FTA / APSA Monthly Shipping Report - May 2024

MAY 2024 - SNAPSHOT

• Rates
• Drewry's composite World Container Index (WCI) has increased significantly in the past month, up 50.5% to $4,072.00 per 40ft container as at 23 May 2024. 
• Rate levels are up 142% when compared with the same period last year.
• The average composite index for the year-to-date is $3,280 per 40ft container, which is $559 higher than the 10-year average rate of $2,717 (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 27th May announced they will implement a rate restoration program from 15th June 2024, from North East Asia (NEA) to AU East Coast & NZ, at USD300 per 20' dry/reefer & USD600 per 40' dry/reefer, and at USD100 per 20' dry/reefer & USD200 per 40' dry/reefer for all shipment from NEA to AU West Coast.
• ZIM on 26th May 2024 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 15th June 2024. 
• Expectations are now that some carriers are already planning to put in another GRI off approx USD300-400/teu from 01 July.
• Meanwhile, container shortage and congestion is getting worse in China, with reports suggesting long term freight contracts can't get containers from carriers due to low rates, with Oceania freight charges the lowest of all their trades except intra-Asia trade. India's freight rate is also currently sitting higher than Australia based on Chinese sources. 
• ANL/YML/Sea land/PIL/HMM/OOCL are under big pressure of equipment shortage, making them all prefer to release containers to South America, Middle East and African trade. As an example, the FAK rate from Shenzhen to Mombasa has increased 60% in last week, with vessels all full until June. 
                             

• Supply / Demand
• Inventory drawdown contributed to 2023 goods slump - World Bank reported in May that the decline in goods trade in 2023 was driven in part by a drawdown of inventories that companies had built up during the COVID-19 pandemic to protect themselves from supply chain disruptions. Changes in Inventories accounted for less than 0.3 percent of global trade in 2023, down from 0.8 percent in 2022 and 0.6 percent in 2021. In the period from 2015 to 2019, annual accumulation averaged about 0.4 percent of global trade observed. The figures cover 50 countries with available data, which account for 50 percent of global goods trade.

• Shipping Line Financial Results

Q1 Results - In Q1 2024, container lines rebounded with a $5.4bn profit, reversing a $700m loss from Q4 2023, driven by higher rates due to Red Sea disruptions and rerouting. This resulted in a 9.2% year-on-year volume increase, the strongest quarterly growth since the pandemic. Spot rates surged over 30%, but market uncertainty and tight capacity pose challenges. Maersk reported a loss of $166m, shifting from a $2.18bn profit in Q1 2023, while Evergreen, Yang Ming, HMM, and ZIM saw higher profits. Despite this rebound, annual earnings for the 12 months to March 2024 were $16.4bn, down from $171.1bn the previous year.

• Panama Canal
• Panama Canal Authority (ACP) increased 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
• Still ongoing issues with a vessel attacked in the Red Sea over the weekend. An oil tanker "M/T Wind". US CENTCOM confirmed it was indeed hit by a missile which caused some flooding and temporary loss of propulsion and steering. A military coalition vessel came for assistance but the vessel managed to get under way again on its own. According to AIS data it appears to be carrying oil from Russia to China. The vessel is flagged in Panama and, according to USCENTCOM, owned an operated by a Greek company. According to TankerTrackers this vessel is part of the dark fleet shipping Russian oil and have in the past also been moving oil from Venezuela. 
• Containerships are still making transits on the Suez/Bab-el-Mandeb despite heightened risks following the collapse of ceasefire talks between Israel and Hamas and the escalation of the Houthi attacks on commercial shipping on the Red Sea which has widened to the Indian Ocean. Over 90 transits on the Bab-el-Mandeb has been recorded since 1 April 2024, mainly by smaller carriers operating in the Asia-Med and Baltic Sea routes, compared to over 700 voyages diverted to the Cape route in the same period.CMA CGM remains the only mainline carrier to retain selective Red Sea transits with 3 of its ships on Asia-Med services operated within the OCEAN Alliance and 1 ship on the Europe-India route making the passage last month, with 2 more scheduled in the coming week.
• The following map displays incidents involving merchant vessels from February 18th through to present. Yellow markers indicate missiles or drones that either missed or were intercepted before impact and red markers indicate merchant vessels that have been hit :

• Baltimore – Francis Scott Key Bridge Collapse 
• Baltimore continues to mark progress on the recovery operation for the port as it marked eight weeks since the collision that brought down the Francis Scott Key Bridge. During a briefing on May 21, the U.S. Coast Guard reported that it expects to restore 24-hour access to the port as the effort continues on track to reach the goal of fully reopening the federal channel by the end of May.
• Maersk and MSC have announced they've reopened bookings for services to/from Baltimore.

