FTA / APSA Shipping Report - Edition 8, 2024

Tuesday, October 8, 2024
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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. 
 
Edition 8, 2024 - SNAPSHOT
  • Rates / Services
    • It remains to be seen if/when the US East Coast & Gulf Coast port strikes will affect global pricing trends, however Drewry's composite World Container Index (WCI) has decreased for the 11th consecutive week, down 41.2% in that period to $3,489.00 per 40ft container as at 3 October 2024. 
    • Rate levels are up 267% when compared with the same period last year.
    • The average composite index for the year-to-date is $4,097 per 40ft container, which is $1,269 higher than the 10-year average rate of $2,828 (inflated by the exceptional 2020-22 Covid period).
                       
                                                                                                             Source: Drewry
    • ZIM announce North East Asia to Australia Rate Restoration Program of USD$500/TEU effective 15 October 2024.
    • ANL announce a General Rate Increase (GRI) effective for all shipments South East Asia, Indian Subcontinent, Middle East and Gulf to Australia of USD$150/TEU effective 15 September 2024.
    • ANL announce a Rate Restoration effective for all shipments North East Asia to Australia East Coast, Fremantle, Adelaide & New Zealand of USD$500/TEU effective 15 September 2024.
    • ANL announce a General Rate Increase (GRI) effective for all shipments PNG, Gladstone & Townsville to North East Asia, South East Asia, Indian Subcontinent, Middle East, and Gulf of USD$300/TEU effective 1st October 2024.
    • ANL announce a Peak Season Surcharge (PSS) effective for all shipments PNG, Gladstone & Townsville to Indian Subcontinent, Middle East, and Gulf of USD$700/TEU effective 1st October 2024.
    • ANL announce a General Rate Increase (GRI) effective for all shipments North East Asia to Australia East Coast, Fremantle, Adelaide & New Zealand of USD$300/TEU effective 15 October 2024.
    • ANL announce a Peak Season Surcharge (PSS) effective for all shipments North East Asia to Australia East Coast of USD$300/TEU effective 15 October 2024, citing an imbalance between supply and demand.
    • CMA CGM / ANL announce revision of Bunker Adjustment Factor (BAF) for Australia, New Zealand and Sofrana ANL for Q4 2024. 
    • MAERSK announce revised Origin & Destination Terminal Handling Charges for Australia to/from world effective 1st October 2024.
    • MAERSK is launching the Northern Star service, offering faster connections between Greater China, Australia (Brisbane), and New Zealand, with transit times as low as 15 days. The first sailing departs Shanghai on 21st October 2024. The Southern Star service continues with an updated route to improve reliability, maintaining Sydney connections, with the first sailing on 3rd November 2024. To streamline operations, Maersk will discontinue the Triple Star and Polaris services, with the last sailings on 20th and 6th November 2024 respectively. Melbourne will now be served by PANZ and OC1.
    • MSC, after recently cancelling their Capricorn & Kiwi Express transhipment services from Europe to Australia, has relaunched its Wallaby service which features a rotation of Hong Kong – Yantian – Xiamen – Shanghai – Ningbo – Port Botany – Melbourne – Auckland – Bluff – Lyttelton – Wellington – Napier – Tauranga – Melbourne – Brisbane – Hong Kong on a 63 day round voyage.
    • MSC (as reported by DCN) have also announced a new Koala service which features Shanghai and Shekou in China before calling Jakarta and then Fremantle.

       
  • Supply / Demand
    • The supply/demand balance will be stronger overall in 2024 than in 2023. Weakening has already begun during 2nd half of 2024 and will gather speed as soon as ships return to transiting the Suez Canal.
    • OECD in September reported a recovery in global trade in the first half of 2024, with growth in both goods and services, especially in the second quarter. This was driven by stronger US imports and increased trade in emerging markets like China, Brazil, and India. Indicators such as global container trade and air freight volumes rose steadily through July, although export orders have weakened, possibly due to early peak season orders in advanced economies                                                                                                                                                                                                                   Source: OECD
    • IMF Economic Growth Forecast: The IMF projects global economic growth rates of 3.2% in 2024 and 3.3% in 2025, with the EU standing out as the only major economy among the top five expected to experience faster growth compared to 2023. Despite the recent aggressive start to rate cuts in the US, the IMF notes that GDP growth projections remain fairly subdued, largely due to ongoing geopolitical tensions.
    • Manufacturing PMI Stability: Global manufacturing activity remains stable, with the Purchasing Managers' Index (PMI) hovering near the 50 mark, signalling consistent output. However, in China, new export orders have been in contraction, with the PMI falling below 50 for four consecutive months.
    • Indian sub-continent (ISC) is extremely impacted at present, with significant space issues causing headaches in trying to secure bookings from AU into the ISC.
    • US / China Trade - Mexico is emerging as a key winner in the US-China trade war, with trade between Mexico and China increasing, Experts suggest that this trade flow acts as a "back door" for goods to enter the US, circumventing tariffs imposed by both the Trump and Biden administrations.
    • Container Trade Statistics (CTS) issued new cargo demand data for August shows global demand in TEU grew by 5.3% year-on-year, marking the fifth consecutive month of 5-6% growth. Notably, volumes from the Far East to Europe and North America surpassed 2021 records in June, July, and August. More significantly, demand in TEU Miles, heavily affected by the Red Sea crisis, surged 25% compared to last year and 41% versus August 2019, underscoring the crisis's impact on global supply and demand dynamics.
    • ABF cargo reporting data shows Sea Cargo reporting for September 2024 was up 59% YoY, and Air Cargo still continues to increase considerably, up by 36% YoY.  eCommerce making up 97% of the Air Cargo reporting. The sea cargo demand was largely attributed to Golden Week demand. 
 
