FTA / APSA Monthly Shipping Report - April 2024

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. 
 

APRIL 2024 - SNAPSHOT

• Rates
• Drewry's composite World Container Index (WCI) has decreased steadily in the past 13 consecutive weeks to $2,706.00 per 40ft container as at 25 April 2024. A 31.7% decline since reaching a high of  $3,964.00 per 40ft container at 25 January 2024 after 8 previous consecutive weekly gains.
• Rate levels are up 55% when compared with the same period last year.
• The average composite index for the year-to-date is $3,260 per 40ft container, which is $550 higher than the 10-year average rate of $2,710 (which was inflated by the exceptional 2020-22 Covid period).
• Rates have started to show signs of stabilising over past few weeks with a slowing rate of decline overall. The slowing largely due to rates ex China starting to increase to certain markets (including Australia).

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• ANL on 16th April announced they will implement a rate restoration program from 1st May 2024, from NEA to AUEC & NZ, at USD300 per 20' dry/reefer & USD600 per 40' dry/reefer for all shipment from North East Asia to Australia East Coast, and at USD100 per 20' dry/reefer & USD200 per 40' dry/reefer for all shipment from North East Asia to NZ.
• ANL on 22nd April announced they will implement a rate restoration program from 15th May 2024, from NEA to AUEC & NZ, at USD300 per 20' dry/reefer & USD600 per 40' dry/reefer for all shipment from North East Asia to Australia East Coast, and at USD200 per 20' dry/reefer & USD400 per 40' dry/reefer for all shipment from North East Asia to NZ.
• GSL/ZIM on 18th April announced a North East Asia to Australia Rate Restoration Program citing that with the present market condition and to sustain the level of service to customers, they independently decided to implement a Rate Restoration with below details on shipments from North East Asia to Australia East Coast at USD$300 per 20' & USD$600 per 40' effective 30th April 2024.                                    

• Purchasing Manager's Index (PMI)
• Global Purchasing Manager's Index (PMI) continues to indicate stability as it hovers around 50. March saw the rate of growth in global manufacturing production accelerate to its fastest since June 2022.

• Supply / Demand
• According to the International Monetary Fund (IMF), the world economy will grow slightly faster in 2024 and 2025 than in 2023 even though economies in the US, China, Japan and India will grow slower.

• Shipping Line Financial Results
• PIL - Singapore's Pacific International Lines (PIL) bucked the trend in 2023, reporting profits in every quarter, culminating in an annual profit of $307 million despite a significant revenue drop from $6.1 billion in 2022 to $2.9 billion. This success, achieved amid a broader industry downturn and lower freight rates, was attributed to stringent cost-cutting measures, including enhanced fleet management that improved fuel efficiency and reduced emissions. PIL anticipates continued profitability in 2024, buoyed by increased shipping rates due to rerouted operations around Africa because of conflicts in the Red Sea.In the fiscal year 2023, the shipping industry experienced a significant decline in revenue, with reductions ranging from 46.6% to 62.6% compared to the previous year. 

• Panama Canal
• Panama Canal Authority (ACP) in April announced an updated schedule for the anticipated number of ship transits per day in the upcoming months. Typically, the canal's operational capacity is described as between 34 and 38 transits daily, based on its design limit of 36, but it is currently restricted to 27. Starting from May 16, the ACP plans to increase the number of daily transits to 31, and from June 1, this number is expected to rise to 32. This adjustment means the canal will be functioning at approximately 90% of its full capacity. Furthermore, the ACP anticipates that the canal will resume full operational capacity by early 2025.

• Red Sea Crisis
• After almost a two week hiatus, Houthi militants on 24th April resumed targeting commercial vessels, striking the Maersk Yorktown and MSC Veracruz following recent threats. U.S. Central Command intercepted an anti-ship missile and neutralised several drones. The security situation in the Red Sea and surrounding areas remains tense, with continued threats to maritime navigation. 
• Linked to the ongoing Red Sea crisis, containership MSC Aries along with 25 crew was hijacked by Iran's Revolutionary Guards on 13th April in the Strait of Hormuz, occurring just before Tehran launched missiles at Israel. The MSC Aries, along with three other detained ships, is currently anchored near Iran. As at time of publication, Iran's foreign minister has since announced that the crew would be released.
• The MSC Aries incident has triggered a global outcry from leading shipping associations include the World Shipping Council (WSC), which emphasized the severe inequities faced by seafarers taken as hostages. In an open letter to the UN Secretary-General Antonio Guterres, the associations criticised the lack of international response compared to hypothetical airliner hijackings. They highlighted ongoing maritime security threats, including a ship held by Houthis in Yemen and recent abductions by Somali pirates. The letter urgently called for increased coordinated military presence and international efforts to secure the release of hostages in these regions.
• MSC is rerouting ships from the Persian Gulf following the April 13 seizure of MSC Aries by Iranian forces. The vessels being diverted include MSC Jewel and MSC Orion from the Himalaya Express service, and MSC Berangere, MSC Daria, MSC Calypso, and MSC Audrey from the Falcon service. These changes involve skipping ports in the Persian Gulf, with some ships being redeployed to transpacific services or other routes. MSC is also negotiating with Iranian authorities for the release of the MSC Aries' crew and the offloading of containers. Additionally, two ships on the 2M's Asia-Mediterranean Tiger service, MSC Leanne and MSC Rifaya, are expected to avoid the Persian Gulf, as they are currently still in the Mediterranean. MSC are the sole operator of Israel-linked containerships which were currently operating in the Persian Gulf. 

