ID 157458243 © Mikesimon25 | Dreamstime.com

By Gavin van Marle, The Loadstar,  01/11/2024

Container shipping lines on the main east-west trades this week managed to reverse 15 weeks of consecutive declines in spot freight rates by managing to push through a general rate increase on ex-Asia loadings.

This week’s Drewry World Container Index (WCI) saw the spot rate on the Shanghai-Rotterdam leg rise 8% week on week, to $3,396 per 40ft, while the Shanghai-Genoa leg grew 11%, to $3,648 per 40ft.

One European forwarder told The Loadstar the hike was largely due to a 1 November general rate increase that was applied last week for bookings on shipments due to be loaded in Asia from today – for example, MSC notified customers in October that its new FAK rate from 1 November was $5,000 per 40ft from Asia to North Europe.

“The GRIs we saw applied last week are already being reduced, and we do not expect these rates to maintain beyond November. It seems more an attempt to slow the decline in rates after Golden week,” he said.

“Feedback from customers who move cargo on these lanes is that they have enough stock now and demand will be low for the next three months – so we can’t see any reason why rate levels will maintain elevated levels, longer-term.

“Bookings have been a little tight, but this was due to the blank sailings not extra demand from customers,” he explained.

An analysis of the eeSea liner database shows that, of 168 liner services scheduled to operate Asia-North Europe and Asia-Mediterranean services in October, only 147 actually set sail, the remaining 21 sailings being blanked.

This had the effect of reducing capacity on the trades by around 300,000 teu, the scheduled 1.88m teu reduced to 1.57m teu.

A further attempt at hiking Asia-Europe rate levels is scheduled for 15 November, although the quantum varies considerably among carriers: MSC has notified a new FAK rate of 5,500 per 40ft for Asia-North Europe shipments; Hapag-Lloyd has announced $3,500 per 40ft for North Europe and $3,700 to west Mediterranean; and CMA CGM is aiming for $5,700 per 40ft on Asia-West Mediterranean shipments.

However, Xeneta chief analyst Peter Sand described the spot rate hikes as “desperate”, and said they were part of carriers’ negotiating strategy as shippers and lines begin to discuss 2025 contracts, which typically run January-December on Asia-Europe.

“Tender season for new long-term contracts is already under way for many European shippers, so it is no coincidence these are the trades where carriers are fighting so hard to keep the spot market elevated in the hope it strengthens their hand at the negotiating table.

“European shippers may be spooked by the uptick in average spot rates on these trades at the beginning of November, but it is clear the fundamental direction of the market is downward.

“That is why it is vitally important that European shippers pay close attention to market developments during November, because these desperate efforts by carriers to push up spot rates are unlikely to succeed for too long, and it could have a significant bearing on the long-term rates they secure for new contracts coming into force in January,” he said.

Elsewhere, spot rates on the transpacific and transatlantic trades were unchanged, week on week.

ID 341071298 © Mariusz Bugno | Dreamstime.com

By Gavin van Marle, The Loadstar, 25/10/2024

Container spot freight rates on the main export routes out of China continued to fall this week, with declines seen on both the transpacific and Asia-Europe trades.

The trend of declining spot freight rates was bucked, however, on the transatlantic, where Drewry’s World Container Index (WCI) recorded a 28% week-on-week increase, to $2,663 per 40ft, on its Rotterdam-New York leg.

And the backhaul New York-Rotterdam leg price rose 4%, to $761 per 40ft, as forwarders claimed pre-US east coast strike surcharges have had an inflationary effect on pricing this month.

“In a nutshell, carriers successfully implemented a PSS in September, due to strong demand and less capacity,” one vastly experienced UK-based transatlantic forwarder told The Loadstar.

“They then introduced ‘workforce disruption surcharges’ in anticipation of the strike’s impact on the USEC and Gulf – but in the end they were waived or only applied for a very short period before being removed, as the strike ended quickly.

“Some spot rates have gone up, and we still see strong demand and capacity constraints as the congestion caused from the short strike flushes through,” the forwarder added.

Meanwhile, Xeneta data also shows a jump in rates in early September and October on the transatlantic headhaul leg, and lead analyst Peter Sand told The Loadstar “we expect sideways development for the beginning of November”, adding that reduced capacity had also played a part.

