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Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have prepared the following report using practical efforts to ensure that the commentaries are accurate, generally using source intelligence and publicly available data.
JANUARY 2024 - SNAPSHOT - Rates
- Drewry's composite World Container Index has increased to $3,964.00 per 40ft container as at 25 January 2024.
- The increase equates to a rise of 186.42% since the 23rd November composite index of $1,384.00.
- The week leading into the new year recorded the highest ever weekly increase of 61%.
- The latest Drewry WCI composite index of $3,964 per 40ft container is the highest since October 2022 and is 179% more than average 2019 (pre-pandemic) rates of $1,420.
 Panama Canal As a result of a wetter than expected November, the Panama Canal Authority (PCA) recently revised up the allowance to 24 vessels for January. At normal capacity, the canal generally caters for 36 containerships each day, however as a result of October '23 being the driest month in the Canal watershed in history , in anticipation of the possibility of a worsening situation in November and December, the decision was taken on October 30, to progressively adjust the number of daily transits to: o 24 in November; o 22 in December; o 20 in January and o 18 in February, To circumvent Panama canal impacts, Maersk opted to introduce a rail option (running adjacent to the canal) to bypass the drought-stricken Panama Canal. - Red Sea
- Red Sea challenges are still seeing major impacts. With the Suez canal generally catering for 29% of global ocean traffic (higher of late as a result of the panama canal restrictions), the crisis has wide-ranging implications.
- Carriers continue to adjust services as a result of continued attacks by Houthi rebels and ahead of Lunar New Year in order to mitigate disruption caused by Red Sea diversions, employing strategies like shortening journeys and increasing sailing speed. Disruptions and cost increases in ocean freight may have peaked, as demand is expected to ease post-Chinese New Year and new ships introduce additional capacity. Meanwhile, empty container shortages in Asian export hubs pose challenges, prompting carriers to potentially add vessels to alleviate shortages.
- The Suez Canal connecting the Mediterranean Sea to the Red Sea, handled approximately 12% to 15% of global trade in 2023.
In response to the Red Sea crisis, major players in the shipping industry have again temporarily suspended Suez transits. Notably, weekly container ship transits have plummeted by 67%. Tanker transits and gas carriers are also experiencing significant declines. Meanwhile, shipping prices are increasing. The USD$500 surge in the average container spot freight rates during the last week of December was the highest ever weekly increase (61%). Average container shipping spot rates from Shanghai have more than doubled (+122%) since early December. More specifically, the rates from Shanghai to Europe have more than tripled (+256%). Insurance premiums have also surged, compounding the overall cost of transit. Additionally, ships rerouted from the Suez and Panama Canal routes are compelled to travel faster to compensate for detours, burning more fuel per mile and emitting more CO2, further exacerbating environmental concerns. - FMC in the US is holding a public hearing on February 7, 2024 focussing the impact of conditions in the Red Sea and Gulf of Aden regions on commercial shipping and global supply chains. According to FMC regulations, common carriers must provide a 30-day notice between the announcement and effective date of a tariff change that increases shippers' costs, however, carriers can submit a Special Permission request to reduce this waiting period if they can provide a good reason.
- Tesla on 12 January announced it was halting production of electric vehicles at its biggest factory in Berlin, Germany for two weeks from 29 January to 12 February because of the conflict in the Red Sea, with other car manufacturers since following suit.
- UNCTAD estimates that the trade volume going through the Suez Canal decreased by 42% over the last two months, with some 220 fewer ships per week taking to route :
 - Capacity deviation as a result of the Red Sea crisis in comparison to other global events shows the significance of the crisis in terms of TEU capacity per week :
- Shipping Competition
- Maersk and Hapag-Lloyd in January announced their intention to form a new operational agreement, to be called Gemini Cooperation, effective from February 2025. The collaboration will merge the fleets of both companies, creating a pool of around 290 vessels with a combined capacity of 3.4 million TEUs. Maersk will deploy 60% of these vessels, while Hapag-Lloyd will account for the remaining 40%. The companies have set an ambitious target of achieving above 90% schedule reliability once the network is fully operational. The formation of the Gemini Cooperation will lead Hapag-Lloyd to exit THE Alliance early at the end of January 2025, two years ahead of its scheduled conclusion in 2027. Similarly, Maersk and MSC Mediterranean Shipping Company have already announced that their 2M alliance would conclude in January 2025. The departure of Hapag-Lloyd could spark changes in THE Alliance, but the remaining members (NYK, Yang Ming, MOL, K-Line, HMM), have limited options.