  • Shipping Line Financial Results
    • In the second quarter of 2024, the top nine container shipping companies, based on Earnings Before Interest and Tax (EBIT), saw their average operating margins exceed 20%—a level only reached during the COVID pandemic.
      The average return increased from 11.4% in the first quarter to 21.6% in the second, as carriers benefited from three months of elevated rates, with shippers placing orders early to prevent possible delays later in the year. This shift reflects a move from "just-in-time" to "just-in-case" import strategies. With global container rate indices trending down of late, the expectation is that the carrier margins will also reduced considerably as well. 
          

 
  • Panama Canal - Drought Recovery
    • Panama Canal's average daily transits for commercial shipping in August surpassed 30 for the first time in 10 months, reaching 30.8 per day, with a total of 956 ships transiting. Since early August, 35 daily transit slots have been available following the reintroduction of a tenth Neopanamax slot. Additionally, the Panama Canal Authority will introduce a Long Term Slot Allocation (LoTSA) method from October 1, 2024, allowing shipping companies to purchase transit slots for the next fiscal year.
    • The Panama Canal Authority plans to build a $1.6 billion reservoir on the Indio River to secure a reliable water supply for the canal during droughts, aiming to increase daily transits by up to 15 vessels and maintain operations even in prolonged dry conditions.
 
  • Red Sea Crisis
    • In September 2024, the Red Sea saw the continuation of Houthi attacks on commercial vessels, primarily using missiles and drones. At least four attacks were reported, targeting crude oil tankers and other merchant ships. The Houthis have continued their aggressive tactics, including explosive-laden drone boats and missile strikes, continuing concerns for international trade. There has been an apparent decrease in attacks on merchant vessels during the past month with attacks instead shifting to targets in Israel directly with missiles.
    • Salvage operations for the M/T SOUNION remained delayed due to ongoing interference and risks, despite promises of safe passage. The firefighting operation onboard M/T SOUNION commenced Monday 23 September 2024 by a team of international experts, with the operation seeing promising results as some fires being extinguished and others under control. Salvage and firefighting operations continue with encouraging results and nearing completion. 
    • Houthi Attacks since 19 November 23 :
                   
  • Shipping Competition
    • US Federal Maritime Commission (FMC) upheld a ruling that Hamburg Sud retaliated against OJ Commerce, a furniture importer, by unfairly denying space on its vessels during the pandemic. The FMC increased the damages Hamburg Sud must pay from $10 million to $17.5 million, setting an important precedent in enforcing service denial cases within the shipping industry?.
    • The FMC also issued a warning to carriers and terminal operators not to impose unfair detention and demurrage charges in the event of a port strike on the US East and Gulf coasts. The FMC emphasized that such charges must be reasonable and serve a clear purpose, cautioning that any unjust fees during the disruption will be scrutinised and could result in penalties.
    • Premier Alliance (PA) - ONE, HMM, and Yang Ming, announced via joint statements that as of February 2025, they will operate under a new alliance name Premier Alliance, replacing THE Alliance as Hapag-Lloyd departs to form their new cooperation with Maersk in February 2025 as the Gemini Cooperation. PA will offer expanded East-West trade services. MSC also chose the same day to announce its future East-West network, including a slot exchange agreement with PA. MSC also entered into a three-year operational cooperation with ZIM on transpacific routes.
    • M/V Dali - Baltimore Bridge Collapse fallout - The US Department of Justice is seeking USD$100 million in damages from Grace Ocean and Synergy Marine, the owner and manager of the vessel Dali, which caused significant disruptions at the Port of Baltimore after striking the Key Bridge. The lawsuit follows an NTSB report pointing to electrical failures as the root cause, with the DOJ accusing the ship's operators of negligence in addressing known vibration issues.
    • MSC announced plans to develop a new container terminal in Aarhus, Denmark's largest port, challenging Maersk's dominance. The new terminal, part of MSC's expansion strategy, is expected to be completed by 2027 and will solidify MSC's presence in the region after the dissolution of the 2M Alliance with Maersk.
 
