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The Leading Maritime & Transport News Portal
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Monday, March 25, 2024
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Falling rates focus annual transpacific contract talks
THE seasonal dip in container spot rates from Asia to the United States belies market strength, as carriers add capacity and big US retailers slow-walk annual service contract talks, says New York's Journal of Commerce.
But this year spot rates were much higher than last year entering the Lunar New Year, so even with a large drop in spot rates, prices are not expected to fall to last year's nadir.
Also, there are strong signs for growth ahead, according to US retailers and industry analysts. US retailers have significantly upped their projections for US imports from Asia in the second quarter and into the second half of the year.
Platts, a sister company of the Journal of Commerce within S&P Global, said it pegged Asia-to-west coast spot rates at US$3,000 per FEU and rates to the east coast at $4,500, down $900 and $1,000, respectively, on the week and the lowest for both since mid-January.
Last year, Chinese New Year factory closures began on January 22, with the west coast spot rate at $1,290 per FEU and the east coast spot rate at $2,780 per FEU. One month later, the west coast spot rate had edged down to $1,200 per FEU and the east coast rate fell to $2,240 per FEU.
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Zim boxes banned, Malaysia sends ports stern warning
MALAYSIA's Ministry of Transport (MOT) has issued a stern warning to port operators who allowed containers bearing the logo of Israeli company, Zim, to exit the port and move on the highways, reports Bernama, the national news agency.
Transport Minister Anthony Loke said MOT had previously instructed that all Zim-branded containers, with their Star of David logo, should not leave ports and must be returned to their country of origin or other countries. Malaysia is predominantly Muslim.
"They have been given a strong warning that we do not want to see any of these containers leaving our ports into the country and what is already there must be removed as soon as possible," Mr Loke said.
He said this was in response to a viral video of a Zim container truck on a highway in the country on March 16. He also assured that such incidents would not recur.
Last December, Prime Minister Anwar Ibrahim announced that the government had decided to immediately stop accepting ships flying the Israeli flag into the country, as well as banning ships en route to Israel from loading cargo at Malaysian ports.
Mr Anwar, who is also finance minister, said the government had also decided to immediately block and not allow ships of the Israeli-based shipping company, Zim, to dock at any ports in the country.
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Container costs surge 40pc on EU-Korea trade lane
CONTAINER shipping costs between Europe and Korea experienced a sharp rise of nearly 40 per cent in February, driven by escalating tensions in the Red Sea, marking the highest surge since 2019, reports Korea JoongAng Daily.
Data from the Korea Customs Service revealed that the average shipping cost for an FEU on this route surged 38.7 per cent month-on-month to US$934.16 last month.
Similarly, the average shipping expense from Korea to the EU also increased 11.4 per cent in February.
Tensions persist along the critical Middle East route as Iranian-backed Houthi forces, stationed in Yemen, continue to target ships in the Red Sea.
Consequently, carriers have been compelled to halt transit through this maritime corridor, resulting in extended shipping durations and heightened shipping costs.
In addition to the Europe-Korea route, shipping costs on other routes surged in February, propelled by the growth in Korea's export volumes.
The expense of shipping from Korea to the US west coast witnessed an 18.1 per cent month-to-month increase, while shipping costs to the US east coast climbed 13.5 per cent.
These figures encompass freight rates, commissions, and other charges reported by local exporters.
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China's export container shipping price index up 20.9pc
ACCORDING to data from the Shanghai Shipping Exchange, China's export container shipping price index surged 20.9 per cent month-on-month in February, reports Xinhua.
The shipping exchange reported that last month, the average China Containerised Freight Index (CCFI) reached 1,440.74.
Among the sub-readings, the West Coast America service witnessed the most substantial increase, with a month-on-month growth of 33.8 per cent, followed by the Europe service.
In contrast, the sub-reading for the Persian Gulf/Red Sea service declined 1.8 per cent from the previous month.
The CCFI monitors spot and contractual freight rates from Chinese container ports on 12 shipping routes worldwide, drawing on data from 22 international carriers.
