compared to KRW 2.9 trillion ($2.2 billion) in the second quarter of 2022.
  • Figure 1 shows the EBIT/TEU of the shipping lines that publish both their EBIT and their global transported volumes:

• Mergers/Acquisitions:
  • HMM - Hapag-Lloyd has emerged as an interested party to take over HMM. Both companies are current members of THE Alliance, with speculation it could be first step towards a full takeover. Deadline for bids closed on 21st August.
• Schedule Reliability
  • Global schedule reliability has seen the first drop for the year of 2.5%, down to 64.3%. It is still 24.4% higher than the same period last year.
  • The average delay for late vessel arrivals stable at 4.36 days.
  • MSC demonstrated the best result of the major carriers with a schedule reliability of 70.6%, making it the top-performing carrier among the top 14. Maersk closely followed with a commendable 69.9% schedule reliability. MSC was the sole carrier achieving a schedule reliability exceeding 70%, while six carriers, including Maersk, achieved a reliability range of 60% to 70%. The remaining seven carriers recorded schedule reliabilities between 50% and 60%, with HMM being the only carrier with a reliability score below 50% at 48.3%.

• Cancellations
  • Between weeks 35 (28 Aug-3 Sep) and week 39 (25 Sep-1 Oct), out of a total of 665 scheduled sailings, representing 5% cancellation rate. During this period, 53% of the blank sailings will occur in the Transpacific Eastbound, 26% on Asia-North Europe and Med, and 21% on the Transatlantic Westbound trade.
  • Over the next five weeks OCEAN Alliance has announced 15 cancellations, followed by THE Alliance with 6 cancellations. During the same period, 13 blank sailings have been implemented in non-Alliance services. However, no blank sailings have been announced by 2M.
  • There is an expectation that cancelled sailings may pick up in the coming months as liners battle the worsening economic environment.

           

• Panama Canal Congestion -
  • Panama Canal Authority (ACP) data shows that as at 27 August, there are 128 ships (54 booked, 74 non-booked) waiting for passage through the canal, some 45% more than the average. The Panama Canal Authority slashed the number of daily transits by 20% last month in a bid to conserve freshwater in what has been a year of unprecedented drought for the Central American country. It has also cut the maximum draft for its neopanamax locks by around 2m. While rains have returned to Panama, the authorities are unlikely to make any upwards revision on drafts or the number of transits anytime soon aware of the effects of this year's El Niño weather phenomenon which tends to bring drier weather to the country later on this year. August's waiting time through the canal from the Atlantic to the Pacific was 9.7 days, more than quadruple June's average, but the increase was primarily restricted to non-containerized vessels. Average waiting time for container ships has remained insignificant, at less than a day.
• Orderbook / Scrapping
  • The container fleet is set to grow 18 percent over the next few years however the many new box ships and lower demand are hitting shipping companies' earnings. 4.5 million new teu are expected to be added to the market by 2025. The level of vessel newbuilds being delivered was 126 container ships in the first half of 2023 and that is expected to be added to by another 210 vessels in the second half of the year, with a further 381 deliveries slated for 2024.
  • Wallenius Wilhelmsen orders 4 new vessels (with an option for 8) that are ready to bunker green methanol straight from the shipyard but also prepared to be converted into ammonia-powered ships later.
  • On the scrapping front, ship broker Braemar confirmed that 57 ships of 110,000 teu had been sent for demolition this year to date, compared to just four ships of 2,750 teu up to 14 August 2022, with an estimated 105 ships totalling 207,000 teu expected to be scrapped by the end of this year Braemar reports that Maersk and MSC have been particularly active in scrapping ships to make way for new vessels. It is estimated that vessel scrapping will increase next year to around 160 ships with a similar level of scrapping the following year as deliveries of new vessels.

                   

• Sustainability
  • Maersk has ordered 25 ships that will be able to run on green methanol. However, Maersk' chief executive Vincent Clerc will not guarantee the target of having 25 percent of ocean freight run on green fuels by 2030
  • 'Ship It Zero' has released a decarbonisation scorecard, giving ratings to the carriers based on three campaign demands, which include their ability to;
    1. end port pollution,
    2. abandon dirty ships,
    3. put zero at the helm.
  • In terms of carrier scores, Maersk earned the highest points, 76.5 / 100 (B grade), for the company's actions to date to end its ocean shipping pollution. Maersk is committed to a 70% reduction in absolute emissions by 2030 in Scope 1 and 2 (compared to 2020) and net zero by 2040 across all scopes, which Ship It Zero commented is 'the port industry's most ambitious target to date'. Maersk is the only carrier out of ten carriers to have a target date of 2040 for decarbonization.