  • Mergers/Acquisitions
    • DB Schenker - DSV have won the bid to acquire Schenker from Deutsche Bahn, valued at €14.3 billion. A deal which is set to transform the global logistics landscape. The deal, expected to close in 2025, will create one of the world's largest logistics providers. Despite approvals from Deutsche Bahn's supervisory board and the German federal government, there has been opposition from unions, citing concerns over job security. However, the acquisition is anticipated to proceed to the regulatory approval stage, which is expected to be obtained by 2025. 
    • Lineage Logistics have been cleared by the ACCC to acquire Fremantle City Coldstores (FCC). The ACCC concluding that the deal would not significantly reduce competition in Perth's cold storage market. Despite both companies serving similar customers, FCC holds a small market share, and strong competition from firms like Americold and Golden West remains. Recent expansions by competitors ensure sufficient capacity for customers to switch providers for better pricing or service.

 

  • Schedule Reliability
    • Schedule reliability has improved slightly by 0.7% month-on-month up to 52.8%, keeping YTD trends at the 50-55% mark. On a year-on-year basis, schedule reliability was 10.2% lower than the same period last year (Aug 2024: 63%). 
    • The average delay for LATE vessel arrivals has deteriorated, increasing to 5.28 days. Which historically is only surpassed by the pandemic highs of 2021-2022. At the same period last year, the figure was 0.62 days lower at 4.66 days. 
    • Maersk was the most reliable top-13 carrier in August 2024 with schedule reliability of 54.7%, followed by future Gemini Cooperation partner in Hapag-Lloyd with 54.3%. 
    • Another 8 carriers were above the 50% mark, with PIL the least reliable at 37.2%. 
      
                                                                                             SOURCE: SEA-INTELLIGENCE
  • Cancellations - Blank sailings increasing
    • Global - Between week 41 (7 Oct-13 Oct) and week 45 (4 Nov-10 Nov), 90 cancelled sailings out of a total of 693 scheduled sailings, representing 13% cancellation rate. During this period, 52% of the blank sailings will occur on the Transpacific Eastbound, 28% on Asia-North Europe and Med and 24% on the Transatlantic Westbound trade.
    • THE Alliance have announced 22 cancellations, followed by Ocean Alliance & 2M with 18 and 13 cancellations respectively. 
    • Australia - Based on October schedule data ex China to Australia, only 2 cancelled sailings have been announced at time of publishing, out of a total of 79 scheduled sailings, representing a 2.5% cancellation rate. 
      
                                                                                             SOURCE: DREWRY
  • Orderbook / Scrapping
    • ZIM recently took delivery of their latest 7800TEU LNG-powered ZIM Diamond, marking the 10th vessel in a series of 15 LNG-dual-fuel "SAVER 7000 CleanBlue" ships. These vessels expanding its LNG-powered fleet to 22 ships, just surpassing MSC in number but at a smaller overall TEU capacity. 
    • CMA CGM received their 2126TEU LNG-powered CMA CGM Salamanque, boosting its lead in LNG-powered ships to 57. The total number of LNG-powered container ships delivered so far in 2024 has risen to 45, up from 31 just a month ago.
    • COSCO have signed a contract for the construction of twelve 14000TEU container ships equipped with dual-fuel methanol propulsion. With a focus on reefer services, the ships are set to enhance their global cold chain logistics offerings. Additionally, COSCO is modernising its existing fleet by converting 8 existing vessels to dual-fuel methanol systems.
    • LNG has become the leading choice for vessel propulsion, representing around 45% of all ship capacity currently on order. A significant portion of these LNG-powered vessels, over half, are set to be delivered to MSC. Methanol ranks as the second most popular alternative, accounting for 29% of the overall fleet on order :
         
 
    • Latest orderbook volumes :
         