• Baltimore – Francis Scott Key Bridge Collapse 
• On 26 March the vessel Dali, chartered by Maersk, impacted the Francis Scott Key Bridge bringing down the bridge and killing 6 people and cutting off the port from all sea traffic. Following are the latest key developments since:
• US Army Corps of Engineers are continuing to lead the salvage effort.
• The city of Baltimore in April made a filing in court suggesting the vessel owners of the Dali operated the vessel despite it being "a clearly unseaworthy vessel." The filing is in response the companies asking the court to limit their potential liability payouts to USD$43.6 million.
• The vessel owner has now declared General Average. 
• Four temporary channels have been created to allow some vessels through the affected area.
• On 25 April, the vessel M/V Carmen operated by Wallenius Wilhelmsen was finally able to depart the Port of Baltimore through a temporary channel.
• On 29 April, the first container ship since the tragedy arrived at the Port of Baltimore since the collapse more than a month earlier. The MSC Cargo Passion III made it through the 35-foot temporary channel on Sunday carrying nearly 1,000 containers
• US Army Corps of Engineers expect to reopen the main shipping channel by the end of May. Carriers in the meantime continue omitting Baltimore and instead offloading through Norfolk VA, New Jersey & New York instead of Baltimore. 

• Haiti

• Innovation
• The CMA CGM Group recently launched SEA REWARD, the first loyalty program specifically for shipping customers. Initiated in March, the program is available to those who use "SpotOn", CMA CGM's digital platform, and the program is now applicable for ANL shipments. SEA REWARD aims to recognise the consistent and voluminous shipping activities of its users.
  Participants in SEA REWARD can progress through four levels—Lieutenant, Captain, Master, and Admiral—each offering unique benefits and the ability to accumulate Nautical Miles. These miles can be used to offset parts of their invoices, integrating a rewards system that appreciates the frequency of their transactions. This program is part of CMA CGM's broader strategy to integrate more digital tools into their customer interactions, enhancing the overall experience through technology and innovation.
• Sydney Autostrad Botany Rail Expansion (SABRE) project, a collaboration between NSW Ports and Patrick Terminals, won the Innovation Excellence Category at the 2024 Infrastructure Partnerships Australia Awards. This project created the world's first fully automated container exchange on and off rail wagons at Port Botany, significantly enhancing efficiency and capacity. The $190m development includes automated features like Automated Rail Mounted Gantry (ARMG) cranes and can handle up to 500,000 TEUs annually, with potential expansion to over 1 million TEUs.

• Shipping Competition
• ZIM have overtaken Yang Ming in Alphaliner's rankings of the world's largest container shipping lines with ZIM climbing up to ninth. ZIM have been aggressively expanding their fleet in recent years, having doubled its capacity over the last three years from 271,000 TEU in April 2020 to now over 700,000 TEU. 
•  US Federal Maritime Commission (FMC) is seeking a $63 million civil penalty from MSC for alleged violations of U.S. shipping laws. According to the FMC's Bureau of Enforcement, Investigations, and Compliance, MSC is charged with charging excessive late fees on non-operating refrigerated containers and incorrectly billing entities that had no contractual relationship with the carrier. These charges, detailed in an 81-page brief, highlight MSC's practices of overcharging and misbilling under the guise of billing "notify parties" instead of the actual contracting parties. MSC disputes the charges and intends to vigorously defend against what it considers excessive penalties, arguing the highest ever imposed by the FMC.
• World Shipping Council (WSC) has challenged new detention and demurrage (D&D) rules set by the US' Federal Maritime Commission (FMC) by filing a petition with the US Court of Appeals citing an "internal contradiction" in the rule which still allows ocean carriers to bill motor carriers directly, contradicting the rule's intended spirit. The changes, instigated by the 2022 Ocean Shipping Reform Act, aim to restrict D&D charges to contracted parties, relieving truckers of liabilities they might not fully understand due to not being privy to the contract terms.
• HMM's CEO sees Hapag-Lloyd's exit from THE Alliance to join forces with Maersk Line in forming the Gemini Cooperation as a significant opportunity for HMM to expand its operations. As Hapag-Lloyd departs in February, THE Alliance will consist of ONE, HMM, and Yang Ming. HMM plans to hire an external consultancy to develop a strategic plan for business growth and is open to collaboration with local South Korean carriers, particularly SM Line, which might help fill the gap left by Hapag-Lloyd despite its smaller fleet. This comes alongside South Korea's broader maritime ambition to grow its container shipping fleet to 2 million TEU by 2030, with substantial investment planned to support this expansion. 
• Hapag-Lloyd has announced ambitious plans through to 2030, aiming to solidify its position among the top five global container lines amid competition from Japan's Ocean Network Express and Taiwan's Evergreen. The company, is poised to pursue further acquisitions to maintain its ranking, with a strategic focus on expanding its presence in Africa, India, Southeast Asia, and the Pacific. 

