SEPTEMBER 2023 - SNAPSHOT

• Drewry's composite World Container Index decreased by 16.33% in the past month to $1,479.48 per 40ft container as at 21 September 2023. It is now 86% below the peak of $10,377 reached in September 2021 and 45% lower than the 10-year average of $2,684. This indicates a return to more normal prices, but remains 4% higher than average 2019 (pre-pandemic) rates of $1,420.
• After 6 consecutive weeks of rate increases July through August, we've now seen 5 consecutive weeks of rate decreases since August.  

         

• ANL announce Rate Restorations
  • from October 15th, 2023 at USD150/teu for all shipments from North East Asia to Australia East Coast & South Australia.
• MSC & ZIM further strengthen ties
  • As MSC and Zim strengthen their partnership, Maersk faces increasing isolation. On September 6, 2023, MSC and Zim unveiled a new operational partnership that spans trade routes from the Indian subcontinent to the East Mediterranean, from the East Mediterranean to Northern Europe, and services linking East Asia with Oceania. As the existing 2M-Zim alliance concludes in January 2025, there are anticipations of a more extensive collaboration. MSC is also looking to broaden its current slot sale agreement with Zim, extending from the Asia-Pacific Northwest route to encompass the Asia-US East Coast and Asia-Med trades.
  • This progression threatens to further sideline Maersk. The company might find itself without allies on crucial Transpacific and Asia-Europe routes, potentially limiting its network reach and access to additional vessel tonnage. Since 2022, while Zim and MSC have expanded their capacities by 33% and 24% respectively, Maersk has seen a 3% reduction in its operated capacity.

• Shipping Competition
  • Bankrupt retailer Bed Bath & Beyond this month has lodged a complaint with the US Federal Maritime Commission against Yang Ming, alleging they shipped 85% less than the agreed cargo. The contract, spanning May 1, 2021, to April 30, 2022, committed to an average of 83.33 feu monthly. Yang Ming provided only 149 feu causing Bed Bath & Beyond to incur added costs and a $6.65m damage. Including surcharges and fees, the retailer's total alleged losses exceed $7.68m, with further losses, such as lost profits, pending trial.
• Mergers/Acquisitions:
  • HMM - South Korean authorities have excluded Hapag-Lloyd from the second round of bidding to acquire flagship carrier HMM, with the creditor banks reportedly taking into account the local maritime community.
  • MSC and City of Hamburg agree a long-term strategic partnership for European boxship terminal operator HHLA.
  • CMA CGM announced it has finalised its acquisition of two container terminals in the Port of New York and New Jersey as it looks to grow its supply chain presence in the US.
• Schedule Reliability
  • Global schedule reliability for July was 64.2%. It is still 23.8% higher than the same period last year.
  • The average delay for late vessel arrivals deteriorated by 0.21 days month-to-month to 4.59 days, which is the first substantial increase for the year.
  • MSC again demonstrated the best result of the major carriers with a schedule reliability of 71.5%, making it the top-performing carrier among the top 14. Maersk & Hamburg Sud closely followed with a commendable 69.8% 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 Yang Ming now the least reliable of the top 14 with 51.3%.

• Cancellations
  • Between weeks 39 (25 Sep-01 Oct) and week 43 (23 Oct-29 Oct), 101 cancelled sailings have been announced out of a total of 662 scheduled sailings, representing 15% cancellation rate. An increase of 10% month-to-month, largely attributed to Golden Week. During this period, 57% of the blank sailings will occur in the Transpacific Eastbound, 38% on Asia-North Europe and Med, and 5% on the Transatlantic Westbound trade.
  • Over the next five weeks OCEAN Alliance has announced 33 cancellations, followed by THE Alliance and 2M with 20 and 17 cancellations. During the same period, 31 blank sailings have been implemented in non-Alliance services. 
  • Weakening demand and declining spot rates have resulted in carriers restricting supply in an effort to boost prices. The number of scheduled sailings cancelled has consequently surged. During weeks 34 to 38, there were 73 cancelled sailings, but the number has risen to 101 cancelled sailings between weeks 39 to 43, a staggering 38% increase in cancellations. 

           

• Panama Canal Congestion -
  • Panama Canal Authority (ACP) reported ongoing challenges due to the ongoing drought that's impacted water levels, complicating shipping routes crucial to global supply chains, including 40% of the US's containerised trade. Factors such as elevated ocean temperatures, erratic rain patterns, and the continued presence of the El Niño weather event are causing officials to likely maintain vessel traffic limitations until at least 2024. These constraints anticipate extended delays, especially during peak periods like Christmas and Chinese New Year. Daily ship movements through the canal have decreased from 36 to 32 because of diminishing reservoirs, leading to heightened competition for the limited available transit slots.
• 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.