- The new Shipping Alliance landscape :
 · - PAMA & PBLIS - The NSW Government released the Final Report of the Independent Review on the Ports and Maritime Administration Act (the Act) and the Port Botany Landside Improvement Strategy (PBLIS). The 241 page report provided extensive detail making 37 recommendations relating to the Act and PBLIS. All 16 of the Act recommendations will be adopted, with further stakeholder consultation to occur on 20 of the 21 PBLIS recommendations before making a final decision on these.
- Of serious concern however were the recommendations to remove the broad powers aimed at regulation :
- PBLIS Recommendation 6: Remove the broad power for regulating stevedore charges : Remove the broad Regulation power for regulating stevedore charges and remove associated PBLIS stevedore charge notification and government assessment requirements, and
- PBLIS Recommendation 19: Remove regulated rail servicing arrangements : Remove the regulation of stevedore rail servicing arrangements to allow stevedores to set charges and service terms as appropriate.
- Mergers/Acquisitions
HMM - Harim Group has been selected by state creditors as the winning party to take a majority stake in South Korea's HMM. The deal is expected to be ratified in the first half of next year for the 57.9% stake in HMM. Harim Group is best known for its poultry business, but it already has a sizeable exposure in shipping having bought Pan Ocean, one of the nation's largest bulk owners a few years ago. - The joint venture between China's COSCO Shipping and Italy's Fratelli Cosulich, has acquired the entire capital of Italian trucking and logistics player Trasgo. Established in 1981, Trasgo boasts 14 warehouse facilities with almost 300,000 sqm and over 320 trucks and handling units.
Nippon Express Holdings has completed its acquisition of several cargo-partner businesses based in central and eastern Europe. The deal is expected to cost the Japanese firm around $740m and will propel the company into one of the top five airfreight forwarders with volumes of more than 1m tonnes. - Schedule Reliability
- Global schedule reliability recorded the first proper month-on-month decline in November 2023, with a 2.5% reduction to 61.9%, bringing the score in line with that of March 2023. On a year-to-year level however, schedule reliability was 5.4% higher.
- The average delay for LATE vessel arrivals continues to creep up, increasing by 0.10 days to 5.02 days and on a similar trajectory to what we saw during the same time-period in 2020.
- With 70.0% schedule reliability in November 2023, Evergreen was the most reliable top-13 carrier while ZIM was the least reliable carrier with schedule reliability of 52.3%. 6 of the top 13 carriers recorded a month-to-month increase in November 2023, with Evergreen recording the largest increase of 5.7%.
- Cancellations
- Between weeks 05 (4 Feb-11 Feb) and 09 (26 Feb-3 Mar), 99 cancelled sailings have been announced out of a total of 650 scheduled sailings, representing a 15% cancellation rate. During this period, 56% of the blank sailings will occur on the Transpacific Eastbound, 34% on the Asia-North Europe and Med, and 10% on Transatlantic Westbound trade.
- As has been widely reported in the Australian media, in January alone 13 cancelled sailings have also been announced out of a total of 69 scheduled sailings from China into Australia, representing a 19% cancellation rate.
- Over the next five weeks, OCEAN Alliance have announced 33 cancellations, followed by THE Alliance and 2M with 22 cancellations each. During the same period, 22 blank sailings have been implemented by non-Alliance services.
 · Terminal and Port Update - o Patrick terminals § Brisbane: Delays approx. 0-0.5 day § Fremantle: Delays approx. 0.5 day § Sydney: Delays approx. 4-5 days § Melbourne: Delays approx. 4-5 days § Patrick on 5th January announced their 60 day notice of intention to increase TAC charges, to take effect on 4 March 2024. Patrick the proposed fee increases include percentage and dollar (+GST) increases of: § TAC for Full Imports - § MELB: up 20% to $204.60; § SYD: 22.52% to $190.15; § BRIS: 25% to $186.30; § FREO: 41.68% to $87.19 § TAC for Full Exports - § MELB: up 7.51% to $146.65; § SYD: 7.53% to $133.55; § BRIS: 7.51% to $128.20; § FREO: 41.68% to $43.58. § VBS Booking Fee (Electronic) per slot - MELB, SYD, BRIS: up 15.06% to $44.70 and FREO: up 14.98% to $52.95. § Most other VBS-related and Ancillary charges have increased by 7.50% with the exception of the Side Loader Fee in each terminal which will rise by 9.55% to $77.40. Unlike DP World's recent announcement to bridge the gap, Patrick is adopting a strategy to maintain a differential between its charges for full exports compared to full imports (a concession of approx. 30% between the two rates. o * DP World Terminals (*ongoing protected industrial action) § Brisbane: Working with delays approx. 10 days § During the period between Christmas and New Year, DP World Brisbane has suffered from equipment outages and maintenance of their Automated Stacking Cranes (ASCs) used to load and unload trucks within the Terminal. § Fremantle: Working with delays approx. 2 days § Sydney: Working with delays approx. 9days § Melbourne: Working with delays approx. 11 days § DPW Terminal Access Charge increases take effect in Feb 2024, up 52% in MEL, 38% in SYD and 37% in BNE. o VICT § Melbourne: Working with delays of 0-0.5 days § VICT is recovering after it was severely impacted from 19 January until 23 January as a result of protesters targeting a ZIM vessel handled by the terminal, with gates closed for the duration as a result of safety concerns. o AAT § Brisbane: Working with minimal delays. § Port Kembla: Working with minimal delays. § Melbourne: Working with minimal delays. o MIRRAT § Melbourne: Working with minimal delays. o New Zealand § Auckland: delays approx. 2 days § Tauranga: Working with minimal delays approx. 0-0.5 day § Napier: Working with minimal delays approx. 0-0.5 day § Lyttleton: Approx. 0.5 day delay - Equipment
Reports of empty container parks around the country fast reaching capacity, with ZIM for example having their contracted empty parks reach maximum capacity. Some ZIM customers reportedly stuck holding onto empty containers whilst ZIM looked to make alternative arrangements. ZIM has since confirmed to FTA / APSA that they will consider the delay of an available off-hire depot when reviewing demurrage for impacted customers. Transport companies also highlighting issues in other ports becoming more and more prevalent. - China however are seeing the opposite with a shortage of empties expected to reach a critical point due to the Red Sea chaos causing delays in repositioning.