• Haiti

Hapag-Lloyd has followed CMA CGM in resuming bookings to Haiti. As of May 21, the carrier has begun accepting new bookings for Port-au-Prince. The country continues to be plagued by rampant gang violence which has been ongoing since January, forcing a shutdown of the country's main airport and plunging the nation into chaos.

• Shipping Competition
• CMA CGM is facing two legal claims within a fortnight, including a $12 million claim by Colorado furniture distributor PKDC. The allegations involve CMA CGM's refusal to honor contract commitments, forcing PKDC to incur additional shipping costs, and unreasonable demurrage and detention (D&D) charges, which PKDC argues were not intended to promote cargo fluidity.
  Additionally, haulier Access One Transport is seeking $77,000 in damages due to difficulties with returning empty containers, further complicating CMA CGM's legal challenges.

• Mergers/Acquisitions
• DB Schenker - a consortium led by CVC Capital Partners and Carlyle Group has submitted a bid worth around €14bn. DSV, AP Moller Maersk and Mediterranean Shipping Company (MSC) have also submitted bids, but the logistics companies have reportedly been less aggressive on price. Some other companies rumoured to be interested include UPS, DP World, Bahri, and ADQ.

• Schedule Reliability
• Global schedule reliability continues to improve month-on-month, with reliability having improved by 1.6% month-on-month up to 54.6%. On a year-on-year basis, schedule reliability was 7.9% lower than the previous year. 
• The average delay for LATE vessel arrivals has also continued to improve, decreasing to 5.03 days (down from 5.55 days last month). 
• Wan Hai was the most reliable top-13 carrier in March 2024 with schedule reliability of 59.7%. Hapag-Lloyd and ZIM followed with schedule reliability of 56.1% each. There were another 8 carriers above the 50% mark. PIL was the least reliable carrier with schedule reliability of 49.0%. 

• Cancellations
• Between week 22 (27 May-2 Jun) and week 26 (24 Jun-30 Jun), 39 cancelled sailings out of a total of 651 scheduled sailings, representing 6% cancellation rate. During this period, 44% of the blank sailings will occur on the Transpacific Eastbound, 36% on the Asia-North Europe and Med, and 20% on Transatlantic Westbound trade.
• 2M have announced 9 cancellations, followed by THE Alliance and OCEAN Alliance with 7 cancellations each. During the same period, 16 blank sailings have been implemented by non-Alliance services.
• Based on June schedule data ex China to Australia, 4 cancelled sailings have been announced out of a total of 88 scheduled sailings, representing a 4.5% cancellation rate.

• Orderbook / Scrapping
• French shipping company CMA CGM is said to be paying USD$80,000 per day to lease one of TS Lines' newly constructed 7,000 TEU ships for a duration of three months.
  The agreement for the TS Dubai, which was recently completed in Shanghai, has established a new rate standard—typically, the rate would be half as much for a longer term.
  Analysts indicate that an increasing number of small and mid-size operators are transitioning into tonnage providers for major shipping lines, as they can generate higher earnings by renting out their vessels amid tightening shipping supply.
• Wallenius Wilhelmsen has ordered another four next generation PCTC vessels on top of eight already on order. Each having a 9300 CEU capacity, the vessels rank among the largest of their kind. Deliveries will take place between late 2027 and early 2028, while the first eight will begin delivery starting mid-2026. The vessels are expected to be methanol capable and ammonia ready.
• Fleet Growth - A sector by sector breakdown of year-on-year fleet growth as well as deliveries and demolitions covering the past 12 months and the major shipping sectors.

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• MSC continue to sit atop the orderbook rankings, with 19.9% market share  