He explained: “In September and October, carriers deployed 6%-7% less capacity than in previous months, and this seems to continue in November, if the same level of blanked sailings comes about.

“Demand is steady on this trade, but was probably a little elevated in September due to front-loading, and spot rates reacted to this by going higher.

“As the strike threat is gone for now, we expect uncertainty to keep the rate above the level seen in August into the new year,” he added.

The WCI’s Shanghai-Rotterdam leg shed 7% during the week, to finish at $3,123 per 40ft, while its Shanghai-Genoa leg declined 4%, to finish at $3,296 per 40ft.

Xeneta’s XSI Far East-Europe short term rate this week stood at $3,253 per 40ft.

It was similar picture on the transpacific, where the WCI’s Shanghai-Los Angeles leg dropped 3% week on week, to $4,814 per 40ft, while the Shanghai-New York leg lost 6% week on week, to $5,266 per 40ft.

Mr Sand said the continued Asia-North America rate declines were due to growing overcapacity on the trade, as they have occurred against a background of near-record demand.

“Container imports into the US west coast in August were the second-highest on record, and beaten only by May 2021 during the peak of Covid-19.

“Volumes fell 3.4% in September from August as the market moved past its import peak, but it was still an all-time high for September, and the sixth-highest of any month on record.

However, according to Sea-Intelligence data, in the third quarter, carriers deployed 19% more capacity than in Q2, and 17% more compared with the same period last year.

“But have they overshot?” asked Mr Sand. “The spot market would suggest so, with average freight rates falling 10.4% in September and a further 6.4% in October. Looking ahead to November, there appears to be little change in the capacity offered to shippers and freight forwarders on this trade, even when allowing for some announced blank sailings.

“Unless carriers act more decisively to match offered container shipping capacity to demand, through more blank sailings or outright cancelling of peak season services, then short-term market rates are likely to erode at an even faster pace than seen in October,” he concluded.

By Martina Li in Taiwan, The Loadstar, 04/11/2024

China International Marine Containers (CIMC), the world’s largest container manufacturer, said its output in the first nine months of the year rose five-fold after the Red Sea crisis sparked resurgent demand.

From output of 2,490,000 boxes, (including 93,400 reefers, up 17%) revenue rose 36% year on year, to CNY128.97bn ($18.37bn), while net profit nearly doubled, to CNY2.73bn ($388.35m).

CIMC said: “In the first three quarters, global container trade demand rebounded. Clarksons recently forecast that global container trade will increase significantly, from 0.7% in 2023 to 5.2% in 2024, and it is expected that such trade will continue grow, by 2.8%, in 2025.

“To manage the risk of container shortages caused by the prolonged Red Sea crisis, port strikes and other uncertain events, customers are more willing to order new containers.

“Although there are still risks and challenges, the trend of continued growth in trade volume is expected to remain unchanged. At the same time, international inflation has cooled down, and the US Federal Reserve’s interest rate cut has led many central banks worldwide to follow suit, stimulating a recovery in consumer spending.”

Drewry expects 2024 to be the second-highest year on record for dry freight container manufacturing, driven by record production in Q2 24, while in July alone, more than 850,000 teu was delivered from Chinese manufacturers, which have reported being busy until this month.

The provision for getting containers in numbers at locations where they are required has become a challenge, because of the strong exports from Asia, congestion at transhipment ports and declining container turnover, due to the extended sailing times caused by the Red Sea crisis that has seen ships detour round the Cape of Good Hope.

In particular, the availability of 40ft containers, the workhorses of the industry, has become increasingly tight, with more needed to move the same volume of cargo. In the first seven months of the year, 1.4m were delivered, compared with just 125,000 in the same period of 2023, indicating a tenfold surge.

© Mr.siwabud Veerapaisarn

By Charlie Bartlett technology editor, The Loadstar 17/10/2024

Some three million teu of new tonnage arriving next year will most likely be “more than offset” by further market disruption, ensuring no respite for embattled shippers, according to Drewry.

As the prospect of more US east coast port strikes remains uncertain, the maritime consultancy drew up scenarios with a strike in January and without one, and found that in both models, freight rates would continue to rise.