 
  • Sustainability
    • IMO's Marine Environment Protection Committee (MEPC 82) recently met to address ongoing environmental challenges in the shipping industry, particularly focusing on reducing greenhouse gas (GHG) emissions, with a growing push for a flat fee per tonne of CO2 emitted. The Carbon Intensity Indicator (CII) will be reviewed by an inter-sessional working group, with findings expected in March. Delegates expressed concerns about the CII unfairly penalising port wait times, especially affecting feeder vessels that operate on shorter routes or between nearby ports, which could shift traffic to more CO2-intensive trucking. Some observers, including the Clean Shipping Coalition, criticised the slow progress, while the World Shipping Council saw "clear progress" in negotiations, urging patience as work continues toward MEPC 83 in April next year.
    • Flinders Port Holdings (FPH) will receive $70 million investment from the Clean Energy Finance Corporation (CEFC) to help FPH electrify its operations. This marks CEFC's first green financing initiative in Australia's container stevedoring sector and the maritime industry. The investment will support transitioning to electric cranes at the Flinders Adelaide Container Terminal, as well as initiatives like solar system installations and replacing vehicles with electric alternatives at FPH's seven ports. Federal energy minister Chris Bowen highlighted this as a step toward decarbonising Australia's ports and reducing emissions.
    • IATA has announced the launch of the SAF Matchmaker, a platform to connect airlines with Sustainable Aviation Fuel (SAF) suppliers. Set to launch in early 2025, the platform will streamline SAF procurement by providing transparency on availability, production methods, and emissions reductions. It aims to reduce costs and complications for airlines, accelerating the industry's move towards net-zero emissions by 2050. Initially focused on airlines and SAF suppliers, it will later include governments and corporate buyers.
           
  • Terminal and Port Update - 
    • Patrick terminals
      • Brisbane: Delays approx. 0 - 0.5 day 
      • Fremantle: Delays approx. 0.5 - 1 day
      • Sydney: Delays approx. 1 - 2 days
      • Melbourne: Delays approx. 0 - 0.5 day
    • DP World Terminals
      • Brisbane: Delays approx. 0 - 0.5 day
      • Fremantle: Delays approx. 0 - 0.5 day
      • Sydney: Delays approx. 2 days
      • Melbourne: Delays approx. 0 - 0.5 day
    • VICT
      • Melbourne: Delays approx. 0.5 day
    • AAT
      • Brisbane: Delays approx. 1 - 3 days between 18 Sept until 27 Oct expected.
      • Port Kembla: Delays expected from 3 Oct until 23 Oct.
      • Melbourne: Working with minimal delays.
    • MIRRAT
      • Melbourne: Working with minimal delays.  
    • New Zealand 
      • Auckland: minimal delays approx. 1 - 2 days
      • Tauranga: minimal delays approx. 0.5 day
      • Napier: minimal delays approx. 1 day
      • Lyttleton: minimal delays approx. 0.5 day       
    • Kenwick Intermodal Freight Terminal in Perth was officially opened last month and is set to reduce road congestion by cutting 135000 truck journeys annually, moving up to 200000 containers between Fremantle Port, Westport, and Kenwick via rail. This $25 million joint venture, supported by federal, state, and Arc Infrastructure funding, aligns with Western Australia's goal of shifting 20% of container freight to rail. The terminal plays a key role in the Westport project, enhancing the state's freight logistics and supporting long-term economic growth by creating a more efficient, sustainable supply chain.
    • Port of Melbourne is set to expand by securing a long-term lease of the former Melbourne Markets site, covering approximately 29 hectares. This development, part of a strategic transformation of the port precinct, involves an investment of over $200 million. The expansion aims to improve traffic flow, reduce congestion, and enhance Victoria's supply chain efficiency. With container volumes expected to double by 2050, the lease will provide additional land for container storage and truck parking facilities, aligning with the goals of the Victorian Freight Plan.    
    • The Queensland Government has declared the Port of Brisbane's Channel Enhancement Project a coordinated project, requiring an Environmental Impact Statement (EIS). This major 25-year initiative will improve the port's shipping channel to accommodate the growing size of vessels, which is crucial as the port handled $72 billion in trade and 1.61 million containers in FY24. The project will enhance channel capacity, reduce vessel emissions, and ensure long-term efficiency. 
    • Ports Australia has released its State of Trade report, offering a comprehensive view of the essential role Australian ports play in driving the nation's economy and supporting global trade. The report reveals that Australian ports handle 99% of the country's international trade, moving $650 billion worth of goods each year. Port operations support nearly 700,000 jobs and contribute $264 billion to the national economy. With a trade volume of 1.6 billion tonnes and 1.25 million cruise passengers annually, the report underscores the critical importance of ports to key industries.

               
                                     
  • Global Port Congestion Hotspots
    • Ningbo and Shanghai are still grappling with significant congestion with 140 ships at anchorage awaiting their window of opportunity. The situation has deteriorated by 32% compared to prior month queue-to-berth ratio figures, with typhoon Bebinca causing further disruption due to closures at Shanghai & Ningbo during the storm's passing. 
    • Manila are also continue to show signs of severe congestion with 30 vessels at anchorage.  