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EU ombudsman seeks reforms after coast guard tragedy
THE situation in the Red Sea region remains highly complex, with ongoing attacks by the Houthis targeting tankers and reports indicating their collusion with Hamas, reports Fort Lauderdale's Maritime Executive.
According to CNN, the fate of the car carrier Galaxy Leader and its multinational crew now rests with Hamas, as the Houthis express intentions to expand their attacks into the Indian Ocean to disrupt shipping related to Israel.
In a recent incident highlighting the Houthis' use of outdated information for targeting, the crude oil tanker Pacific 01 experienced an explosion while sailing in the Red Sea.
The vessel, previously associated with Israeli ownership, had undergone a recent change in ownership and management, yet was still targeted by the Houthis based on outdated data.
Security services have cautioned about the risks posed by such situations, with recent ownership transfers being linked to other instances of targeting using outdated information.
Conflicting reports have emerged regarding the status of vessels targeted by the Houthis, adding to the confusion surrounding these incidents.
Furthermore, there are reports indicating direct coordination between the Houthis and Hamas, the latter being a designated terrorist organisation.
This coordination raises concerns, especially given the ongoing conflict involving Hamas in Gaza.
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Sorting SoCal intermodal backlog now main railway focus
TERMINAL operators at the ports of Los Angeles and Long Beach are working to reduce rail container congestion caused by two months of strong imports, reports New York's Journal of Commerce.
The situation has both the Union Pacific the Burlington Northern Santa Fe railways calling for more rail cars to be sent west to help finish the job.
The rail container inventory at Yusen Terminals in Los Angeles is double the normal volume. "We've been backed up for four to five weeks, but there's no real congestion yet," said Yusen CEO Alan McCorkle.
Still, Mr McCorkle said he expects strong volumes for summer and fall as much of the discretionary cargo that left west coast ports last year during the prolonged longshore contract negotiations has returned.
US imports from Asia in January and February handled in Los Angeles-Long Beach totalled 1,395,837 TEU, an increase of 39.6 per cent from the first two months of 2023, according to PIERS data.
The two railways that serve Los Angeles-Long Beach, BNSF and Union Pacific, say they are responding to the backlog in Southern California. BNSF and Union Pacific said they are deploying more intermodal railcars to Los Angeles-Long Beach and are adjusting their operations so the terminals can clear out the rail containers and reduce dwell times.
BNSF in February set a record for on-dock intermodal container moves in Los Angeles-Long Beach, beating its previous February volume record set in 2021, said BNSF vice president Jon Gabriel.
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Unions deem Red Sea, Gulf of Aden 'warlike' no-go zones
THE International Bargaining Forum (IBF), a that negotiates seafarer wages and working conditions, has deemed Red Sea and Gulf of Aden to be "warlike" and called on carriers to avoid transits through these troubled waters, reported New York's Journal of Commerce.
The union statement came after the deaths of three crew members from the bulk carrier True Confidence, which was struck by a Houthi missile.
"Ships transiting the Red Sea and Gulf of Aden are Houthi missile targets, putting seafarers' lives in grave danger," the IBF said.
"We strongly urge charterers, operators and shipowners to avoid passage through the area until there is no risk to the safety of seafarers from further attacks," said the statement.
The IBF wants all vessels diverted away from the questionable areas and has urged all employers and union affiliates to lobby their respective governments to intervene and act in the safety of seafarers.
Container lines have been rerouting vessels around southern Africa since attacks by Houthi militants operating from Yemen picked up late last year. Despite a multinational naval force patrolling the Red Sea and Gulf of Aden, the attacks against commercial shipping have continued.
Of the major container carriers, only CMA CGM has indicated its willingness to send vessels through the volatile waterway.
"The CMA CGM Group has reevaluated the situation in the Southern Area of the Red Sea and the evolving conditions allow us to resume transit on case-by-case basis," the carrier said in a February 28 statement.
"The situation is being closely assessed for each vessel before each transit, routing choices therefore cannot be anticipated or communicated," CMA CGM said. "Otherwise, all other vessels are rerouted via the Cape of Good Hope."
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China shows mixed growth in first two months of 2023
CHINA's economic growth was buoyed by strength in factory output and investment at the start of the year, while a revival in consumption continues to show more muted progress, reports Caixin.