Port strikes “will have significant inflationary impact on spot rates, not just on the US connected trade, but also by contagion on the other trades”, said Drewry’s Philip Damas.

“If there is no port strike, some spot rates will decline, but overall we believe there will be sufficient other factors, such as the increased emission trading system carbon taxes, which will increase by 75% from January.”

He added: “So it’s a bit of a return to increases in rates at a slow rate. Now, I should stress that global freight rates increased by 87% between pre-pandemic 2019 and this year, up 87% on average.

“Even if the Suez Canal reopens, we do not expect container freight rates will go back to pre-pandemic levels.”

Mr Damas acknowledged that a reopened Red Sea would increase shipping capacity by about 25%. But Drewry does not expect this to happen, rather that the disruption and Cape of Good Hope routing will continue until at least 2026.

“We have extended the timeline for a resumption of full-scale Suez Canal transits to 2026,” confirmed Mr Damas.

“We anticipated previously that it would be resolved by the first half of 2025… we’re seeing escalating tensions in the Middle East and we don’t see any reason to be optimistic on this front.”

On top of the strain from the Red Sea and possible strikes across the US east coast, next year’s reconfiguration of shipping alliances is expected to cause an additional setback, with Mr Damas describing MSC as “a sort of quasi single-carrier network alliance”.

“Watch for the schedule integrity of Gemini, which will be consumer-dependent,” he advised. “We have said in the past based on our experience, that container transshipment operations can quickly get caught up with delays and missed connections.”

By Charlotte Goldstone, The Loadstar 10/10/2024

Maersk has warned of an “operational meltdown” when carriers are able to use the Suez Canal again.

The Danish liner, along with Hapag-Lloyd, announced their hub-and-spoke Gemini Cooperation services would go round the Cape of Good Hope instead of the still-volatile Red Sea. 

Maersk told customers yesterday: “After thorough consideration, and given the continued safety concerns in the Red Sea, Hapag-Lloyd and Maersk confirm they expect to phase-in their Cape of Good Hope network for the commencement of the Gemini Cooperation on 1 February 2025.” 

Maersk CCO Karsten Kildahl told reporters at the UK port of Felixstowe yesterday the reason for the decision, some four months before Gemini launches, “is to enable customers to do their operational planning”.  

He explained: “They need to know what their lead times are, when they’re planning when they can have their things in the store… We want to give them as much opportunity [as possible] to plan their operations.” 

Hapag-Lloyd told The Loadstar it would plan for “an orderly transition [to Suez Canal transits] to be executed as fast as circumstances allow”, but added that “many currently unknown factors” made it impossible to predict exactly when.  

Mr Kildahl said: “You cannot just flip-flop. What we’ve seen in the past is that it looked safe, people tried to go through, but it wasn’t safe and you undo it.  

“One of the things our customers keep telling us is that they need stability and predictability of their flows to be able to plan their business. It’s not in their interest to suddenly have their cargo arrive,” he said.  

And Mr Karsten added: “The moment the canal opens, the havoc is going to start, because you will have [many] vessels coming in at the same time. 

“Vessels that left Asia two weeks earlier will clash with vessels that leave Asia. So, if you think it was a nightmare operation when the canal closed, it’s nothing compared to what it’s going to look like when it opens again. 

“At that point, we will have several weeks, I would even say a couple of months, when you have something that will look like an operational meltdown. And we don’t take this lightly,” he added. 

The Gemini carriers are targeting a schedule reliability of above 90%, once fully phased-in, and Hapag-Lloyd told The Loadstar that “remains unchanged”.  

“Our Cape of Good Hope network follows the same design principles as our Suez network and will not compromise the reliability or efficiency of our services. We’ve ensured that our services will remain flexible, efficient and resilient, despite the disruptions in the Red Sea region,” a spokesperson said. 

Its Cape network will include 29 mainliner services, supported by 28 intra-regional shuttle services, operated by a fleet of around 340 vessels with a total capacity of 3.7m teu. 

If the services had been able to use the Suez Canal, the network would comprise 27 ocean mainliner services with 300 vessels.  