                             
  • Equipment
    • Container equipment shortages persist but have shown signs of gradual improvement. The shortages are driven by longer transit times, high demand, and port congestion, particularly in Asia and North America. Carriers are still allocating more space to meet Trans-Pacific demand, limiting container availability in other regions. Major hubs such as Shanghai have seen significant delays, though conditions are expected to slowly stabilise post Golden Week. In North America, increased intermodal demand and lengthy inland journeys further contribute to the shortage, though there is optimism that pressures may ease later in the year.
 
  • Enterprise Agreements 
    • Montreal Port strikes ended on October 3, 2024, following a temporary agreement between the Canadian Union of Public Employees (CUPE) and the Maritime Employers Association. The strike was planned to last only a few days, and negotiations were resumed to address key issues such as wage increases and work schedule changes. Although a full resolution has not yet been reached, both parties agreed to return to discussions, preventing further immediate disruptions.
    • US East & Gulf Coast Ports -  On October 3, 2024, the U.S. East Coast and Gulf Coast port strike ended just a few days after it began after the International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) reached a tentative agreement on a 61.5% wage increase over six years. This agreement followed a last ditch offer of a 50% wage increase made before the strike, which the union rejected, reportedly pushing for up to 77%. Unlike the prolonged industrial action by DP World (Australia) and the Maritime Union of Australia (MUA) last year, which saw 3.5 months pass before the government stepped in to make it's stance clear, the US government swiftly pressured USMX to improve their offer, facilitating a quicker resolution. Ongoing talks will continue until January 15, 2025, with automation expected to be a central point of contention. The ILA has made it abundantly clear that it opposes automation that threatens jobs, while USMX sees it as vital for efficiency improvements. There is potential for further disruption come January, though the agreed wage increases reduce the likelihood.
    • AAT and VICT are the next of the major Australian terminals approaching the end of their current enterprise agreements, with negotiations expected to have commenced at both :                          
                    

 
  • Global Air Freight  
    • Spot Rate Increase: Global air cargo spot rates rose 10% year-on-year and 4.2% month-on-month in the past month up to $2.61 per kg as a result of rising demand. Tonnages were 9% above last year's levels. There is an expectation of further increased demand and limited available capacity in Q4. 
    • Department of Home Affairs (DoHA) import air cargo restrictions - As of September 14, 2024, the Australian government issued a Special Security Direction (SSD) to aircraft operators introducing stricter security measures for air cargo originating from 55 European and Central Asian countries in response to emerging aviation threats. These measures include a ban on cargo over 500g from unknown senders on passenger aircraft and mandatory additional inspections for cargo on cargo aircraft. These restrictions remain in force until the expiration of the SSD, which typically remain in force for an initial period of up to 3 months, and they can be extended for an additional 3 months depending on the threat assessment at the time. Carriers like Qantas have already begun implementing compliance measures, restricting certain shipments and advising customers of the new guidelines.
    • US Air Cargo Advanced Screening System (ACAS) Emergency Guidelines: Foreign airlines have responded strongly to an emergency security change by the US Transportation Security Administration (TSA), requiring additional shipper and consignee details for air cargo. Korean Air temporarily halted cargo sales from Europe, CIS, and the Middle East to the US until November 18, 2024, while carriers work to comply with the new regulations, which became effective on August 21, 2024. These changes are linked to the US Air Cargo Advanced Screening System (ACAS) aimed at enhancing air cargo security.
    • IATA reports strong growth in August 2024 where global air cargo demand rose 11.4% year-on-year, marking nine consecutive months of double-digit growth. Capacity increased by 6.2%, driven by international belly cargo, while e-commerce and maritime shipping constraints continued to boost demand. 
    • Q4 Air Charter market is set for high demand with brokers expecting tight availability and rising prices in Q4, largely due to e-commerce demand. While potential US port strikes hadn't yet impacted air freight significantly, prices are expected to rise as peak season approaches. 
    • Delta Air Lines and British Airways join IATA CO2 Connect - Delta and British Airways are contributing operational data to IATA's CO2 Connect platform, enhancing transparency in carbon emissions for both passenger and cargo flights. The CO2 Connect for Cargo tool is set to launch in Q1 2025, supporting industry-wide decarbonisation efforts.
    • IATA updates policy and finance Net Zero roadmaps - IATA's analysis reaffirms that decarbonisation by 2050 is achievable but requires urgent action from policymakers and the aviation industry to meet sustainability goals.
                      
 
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