Industrial output rose seven per cent in January-February from the same period a year earlier, the National Bureau of Statistics said, much faster than economist estimates.
Growth in fixed-asset investment accelerated to 4.2 per cent, also stronger than forecasts. Retail sales increased 5.5 per cent, roughly in line with projections.
"The economy is stabilising with the help of supply-side stimulus and some improvement in export demand," said Michelle Lam, Greater China economist at Societe Generale, citing the positive investment and industrial data. She said "consumer demand remained the weak spot."
The strong industrial and investment figures add to evidence of more traction for the world's second-largest economy after Beijing ramped up stimulus late last year.
Earlier, export growth exceeded expectations. Building and sustaining momentum is key to achieving Beijing's growth target for this year of around five per cent-that's the same as 2023's, but harder to attain given a less favorable comparison base.
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Houthi attacks must ease before salvors can be deployed
HOUTHI missile attacks must ease before before salvors can salvage of two stricken vessels of Aden, says the UN's International Maritime Organisation.
Efforts to limit environmental damage from a cargo vessel that sank after a Houthi missile strike are on hold until missile attacks on ships ease, according to the IMO, Reuters reports.
The British-owned Rubymar last month became the first vessel lost since the Houthis began targeting commercial ships in the Red Sea area in November.
The bulk carrier with 21,000 tonnes of fertiliser aboard has been submerged in shallow waters between Yemen and Eritrea since late February.
The Greek-owned True Confidence was abandoned earlier this month after being set ablaze in an attack that killed three crew members near Yemen's port of Aden.
Salvage operations, which can include refloating vessels, towing and repairs, are critical to protecting marine life and coastal environments from damage from leaking fuel and hazardous cargo.
Damage to the Rubymar caused a 18-mile oil slick and scientists remain concerned that a fertiliser leak could trigger devastating algae blooms in the Red Sea that damage vulnerable coral reefs and harm fish.
"We're limited in what we can do in an area that is not safe and secure," Arsenio Dominguez, secretary-general of the IMO said at a media briefing in London.
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2 hospitalised after container falls off semi on highway
POLICE report that two individuals have been hospitalised following an incident where a shipping container dislodged from a semi-truck on Interstate 90 on Sunday afternoon, reports CBS News.
Illinois State Police responded to a two-vehicle collision at 2:48 PM on the Eastbound Kennedy Expressway near Grand Avenue in Cook County.
The container fell from the semi-truck, causing damage to a passenger vehicle.
Both injured individuals were transported to a hospital and are reported to have non-life-threatening injuries.
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Air cargo rates continue to rise, especially from China
GLOBAL air cargo rates continue to increase according to air freight price reporting agency TAC Index, reports London's Air Cargo Eye.
Its latest Baltic Air Freight Index (BAI) monitoring device reveals general price gains of a further 4.1 per cent in the week to 18 March, a third successive weekly increase, reducing the year-on-year decline over 12 months to minus 20.3 per cent.
Air cargo rates are once again rising strongly out of China, with the index of outbound routes from Hong Kong, for example, up by 5.9 per cent week to week.
Gains on almost all major lanes from this region have cut its year-on-year decline to only minus 7.9 per cent, the numbers show.
"Sources among forwarders are suggesting renewed robust demand for Chinese exports," says a statement. "Outbound Shanghai gained an even greater 8.9 per cent WoW - strong gains both to Europe and the USA further eroding the YoY decline to minus 7.6 per cent.
"Nevertheless, after recent huge gains, rates out of India now seem to be levelling off, and from Vietnam they are falling back a little," the report said.
From Europe, the index show that routes outbound Frankfurt also fell back a little after a large increase the previous week - down 4.1 per cent week to week, mostly due to rates falling to North America, leaving the year-on-year change at minus 33.1 per cent, TAC reports.
Outbound London experienced a similar surge, but a week later with a week-to-week gain of 10.6 per cent, rates rose on all major lanes helping to reduce the decline to minus 42.4 per cent.
"From the USA, outbound Chicago saw a second successive weekly fall - with a decline of 7.7 per cent pushing its decline to a hefty minus 48.5 per cent," it says.