                   

• Sustainability
  • CMA CGM and Maersk are partnering on maritime decarbonization, focusing on alternative fuels like LNG and bio/e-methanol to meet their net-zero goals by 2050 and 2040, respectively. They aim to establish sustainable fuel standards, promote green methanol vessel operations, and jointly research other decarbonisation methods. Supporting the International Maritime Organisation's 2023 emissions strategy, they invite industry collaboration for a global emissions framework. Following Maersk's introduction of its methanol-powered "Laura Maersk", they ranked top on Ship It Zero's decarbonization scorecard, with CMA CGM fourth. Both are investing in additional methanol and LNG vessels.
  • Methanol surges in alternative fuel rankings as out of 62 alternative fuel ship contracts made in July, methanol was specified as the fuel for 48 of these orders, which includes 15 retrofits, based on recent data from DNV's Alternative Fuels Insight (AFI) platform. These numbers greatly surpass the 14 ship contracts that opted for LNG as fuel during the same month, highlighting the rising preference for methanol as a fuel source. Currently, there are 204 ships set to run on methanol, which is significantly fewer than the 949 contracts for LNG-powered vessels, not counting LNG carriers. However, this month's data suggests that this disparity might be narrowing.
  • OOCL has aligned itself with the majority of stakeholders in aiming to reach net zero by 2050. It was previously claimed that, due to its Chinese owners, it had been said that the company's climate target to reduce CO2 emissions was aligned with China's official goal to reach a net zero in 2060. OOCL have since confirmed their commitment to net zero. OOCL also confirmed green methanol will be their future solution and have ordered seven methanol compatible dual fuel vessels which will be delivered between 2026 and 2028.
  • CMA CGM, COSCO, Maersk, and ONE have joined forces for a transpacific eco-friendly corridor. Ports, carriers, and cargo owners have unveiled a blueprint for a Green Shipping Corridor Strategy to hasten emission cuts on a prime container shipping route across the Pacific. In the ground-breaking initiative, the shipping partners pledge to deploy ships with minimal to no lifecycle carbon emissions on this corridor by 2025. Their collective goal is to showcase the viability of the world's inaugural zero lifecycle carbon emission container vessels by 2030.

• Terminal and Port Update - 
  • Patrick terminals
    • Brisbane: Working with minimal delays approx. 0-0.5 day 
    • Fremantle: Working with delays approx. 1-2 days
    • Sydney: Working with minimal delays approx. 0-0.5 day
    • Melbourne: Working with minimal delays approx. 0-0.5 day
  • 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 1-2 days
       
  • 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. Expected to ease with anticipation of nil to minimal berthing delays in October 2023.
    • Port Kembla: Still affected by severe congestion with vessels still queued for up to 15 days at a time citing Berth & Yard congestion. Congestion expected until 7th October at present. 
    • Melbourne: Congestion at present.
       
  • MIRRAT
    • Melbourne: Congestion at present. Expected to ease mid October.
       
  • New Zealand 
    • Lyttleton: Approx. 0.5-1 day delay
    • Napier: Working with minimal delays approx. 0-0.5 day
    • Tauranga: Working with minimal delays approx. 0-0.5 day
    • Auckland: delays approx. 1-2 days

• Enterprise Agreements -
  • DP World (Australia) (end 2023) - MUA in early September submitted a request to the Fair Work Commission for authorisation to undertake protected industrial action during the newly initiated enterprise bargaining agreement discussions with DP World. Voting on the protected action ballot closes on 26 September, therefore industrial action is a realistic threat in the short term.
  • Hutchison Ports fast approaching the end of their current enterprise agreements.
  • Chevron and LNG unions in Australia reached an agreement to end strikes at key liquefied natural gas (LNG) facilities in Australia that have roiled the global market for the fuel. Workers accepted a proposed settlement on pay and conditions put forward by the regulator and will suspend industrial action, the Offshore Alliance, a grouping of two major unions, confirmed Friday in a statement. Worries over the prospects of reduced gas exports from one of the world's biggest suppliers and other unrelated outages, had prompted spikes in prices in Europe and Asia over recent weeks. The global LNG market has been finely balanced since Russia pipeline gas supply to Europe was curbed last year after the invasion of Ukraine.

• The average air cargo spot rate for the month was USD$2.19 per kg in July, the lowest level since the onset of the pandemic more than three years ago. Falling air freight rates paired with growing capacity and yet another month of softening global demand has dampened hopes for a rise in volumes in the back half of the year.

            

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