However, last month Maersk told customers mainline services would be supported by 30 intra-regional shuttle services – two more than was announced yesterday. A spokesperson told The Loadstar the change was in the European shuttle network.

“Two shuttles in the Nordics were merged into one and another was extended to Italy, therefore making another one obsolete.” 

Photo: Maersk

By Charlotte Goldstone, The Loadstar 22/10/2024

AP Møller-Maersk has raised its full-year earnings guidance amid “strong container market demand”.  

The Danish carrier said “on the back of strong third-quarter results combined with strong container market demand and the continuation of the Red Sea situation” it has upped its full-year ebitda forecast to between $11bn and $11.5bn.  

This is up from its previous estimate of between $9bn and $11bn.  

Maersk also raised its predicted ebit to sit between $5.2bn-$5.7bn from $3bn-$5bn. 

Its free cash flow is expected to be “at least” $3bn in 2024, an increase on the $2bn prediction it made in early August.  

This earnings update paints a significantly rosier picture for the carrier than from the start of this year, with expected ebitda now up by some $5bn since its first forecast in May.  

At that point, Maersk’s 2024 outlook for ebitda was between $4bn-$6bn, with ebit between $-2bn to $0bn and free cash flow of at least $-2bn.  

Its new outlook has been based on preliminary unaudited figures for Q3 24. During this period, Maersk reported revenue of $15.8bn, underlying ebitda of $4.8bn and underlying ebit of $3.3bn. 

Further, the outlook for the global container market volume growth for the full year has been revised to “around 6%” from the previous 4%-6%. 

While Maersk has been upping its full-year earnings guidance each quarter, it noted that this was due to the continued effect of the Red Sea crisis.  

It said in May that “oversupply remains a challenge and will eventually prevail, but the impact is delayed”.  

Maersk will publish its full Q3 interim results on 31 October. 

© Rafael Henrique By Martina Li, Loadstar 25/07/2024

CMA CGM plans to apply artificial intelligence (AI) in its business, including starting an AI department, said Park Jae-seo, CEO of the French carrier’s South Korean branch.

He was speaking at the Incheon International Ocean Forum, shortly before CMA CGM signed an agreement with Google to deploy AI across its shipping and logistics businesses.

Mr Park said the group aimed to develop a strategy to link ships and control container movements through this digital transformation.

He said: “Besides liner services, we also move cargo on ferries and ro-ro ships, according to the needs of our customers. We have various shipping methods so that if a problem occurs in one place, we can provide services in other ways.”

He said attempting digital transformation was a way to improve efficiency.

Mr Park explained: “We’re becoming more efficient by connecting ships and controlling overall movement through digital transformation. We’re digitising communication with customers, such as price checks, reservations and freight bills, so that they can be done on the website.”

CMA CGM is also seeking a strategy for “differentiation in punctuality via digitalisation”.

Reviewing the issue of punctuality, which emerged during the pandemic and more recently the Red Sea crisis, Mr Park said: “We will improve how to move each route organically, and how to connect these complex services well, to increase efficiency through digital programmes.”

He added: “On-time arrivals are assured by being more efficient and not just aiming for punctuality. CMA CGM’s policy has not changed before and after the Covid-19 pandemic. The ultimate goal is to assume volatility and unpredictability and operate efficiently by utilising technological advancements.”

Last week’s agreement with Google is aimed at using its AI solutions to optimise vessel routes, container handling and inventory management to move cargo efficiently, while reducing costs and carbon emissions.

Photo 162331293 © Mariusz Bugno | Dreamstime.com

By Gavin van Marle, Loadstar  26/07/2024

There was more evidence in this week’s container port freight markets that peak prices on the main east-west deepsea trades have passed.

All three major indices recorded single-digit declines on the back of lower utilisation of ships loading in Asia.

The most significant drops were seen on the transpacific Asia-North America route, where Drewry’s World Container Index (WCI) Shanghai-Los Angeles declined 5% week on week, to yesterday’s level of $6,934 per 40ft, while Xeneta’s transpacific XSI saw a 6% drop, to $7,322 per 40ft, and the Freightos FBX dropped 4%, to $7,738 per 40ft.