• Mergers/Acquisitions
• MSC is making a strategic move into the car and vehicle transport market by acquiring Norway-based Gram Car Carriers for approximately $700 million. Gram Car Carriers, with its 18 owned vessels, is the third-largest tonnage provider in the PCTC segment, mainly operating mid-sized and Panamax vessels. This acquisition represents a strong entry by MSC into a market characterised by high demand and limited capacity. MSC plans to continue operating Gram under its existing brand and structure, aiming to enhance its footprint in the global vehicle transportation sector. The deal is expected to close by the end of 2024.

• Schedule Reliability
• Global schedule reliability has finally showed signs of improvement since the start of the Red Sea Crisis. With schedules now normalising, reliability has improved by 1.7% month-on-month up to 53.3%. On a year-on-year basis, schedule reliability was 6.9% lower than the previous year. 
• With the market adapting to the new schedules, the average delay for LATE vessel arrivals has also started to improve, decreasing to 5.46 days (down from 6.01 days last month). 
• Hapag-Lloyd was the most reliable top-13 carrier in February 2024 with schedule reliability of 54.9%. Another 7 carriers were above the 50% mark, with the remaining carriers all in the 40%-50% range. PIL was at the bottom with a score of 45.3%.

• Cancellations
• Between week 18 (29 Apr-5 May) and week 22 (27 May-2 Jun), 47 cancelled sailings have been announced out of a total of 643 scheduled sailings, representing a 7% cancellation rate. During this period, 49% of the blank sailings will occur on the Transpacific Eastbound, 34% on the Asia-North Europe and Med, and 17% on Transatlantic Westbound trade.
• Based on April schedule data on China to Australia trade, 6 cancelled sailings have been announced out of a total of 96 scheduled sailings, representing a 6% cancellation rate
• OCEAN Alliance have announced 16 cancellations, followed by THE Alliance and 2M with 12 and 5 cancellations respectively. During the same period, 14 blank sailings have been implemented by non-Alliance services.

• Orderbook / Scrapping
• The container ship fleet is forecast to grow 9.5% during 2024 and 4.9% during 2025, equal to 14.9% growth over the two years combined
• Ship recycling is expected to remain low in 2024 as the Red Sea situation increases demand for ships but increase in 2025.
• Ships with capacities of 12,000 TEU or more, of which there are around 800, will contribute 75% of the total capacity growth as the order book remains large and no recycling is forecast for the segments. At the end of 2025, these ships will contribute more than 40% of total capacity.

• Sustainability
• Ammonia as an alternative fuel was in focus at the Singapore Maritime Week in April, with the trial of the vessel Fortescue Green Pioneer (owned by mining group Fortescue) highlighting ammonia's potential as a zero-carbon fuel. Despite its increasing prominence, significant safety concerns due to its toxicity continue to loom, with fully effective safety practices and technologies still in development.
• Sustainable Aviation Fuel (SAF) - A coalition comprising Qantas, Virgin Australia, major airports and tourism groups have written a letter to the Federal Government advocating for a $2 billion allocation in the upcoming federal budget to foster a sustainable aviation fuel industry in Australia, aiming to diminish reliance on imports. This initiative seeks to bolster national fuel security, create jobs, and reduce carbon emissions, with potential economic benefits estimated at $13 billion annually by 2040. 
• Still on SAF, Wagner Sustainable Fuels and Boeing have signed an agreement to develop a sustainable aviation fuel (SAF) industry in Australia. Wagner has begun building a new SAF blending facility at Toowoomba Wellcamp Airport, aiming to support local airlines' increasing demand for eco-friendly jet fuel. The facility, expected to start regular SAF supply by the end of 2024, will help reduce greenhouse gas emissions and contribute to the development of Australia's SAF production capabilities, aligning with national decarbonisation goals.
• Transport & Environment (T&E), a European clean transport group, released a report on a study they conducted alleging shipping lines are likely to profiteer from the EU's Emissions Trading System (ETS) by setting surcharges higher than their ETS costs.Examples provided suggested some individual ships will bring in more than €1 million per annum in windfall profits. Maersk has subsequently denied claims it is ripping off shippers by overcharging and refuted the T&E study unveiled, branding its findings "misleading", and reliant on "flawed analysis" and "outdated surcharge estimates".