- Enterprise Agreements -
- DP World (Australia) - Maritime Union of Australia (MUA) protected industrial action which commenced on 6th October 2023 continues into February, with action planned until at least 10 February 2024 at time of reporting. Vessel turnaround times now exceed 9 days at most terminals with vessels still being sub-contracted by DP World in various instances. Media interest in proceedings has escalated in the past month with more pressure on the government to intervene. A recent January meeting between DPW, MUA, and the industrial relations minister Tony Burke MP was held, with the minister declining to intervene, instead publicly criticising the efforts of DP World's handling of the negotiations. Negotiations have since continued with the latest announcement of action issued on 29th of January seeing some lessening of action in comparison with prior announcements, leading to some positivity in the hope an agreement may be reached.
- VICT & Hutchison Ports are fast approaching the end of their current enterprise agreements with negotiations expected to commence later this year.
- TasPorts pilots represented by the Australian Maritime Officers Union (AMOU) voted 100% in favour of a series of work stoppages and bans outlined in a protected action ballot order filed by the union last year. The FWC approved the ballot on 19 December, initiating a voting period which closed on Friday 12 January. Participating pilots voted in favour of an unlimited number of one-hour, four-hour, eight-hour and 24-hour work stoppages. Pilots represented by the AMOU have commenced protected industrial action, impacting ships into Tasmania, with a number of cruise ships choosing to omit Tasmanian ports.
- Global Air Freight
- Market data for December shows the global average air cargo spot rate peaking at USD 2.60 per kg, up +6% on its November level, boosted by a +9% annual growth in demand. The general air cargo spot rate however continued to record a double-digit year-on-year fall of -18%. This compares to a growth ratio of -25% in November compared to the previous year.
- Air cargo last year ended with a +9% year-on-year rise in demand and the general air cargo spot rate reached its highest level in nine months.
- December global air cargo capacity stayed at a similar level to previous months, climbing +6% year-over-year versus the global supply still under recovery in 2022.
- Air France KLM Group and CMA CGM have decided to end their cargo capacity partnership due to regulatory constraints.
- DHL, FedEx and UPS are under investigation by the Competition Commission of India (CCI) over alleged antitrust violations. Reports suggest that the local units of the three express companies were the focus of an investigation following a complaint from the Federation of Indian Publishers. According to the report, the publisher federation alleged that the three companies, along with Aramex and some local firms, were deciding charges and controlling discounts.
- January saw the announcement of Emirates adding extra capacity to/from Brisbane & Perth, with Thai Airways & South African Airways also announcing resumption of services into Perth in the coming months.
- Conflict in Ukraine and the Middle East has created a new environment in the jet fuel market and prices paid have since frequently exceeded the global average by between 3% to 6%. The jet fuel price has impacted the competitive landscape for cargo and passenger operations, leading to price inflation :
TRADE DATA UPDATES
AUSTRALIAN PART X SHIPPING NOTICES
APSA is the designated peak shipper body granted status by the Federal Minister for Infrastructure and Transport under Part X of the Consumer & Competition Act to represent the interests of Australian shippers generally in relation to liner cargo shipping services. Notices have been received and are available for members' reference HERE (FTA / APSA LOGIN REQUIRED)
FTA / APSA IN THE MEDIA
Tom Jensen - Head of International Freight & Logistics - FTA / APSA
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