• Sustainability
• Red Sea diversions have boosted fuel consumption by 1 million tonnes monthly
  At Petrospot's Maritime Week Americas, Adrian Tolson, owner of 2050 Marine Energy, highlighted that the Red Sea shipping crisis and Panama Canal issues have increased fuel consumption by 1 million metric tonnes per month in 2024. This disruption has benefited the bunker value chain.
  Tolson noted a temporary surge in high sulfur fuel oil (HSFO) demand but emphasized its limited future. He pointed out slow adoption of alternative fuels like biofuels and LNG, citing challenges like insufficient incentives and GHG concerns.
  Future favorites for new ship orders include hydrogen, methanol, and ammonia, especially in North America, supported by the US Inflation Reduction Act (2022).
• Singapore ready for Methanol Bunkering - In Singapore on March 27, a simultaneous methanol bunkering and cargo operation was successfully carried out on an X-Press Feeders vessel during its maiden voyage from Asia to Europe. The operation, supported by the Maritime & Port Authority of Singapore (MPA), involved refueling the vessel with 300 metric tonnes of bio-methanol supplied by Global Energy Trading Pte Ltd (GET) from the tanker Kara. This four-hour operation demonstrated Singapore's readiness for commercial-scale methanol bunkering. MPA Chief Executive Teo Eng Dih highlighted that the successful execution resulted from extensive preparation, ensuring safety and efficiency, and noted that the methodology will be applied to other new fuels like ammonia and hydrogen.
• Carbon Emissions Index (CEI) Q1 2024 Ratings - In Q1 2024, the average CEI rating across the top 13 ocean freight trades reached 107.5 points, a first-time global average above 100 and a 15.2% increase from Q4 2023. Despite this, only five trades emitted less CO2 per ton of cargo compared to Q1 2018. The biggest increase in emissions was observed in the Far East to Europe trades. The Far East to Mediterranean trade's CEI rose 63.1%, the highest increase. Factors contributing to higher emissions include longer sailing distances due to diversions and increased sailing speeds. Older, less efficient ships also impacted emissions. While higher filling factors countered some emission increases, the overall CEI deterioration in Q1 2024 highlights the severe impact of supply chain disruptions caused by conflict. The Far East (FE) to Europe route showed significant carbon impacts in the CEI graph.

·         Terminal and Port Update - 

o    Patrick terminals

§  Brisbane: Delays approx. 0.5 day 

§  Fremantle: Delays approx. 1 day

§  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

§  DP World this month announced the expansion of its Australian operations and the launch of its new rail service at their Yennora Intermodal Terminal, one of the largest logistics facilities in the Southern Hemisphere. The Yennora Intermodal Terminal will offer two direct rail services to and from Port Botany per day on a dedicated DP World-owned and operated rail line. The daily port-rail service is expected to manage an annual rail capacity of 160,000 20-foot cargo shipping containers. It is also expected to reduce up to 160 truck trips per day, lowering overall emissions.

o    VICT

§  Melbourne: Delays approx. 1 day

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o    AAT

§  Brisbane: Delays approx. 1-3 days.

§  Port Kembla: Working with minimal delays.

§  Melbourne: Working with minimal delays.

o    MIRRAT

§  Melbourne: Working with minimal delays.

o    New Zealand 

§  Auckland: delays approx. 0.5 day

§  Tauranga: minimal delays approx. 0.5 day

§  Napier: minimal delays approx. 2-3 days

§  Lyttleton: minimal delays approx. 0.5 day                      

o    OOCL have launched a Western Sydney Service, with the capability to arrange bookings up to ICD Moorebank, with OOCL adding a rail service from the port to the Moorebank rail yard.

o    Global Port Congestion Hotspots -

• Equipment
• Shippers are facing worsening equipment shortages in China due to soaring export demand and disruption to both long-haul and intra-Asia services caused by the ongoing vessel diversions around southern Africa. 
  While the impact varies by carrier, the worst-affected ports are Ningbo, Dalian and Guangzhou, while inland hubs including Wuhan and Chongqing are also experiencing container shortages, forwarders say. 
  Carriers are facing equipment issues in China, especially for 40-foot and 40-foot high cube containers.

• Enterprise Agreements -
• 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.    
• 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 expecting possible disruptions starting 1 October during peak shipping season. The agreement is set to expire on 30 September.

• Global Air Freight  
• Latest market data shows rates have decreased by 1% in the past month to an average USD$2.49 per kg. The rate remains significantly above pre-Covid levels, +41% compared to April 2019.
• Global air cargo demand was flat as a result of European holidays.  

TRADE DATA UPDATES
 

• Latest Updates as at 27 May 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)
 

FTA / APSA IN THE MEDIA

22 MAY 2024 :    Air Cargo Week - Pledge partners with Australian and Canadian freight Forwarder associations 

22 MAY 2024 :    The Loadstar - Pledge partners with Australian and Canadian freight forwarder associations 

22 MAY 2024 :    Freight Business Journal - Pledge offers emissions tracking in Canada and Australia 
30 APRIL 2024 :  4BC - Sofie Formica interviews Tom Jensen on the impact geopolitical issues are having on shipping and ultimately, consumers 
29 APRIL 2024 :  ABC - Shipping costs on the rise with conflict, pirates, protectionism and profits sharing the blame

Tom Jensen - Head of International Freight & Logistics - FTA / APSA

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