"Overall rates from North America have been declining week to week both to Europe and to China, though they are still rising to South America.
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Fast-fashion Shein, Temu roils global air cargo industry
QUICK delivery Chinese fast-fashion firms Shein and Temu are disrupting traditional air cargo patterns as never before, making off-peak seasons disappear and causing capacity shortages in their wake, reports Reuters.
"The biggest trend impacting air freight right now is not the Red Sea, it's Chinese e-commerce companies like Shein or Temu," said Basile Ricard, director of Greater China operations at freight forwarder Bollore Logistics.
Shein and Temu together send 600,000 packages to the United States every day, according to a June 2023 report by the US Congress - is boosting air freight costs from Asian hubs like Guangzhou and Hong Kong.
Shein, PDD Group's Temu and ByteDance's TikTok Shop, which recently began online shopping in the US, ship the majority of their products directly from factories in China to shoppers by air in individually addressed packages.
According to data aggregated by Cargo Facts Consulting, Temu ships around 4,000 tons a day, Shein 5,000 tonnes, Alibaba.com 1,000 tons and TikTok 800 tons.
"That equates to around 108 Boeing 777 freighters a day," the consultancy said.
"When the Suez Canal crisis hit, there was no capacity to be bought, because e-commerce has bought it all," said an executive at an air cargo carrier, who requested anonymity due to industry sensitivities.
Said Unique vice president Marc Schlossberg: "Temu is looking to lease 12 wide-body freighters. They are scouring the market for any aircraft they can find."
Shein and Temu are reportedly looking more at sea freight due to the high cost of air freight and considering opening warehouses outside of China to shorten transport times to other regions.
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Air France adds flights to US ahead of Summer Games
AIR FRANCE is adding long-haul flights this summer in response to growing demand, especially from the US, ahead of the Olympic Games in Paris, reports Bloomberg.
The French arm of Air France-KLM expects to offer nine per cent more summer capacity than last year on long-distance routes, it said.
It's resuming flights between Paris and Minneapolis, starting service to Phoenix and adding frequencies to Raleigh-Durham in North Carolina, the carrier said.
The transatlantic push comes less than a month after Air France-KLM reported a fourth-quarter loss and capacity for 2023 that fell short of its target.
The Franco-Dutch airline group said then that geopolitical tensions kept travelers away from countries near Israel and conflict-prone parts of Africa, even as broader demand remained strong.
The Paris 2024 Games run from July 26 to August 11, and along with the Paralympic Games are expected to attract millions of visitors to the French capital.
Air France, one of the many sponsors of the events, said it will fly to the US more than 210 times a week during summer, and is also adding flights to Abu Dhabi, Tokyo and Tanzania.
Closer in, Air France said that it's introducing seasonal routes between Paris and Verona, Narvik-Lofoten in Norway, and Kalamata, Greece. The carrier also will operate two special flights between Los Angeles and Nice, on the French Riviera, for the Cannes Film Festival taking place in May.
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US sanctions shipping company, aiding Iran and Houthis
THE US Department of Treasury recently announced sanctions on shipping company Vishnu Inc and its vessel, the Lady Sofia, for allegedly facilitating illicit shipments to China to support Iran and Houthi forces in Yemen, reports New Delhi's Logistics Insider.
The Lady Sofia, a Suezmax oil tanker registered in the Marshall Islands, was found to have conducted a ship-to-ship transfer with the sanctioned vessel Mehle.
The Mehle, posing as a fictitious Amor vessel and utilizing identification spoofing technology, falsely broadcasted its location as the South China Sea while unloading its cargo onto the Lady Sofia near Singapore.
Earlier, on January 12, the Treasury had identified the Mehle as belonging to Cielo Maritime Ltd, which was sanctioned for aiding Sa'id al-Jamal, an alleged Houthi financial facilitator sanctioned by the US Office of Foreign Assets Control in June 2021.
"The United States is steadfast in its commitment to countering terrorist financing and will continue to use all available means to disrupt significant ongoing illicit commercial activity," said US State Department representative Matthew Miller.
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