•    
• Xeneta's Carbon Emissions Index (CEI), measuring emissions per tonne of cargo shipped across 13 key trades for shipping, rose to a record 104.7 in Q1, largely driven by conflict in the Middle East. The CEI for trade lanes from the Far East to the Mediterranean surged by 63% year-on-year, with ships detouring an additional 5,800 nautical miles via the Cape of Good Hope. Air cargo from Dubai to Europe increased by 190% in March compared to last year, reflecting shifts in shipping methods due to disruptions. The increased use of air cargo and longer sea voyages are also raising EU Emissions Trading System costs, impacting supply chains and potentially inflating costs of raw materials and goods.

·         Terminal and Port Update - 

o    Patrick terminals

§  Brisbane: Delays approx. 0.5 day 

§  Fremantle: Delays approx. 2 days

§  Sydney: Delays approx. 1 day

§  Melbourne: Delays approx. 0.5 day

o    DP World Terminals

§  Brisbane: Delays approx. 2 days

§  Fremantle: Delays approx. 1 day

§  Sydney: Delays approx. 1 day

§  Melbourne: Delays approx. 1 day

o    VICT

§  Melbourne: Delays approx. 1 day

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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, however yard at near capacity due to vehicle past freetime.

o    New Zealand 

§  Auckland: delays approx. 0.5 day

§  Tauranga: minimal delays approx. 0.5 day

§  Napier: minimal delays approx. 3-4 days

§  Lyttleton: minimal delays approx. 0.5 day                      

o    Global Port Rankings - Shanghai remain at the top of the global port rankings in 2023. Hong Kong however continues it's rapid decline, having lost a third of its container traffic over the past decade. The major alliances, Gemini Cooperation, THE Alliance and Ocean Alliance, have all unveiled their network changes for this year and next with Hong Kong deselected for many routes. A staggering decline for Hong Kong port which only 20 years ago was the largest container port in the world :

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• Global Port Congestion Hotspots -

• Equipment
• Equipment availability as a result of the DP World / MUA protected industrial action has reportedly recovered at all major ports since earlier this year.
• No significant equipment issues reported.

• Enterprise Agreements -
• The Fair Work Commission (FWC) in April approved the DP World Enterprise Agreement 2024 for each of the DP World Sydney, Melbourne, Brisbane & Fremantle terminals. The FWC approval sees an end to the protracted dealings between DP World and the Construction, Forestry and Maritime Employees Union - MUA Division (MUA) which led to almost four (4) months of protected industrial action. The agreements took effect on 23 April 2024 and will run through to the nominal expiry date of 31 January 2028, with discussions for the re-negotiation of these agreements to commence four (4) months in advance of the nominal expiry date. 
• DP World (Brisbane) are still yet to finalise any agreement with the Electrical Trades Union (ETU), with the last agreement expiring on 30 September 2023.    
• DP World (Sydney) announce that the MUA will hold a stop work meeting on Wednesday 1st May from 1000-1400. The stop work is one of the two authorised stop work meetings per annum.
• VICT are the next of the major terminals approaching the end of their current enterprise agreement, with negotiations expected to commence in October 2024 :

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• The International Longshoremen Association (ILA): Cargo owners in the US are preparing for a potential strike at US east and Gulf coast ports, expected to disrupt traffic starting 1 October during peak shipping season. This comes as the six-year labor contract between the ILA, representing 45,000 port workers, and the United States Maritime Alliance (USMX), representing terminal operators at 46 ports from Maine to Texas, is set to expire on 30 September.

• Global Air Freight  
• Latest market data shows rates have increased by 5% in the past month to an average USD$2.50 per kg. The rate remains significantly above pre-Covid levels, +39% compared to April 2019.
• Global air cargo demand continues to rise, up by 6% year-on-year compared to the same period last year. Largely due to a surge in e-commerce activities, particularly driven by the fashion and consumer sectors.         

TRADE DATA UPDATES
 

• Latest Updates as at 29 April 2024 (FTA / APSA LOGIN REQUIRED)

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)