Meanwhile, pricing on the Asia-North Europe route was either flat or saw slight declines: the WCI and XSI were flat, at $8,260 and $8,474 per 40ft respectively; while the FBX dropped 2% week on week, to finish at $8,420 per 40ft.

Asia-Europe freight forwarding sources confirmed that space over the past fortnight had become easier to procure, suggesting that either demand has begun to wane, or that the large-scale capacity additions since the beginning of the year are finally beginning to make their presence felt.

“It has definitely become easier to get space in the past two weeks, although we are still being held to allocation, and anything over that is having to move to spot/FAK pricing,” one forwarder told The Loadstar this morning.

The WCI’s Shanghai-Genoa leg saw spot rates decline 1%, to finish at 7,645 per 40ft, while the FBX’s Asia-Mediterranean trade was down 3% week on week, to $7,508 per 40ft.

Every major carrier – with the exception of Yang Ming – has seen capacity increase in the first half of the year, according to data from Alphaliner this week, with MSC leading the way, adding around 400,000 teu to its fleet since January, breaching 6m teu fleet-wide capacity.

There is a lot more to come: both MSC and CMA CGM have around 1.2m teu of capacity on order across this year and next, and Alphaliner noted “there is good chance” the French carrier will surpass Maersk to become the second-largest carrier within the next two-to-three years.

Meanwhile, the spot freight rate declines bring to an end more than three months of consecutive spot rate increases, and this has begun to bleed into the charter market, with this week’s Hamburg and Bremen Shipbrokers Association (VHBS) commentary noting carriers becoming increasingly cautious in negotiations with owners.

VHBS director Alexander Geisler wrote: “This prudence is legitimate, considering that spot cargo rates are weakening; the SCFI registering last Friday its second week of fall, after 13 weeks of uninterrupted rise.

“The continued injection of newbuilding capacities is slowly eroding the market’s current strong fundamentals.

“The reduction in cargo demand, which might happen sooner than expected this year, considering an early start of the peak season will test the market’s resilience to the abundance of new ships.

“With more than 1.3m teu of new vessels yet to be delivered by the end of the year, and a further 2m teu in 2025, there could be some turbulent times further down the road for owners and operators,” he added.

Photo: DP World Callao

By Gavin van Marle, Loadstar 04/07/2024

Despite the increasingly large amounts of container shipping capacity being tied up in the Asia-Europe trades to mitigate the widespread vessel diversions, other trades have also seen significant capacity injections over the past year, according to new data from Alphaliner.

Chief among them are those serving Latin America, which has seen capacity into the region increase by more than the global growth.

From June 2023 to June 2024, 2.85m teu of new capacity has been delivered to the global shipping fleet, presenting a 10.6% year-on-year increase, and large amounts of this have been added to the Asia-Europe and Asia-Middle East/India trades, which have been most affected by the Houthi attacks on shipping, and have required many additional ships simply to maintain pre-Red Sea crisis capacity.

For example, the Asia-Europe trades have seen a whopping 23.8% increase capacity over the past year, but that hasn’t been reflected in increased volumes, Alphaliner noted.

“The additional ships were needed for the longer voyages and to avoid gaps in the schedule, which would otherwise have reduced the available slots for bookings ex-Asia,” it said.

According to Alphaliner’s capacity calculations, carriers operating Asia-Europe services had a total of 458,834 teu slots available to shippers and forwarders in the first week of June, compared with 455,050 teu in the same week in June 2023 – year-on-year growth of less than 1%.

Container Trade Statistics (CTS) data supports this: it recorded total volumes of just over 1.5m teu transported from Asia to Europe in April (the latest month for which data is available), a year-on-year increase of 4.4%, far below the nominal capacity injection.

However, capacity serving Latin America – whose trades have been largely unaffected by the Red Sea crisis – during the same period, jumped by 17.4% and now totals 4.1m teu across all trades, Alphaliner said.

“While the fleet growth between Asia and the Indian Subcontinent and Europe was to be expected due to the Red Sea crisis, the strong growth of the fleet deployed in liner services to and from Latin America might catch some by surprise.

“Carriers such as CMA CGM, Hapag-Lloyd or Cosco recently took delivery of 13,250-14,100 teu neo-panamax ships, which were specifically built for Latin American trading as they feature high reefer capacities and were named after regions or cities in South America.