                    

• Innovation - 
  • Maersk aims to fully employ artificial intelligence for cargo handling. Navneet Kapoor, Maersk's Chief Information and Technology Officer, anticipates AI assuming key supply chain roles over the next 5-7 years. Their plan involves progressively using AI to manage global shipping tasks, striving for "zero touch logistics.".

• Terminal and Port Update - 
  • Patrick terminals
    • Brisbane: Working with minimal delays approx. 0-0.5 day 
    • Fremantle: Working with minimal delays approx. 0-0.5 day
    • Sydney: Working with minimal delays approx. 0-0.5 day
    • Melbourne: Working with minimal delays approx. 0-0.5 day
      • Patrick Terminals has announced an investment in 10 Kalmar hybrid straddles for its Melbourne terminal, positioning it as the first container terminal operator in Australia to invest in this technology. The hybrid straddles feature advanced technology that enables them to operate on electric power, reducing dependence on fossil fuels. They also cut fuel consumption by up to 40 per cent compared to equivalent diesel-powered machines
  • DP World Terminals
    • Brisbane: Working with minimal delays approx. 0-0.5 day
    • Fremantle: Working with minimal delays approx. 0-0.5 day
    • Sydney: Working with minimal delays approx. 0-0.5 day
    • Melbourne: Working with minimal delays approx. 0-0.5 day
  • VICT
    • Melbourne: Working with minimal delays of 0-0.5 day
      • VICT is extending its equipment fleet with the installation of six new automated stacking cranes (ASC) increasing the terminal's yard by 30% and reefer capacity by 43%. In addition, 15 new truck grids will be installed on the landside, increasing slot availability by 30%. VICT is also adding two additional bigger ship-to-shore cranes to its fleet, bringing the total number of cranes to seven. The new cranes will have an extent of 22 containers, allowing them to handle up to 14,000-teu Neo-Panamax ships. The quay line will also be expanded by 71 metres to accommodate two 336-metre-long vessels berthing at the same time. The extension is expected to be finished and operational by the beginning of 2024, with the expectation of increasing VICT's annual throughput capacity to 1.25 million teu, up from 250,000 teu.
         
  • AAT
    • Brisbane: Berth congestion from Sunday 13th August throughout Sept 2023, due to the high volume of PCC cargo and PCC change of vessel port rotations resulting in clumping of vessel ETAs in Brisbane
    • Port Kembla: Still affected by severe congestion with vessels still queued for up to 15 days at a time citing Berth & Yard congestion. .
    • Melbourne: Congestion at present.
  • New Zealand 
    • Auckland: Working with minimal delays approx. 0-0.5 day
    • Tauranga: Working with minimal delays approx. 0-0.5 day
    • Napier: Working with minimal delays approx. 0-0.5 day
    • Lyttleton: Approx. 0-2 day delay

• Enterprise Agreements -
  • Marine Pilots servicing the Port of Brisbane narrowly avoided 24hrs of industrial action in Brisbane which was scheduled for 24 August. The Australian Maritime Officers Union (AMOU) and Poseidon Sea Pilots (PSP) coming to an in principal agreement late on 22 August.
  • LNG unions in Australia endorsed an in-principle offer from Woodside Energy Group Ltd., easing a strike threat in one of three disputes underway. Strikes at the Woodside and Chevron facilities threaten as much as 10% of global LNG supply, and prices in Europe and Asia have surged this month on the prospect of action.
  • DP World (Australia) (end 2023) and Hutchison Ports fast approaching the end of their current enterprise agreements.

• Global air freight - 
  • spot rate declines 40% for fourth consecutive month. Last month saw a 7% YoY capacity recovery as airlines' summer schedules stepped up to meet heightened passenger traffic. The average air cargo spot rate for the month was USD$2.20 per kg in July, a notable 41% down on July 2022.

GLOBAL SHIPPERS FORUM (GSF) WORKING GROUPS

INTERNATIONAL SHIPPING LINE UPDATES

• Week 32 (as at 7 August 2023)
• Week 33 (as at 14 August 2023)
• Week 34 (as at 21 August 2023)
• Week 35 (as at 28 August 2023)

TRADE DATA UPDATES

• Latest Updates (as at 28 August 2023)                                        FTA / APSA LOGIN REQUIRED

AUSTRALIAN PART X SHIPPING NOTICES