Yang Ming not tempted to charter ships amid Red Sea crisis
29.01.2024
Taiwanese liner operator Yang Ming Marine Transport will not follow its peers and charter in more ships to capitalise on the Red Sea crisis.
Speaking at a seminar organised by Chung-Hwa Institution for Economic Research on 24 January, Yang Ming chairman Cheng Cheng-mount said, “There is still a tonnage overhang, but the Red Sea crisis that has caused many ships to detour round the Cape of Good Hope has resulted in freight rates jumping in the short term. Economic data is mixed and the market is actually volatile.”
It has been estimated that 90% of ships that previously transited the Suez Canal are now moving round the Cape of Good Hope to avoid attacks from Iran-backed Houthi rebels. The detours have extended Asia-Europe sailing times by 15 days, absorbing excess vessels.
MSC, Maersk Line and other operators have been chartering more ships as tonnage availability tightens, but Yang Ming is refraining from doing so.
Cheng noted, “Freight rates aren’t things that the industry can determine. Many ships are expected to have to queue up to enter European ports after passing through the Cape of Good Hope. I'm afraid there will be another round of port congestion that we saw during Covid-19.
“The container shipping sector is actually oversupplied as the Covid-19-induced pressure on the global supply chain has continued to ease. The fluctuations caused by the Red Sea crisis may inhibit economic growth. If the (Red Sea) crisis gradually subsides and demand is obviously weak, the situation will eventually normalise.”
Cheng reminded attendees that the World Bank estimates that the global economy will enter its third year of slowdown in 2024. Multiple international events and geopolitical conflicts have occurred in succession, resulting in economic development facing a slowdown.
Cheng pointed out, “The outlook for global economic growth in 2024 is the lowest since 2022, making this year full of uncertainties.”
Dubai advances in green transport systems with two new collaborations
22.01.2024
Dubai’s Roads and Transport Authority (RTA) is taking a huge step forward in green transport innovation. During the Dubai International Project Management Forum (DIPMF), the RTA signed two key memoranda of understanding (MoUs) to explore futuristic transportation solutions.
The first MoU focuses on the potential development of the Floc Duo Rail system.
Maersk and Hapag-Lloyd to form new alliance
18.01.2024
Two container giants, Denmark's Maersk and Germany's Hapag-Lloyd have signed an agreement for a new long-term operational collaboration.
The new "Gemini Cooperation" is expected to start in February 2025 with the ambition to deliver a "flexible and interconnected ocean network with industry-leading reliability".
Hapag-Lloyd's CEO said, “Teaming up with Maersk will help us to further boost the quality we deliver to our customers. Additionally, we will benefit from efficiency gains in our operations and joint efforts to further accelerate the decarbonisation of our industry.”
The new cooperation between the two companies will comprise a fleet pool of around 290 vessels with a combined capacity of 3.4 million TEUs with Maersk deploying 60% and Hapag-Lloyd the remaining 40%.
Read the initial service network plan for Gemini here
“We are pleased to enter this cooperation with Hapag-Lloyd, which is the ideal ocean partner on our strategic journey. By entering this cooperation, we will be offering our customers a flexible ocean network that will raise the bar for reliability in the industry. This will strengthen our integrated logistics offering and meet our customers’ needs,” commented Vincent Clerc, CEO of Maersk.
As a part of the agreement, the two companies have set the target of delivering schedule reliability of above 90% once the network is fully phased in.
As a consequence of joining this cooperation, Hapag-Lloyd will leave THE Alliance end of January 2025, when the 2M alliance of Maersk and MSC will also be terminated.
During 2024, Maersk and Hapag-Lloyd will plan the transition from their current alliances to the new operational cooperation, while service to customers will continue along existing agreements.
Shippers are counting the cost of war
15.01.2024
Verifiable costs for transiting the African Cape rather than the Suez Canal are around US$1,000 per box according to Xeneta chief analyst Peter Sand, who was responding to questions on how western bombing had changed the maritime supply chain seascape.
Speaking after coalition forces bombed targets in Yemen in an effort to neutralise the threat to merchant shipping in the Red Sea, Gulf of Aden and Gulf of Oman, US has effectively escalated the regional war, admitted Sand.
“Tensions were already high now they are a bit higher,” he told Container News. He said container shipping would not return in any numbers to the Suez Canal until they are convinced that it is safe.
That means if disruptions last for longer than three months carriers are likely to add ships to loops and rework services to meet the new reality, less than three months of disruption will see services head for the cape, but will be cut short at either end.
With rates edging up to around US$5,300-5,500/TEU this week, Sand believes that the disruption to supply chains will have a disproportionate effect on smaller shippers who are less able to rapidly react to the chaotic nature of the Far East to Europe trades, than the more resourced shippers and forwarders.
In a ‘back of the envelope’ calculation of the extra verifiable costs of transiting the Cape, Sand said that while there would be savings in insurance and Suez Canal costs of around US$1.5 million a ship, the extra fuel for the longer journey, 20 days on a round trip, will add US$1.2 million. With charter rates at US$60,000/day that would add a further US$1.2 million and other expenses will see verifiable costs increase to US$2.5 million per ship, per round trip, translating to around US$1,000/container, Sand said.
Global Shippers’ Forum (GSF) director James Hookham believes there should only be a month of schedule disruption, but as services are developed and ships added to loops the timings should settle down to a comparatively normal system, albeit with longer transit times.
“Overnight action [by coalition forces] have effectively declared the whole region a war zone for the foreseeable future,” claimed Hookham, adding that, “shippers should prepare for extra costs.”
However, the disruption should not be on the scale of the pandemic. “There will be a period of realignment, but assuming there is no wider escalation there should be a one-off hit to scheduling,” said Hookham.
As a result, rates should settle and because we are aware of the limits of this disruption it should be possible to see the boundaries of the disruptive nature of the Middle East conflict.
According to the GSF, many shippers see the end of Chinese New Year, which starts on 10 February and ends on 17 February, as the start of the contract renewal season.
Hookham urges shippers to see through the “fog of war” and “even though the military situation may become worse, ships are safe going around the cape.”
Fire on boxship in Houston kills two seafarers, injures one
09.01.2024
Two seafarers died and another crewman was hurt after a fire broke out in the engine room of the 2,174 TEU container ship Stride.
COSCO Shipping Lines had chartered Stride from Danaos Corporation to operate a service connecting the US port Houston with Guatemala, Honduras and Colombia. The service, launched in June 2021 to target reefer cargoes, is jointly operated with CMA CGM, which contributes two chartered vessels.
The fire is said to have occurred while containers were being loaded at Barbours Cut Container Terminal, and Port Houston Fire Department was alerted to the incident around 3.30 am local time on 8 January. The fire departments of Baytown and LaPorte also responded to the incident.
The three seafarers were hurt while trying to put out the fire, which reportedly started while the 1997-built Stride was being bunkered. By 7.32 am the same day, the flames were put out.
Two of the crewmen were pronounced dead at the scene, while the third seafarer was airlifted to a Houston hospital, where he remains in critical condition.
Port Houston said the flames have since been contained, but the area will be monitored for 24 hours per protocol.
The cause of the fire will be investigated.
Harris County Judge Lina Hidalgo shared a statement following the incident, saying, in part: "At this time, Harris County Pollution Control Services has confirmed that there is no threat to the surrounding community. Harris County extends our deepest to the deceased, the injured, and their families."