“This has pushed the fleet in Latin America-related services to 4.1m teu, which is 1m teu more than two years ago,” the analysts wrote.

The lion’s share of the capacity now deployed to Latin America is ex-Asia, it further noted – with some 1.53m teu deployed on Asia-South America west coast services and 860,000 teu on Asia-South America east coast services.

According to CTS data, April shipments from Asia to Latin America grew 5.2%, to just under 423,000 teu.

In addition, with Cosco resuming construction of the new Peruvian deepwater hub port of Chancay – after a political dispute between the Peruvian government and the Chinese carrier was resolved last month – and scheduled to open its first berth later this year, carriers are limbering up to deploy far bigger ships to Latin America’s west coast.

Around 50 ships serving Asia-Latin America west coast services are in the 12,500-17,999 teu range, representing 47% of all capacity on this route.

Meanwhile, ex-Asia capacity now dwarfs that on offer to Europe, with 392,000 teu capacity on South America east coast-Europe trades and 289,000 teu available on South America west coast-Europe trades.

Yantian Port. Credit Gigel.atat.

By Gavin van Marle, Loadstar 05/07/2024

Since the 1 July implementation of a series of peak season surcharges (PSS) and new FAK (freight all kinds) levels, the largest east-west container trades have seen a week of double-digit spot freight rate increases.

After several weeks in which most of the focus was on soaring spot rates on the Asia-Europe trades, this week it was the turn of the Asia-North America trades to post the largest increases.

Drewry’s World Container Index reading for its Shanghai-Los Angeles leg grew 12%, to finish at $7,472 per 40ft, while Xeneta’s XSI’s Asia-US west coast leg recorded a rate of $7,648 per 40ft.

Meanwhile, the WCI’s Shanghai-New York leg grew 17%, to end the week at $9,158 per 40ft, and the XSI tracked a similar trend to $1,146 per 40ft.

The WCI’s Shanghai-Rotterdam leg also saw double-digit growth, rising 10% to reach $8,056 per 40ft, with the XSI’s Far East-North Europe growing a similar amount, recording a rate of $7,897 per 40ft yesterday.

However, it is also clear that many forwarders and shippers are paying well above the quoted indexed rates in order to secure space in an increasingly strong demand environment, a situation that – on Asia-Europe trades at least – is now beginning to impact major box shippers with significant amounts of contracted volumes.

Freight forwarders in Europe this week told The Loadstar major shippers were being forced to pay space guarantee surcharges on at least a part of their volumes.

“Importers and big BCOs are now beginning to see the effect, with space getting ever tighter,” one forwarder said.

“Even if their carrier has maintained its full commitment in terms of volumes – every carrier is down 30% to 40%, in terms of space – so from the middle of July, retailers that were on contracts are now having to accept $3,000-$4,000 increases on a least a portion of their boxes to get them loaded.

“Some of the multinationals are buffered, but we are now talking to all sorts of importers that previously wouldn’t give us the time of day; now they are calling us to see if we have any loading options – and it’s almost accepted that higher rates are here and paying them is the only way to get cargo onboard vessels.

“This will remain elevated until Golden Week,” he added, which appeared to be a common consensus this week.

Another said that spot rates on Asia-North Europe had already breached $10,000 for many customers, and claimed the elevated pricing would continue until China’s Golden Week holiday, which begins on 1 October – and could even persist until the second quarter of next year.

“I think this is an early peak season, but I also believe this will continue to Golden Week – after speaking with customers they are mindful of the current challenges and do not want to be in a situation where they have no stock for Christmas, and are forecasting strong orders until at least then.

“Should the peak last that long, there is only four-to-six weeks before we start to ramp up for the peak just before Chinese New Year, so realistically the market will not start to come down significantly until Q2 next year, even with extra capacity coming in,” he said.

Another believed there could well be a further 50% increase between now and Golden Week.

“Demand in July and August is quite strong, so we are predicting that a ceiling of $15,000 is not unrealistic,” he said adding that there was very little vessel space for at least the next month.

“We are now booking four weeks ahead for some retailers and it’s the soonest we can do. If a booking is released, 9 August is the first ship I can get onto.”