© 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.”

A French frigate under participating in operation EUNAVFOR ASPIDES supports commercial vessels in the Red Sea and in the Gulf of Aden.

Mike Schuler June 17, 2024

The maritime industry faces an uncertain future due to the ongoing Red Sea crisis, with a majority of industry insiders predicting the issues will continue throughout this year and even extend into 2025, warns Drewry, a leading maritime industry consultant.

Since November, the Iranian-backed Houthis in Yemen have launched numerous attacks on merchant ships in the Red Sea and Gulf of Aden, compelling most shipping services to reroute around the Cape of Good Hope, thereby avoiding the more-direct Suez Canal. The crisis has led to an unexpected extended period of disruption, marked by longer voyages, growing risks, and increased costs.

Since May, the industry has witnessed a resurgence of capacity challenges, coupled with skyrocketing spot freight rates, severe port delays, and an unanticipated surge in volumes. The Drewry World Container Index, a key indicator of spot rates on eight key East-West routes, showed a 74% spike between late April and early June.

Drewry has identified four main factors driving the pricing increases. Despite carriers adding multiple ships to their East-West services to counter shortages due to Red Sea re-routings, effective capacity growth has been relatively stagnant. Drewry highlights that a 24% increase in ships and a 17% increase in total capacity on the Asia-North Europe route resulted in just a 2% increase in monthly effective capacity.

Another contributing factor is demand growth. Drewry points out that container volumes on the Transpacific and other routes have been surprisingly strong, with U.S. containerized imports predicted to hit 2.1 million TEU in May, an 8% year-on-year increase.

Shipper behaviour has also played a role. A Drewry survey suggests that some international shippers are shipping earlier this year, leading to capacity strains and delays. However, this early peak season is considered a short-term market shift.

Finally, operational disruptions have escalated, with port productivity declining and longer waiting times for berthing. Asian transhipment ports, in particular, are seeing near-record container densities, further hampering supply.

A recent Drewry survey regarding predictions for the end of Red Sea diversions paints a grim picture, with less than 17% of the 90 respondents expecting the diversions to end before the end of this year, while the majority of respondents (60%) predict that the current situation will end in the first half of 2025. The second most popular prediction is the second half of 2024, followed by the second half of 2025 and the first half of 2026. Only 3% of respondents do not foresee an end before the end of 2026.

Alternatively, following the end of Red Sea diversions, most respondents (43%) predict a 3-month normalization period for liner operations, followed by 27% who believe it will take longer than 3 months, and 25% who expect a 2-month period.

Fadhlur Rahman Abd Raffar | Dreamstime.com

By Angelo Mathais, India Correspondent,  18/06/2024

Soaring demand is allowing container lines serving Indian trades to flex their pricing muscles on intra-Asia services, especially out of China.

Average spot rates from North China (Tianjin) to West India (Nhava Sheva or Mundra) have exceeded $5,000 for a 40ft container booking, according to market sources.

The rate push is not just for Chinese ports alone. Prices for India-bound shipments from other Far East locations, such as Singapore, Port Klang and Hong Kong have rocketed.

For Singapore-India, carriers are now selling space at $4,500 per 40ft, a sharp jump from the $1,100 they were quoting last month.

Simply put, intra-Asia rates into India have generally seen increases of 200% to 250% over the past month, data from market sources reveals.

And vessel capacity remains acutely tight, because of fewer sailings and schedule disruptions, often causing cargo rollovers for Indian importers, according to shipper sources.

“Shipping costs from China have become a painful thorn for Indian imports,” one senior executive at a Mumbai-based industrial house told The Loadstar. “Nobody wants their production line affected, so we are being forced to pay higher freight rates.”

The source also noted that port congestion problems plaguing Singapore, Port Klang and other South-east Asia hubs had made sailing schedules erratic and transit times unpredictable.

“It’s a guessing game on cargo delivery schedules,” said the official.

And Jitendra Srivastava, CEO of Mumbai-based freight forwarder Triton Logistics & Maritime told The Loadstar the capacity-stressed situation for Indian shippers was expected to last until February.

As container lines increasingly concentrate on the lucrative Chinese trade, with more regional operators jumping onto the demand bandwagon, Indian ports are also seeing a rush of empty equipment outflows, particularly at Mundra Port, in some part, due to major lines repositioning into China.

“Empty evacuation means an additional move from the empty yard to the port, thus creating pressure on the dockside,” a port executive told The Loadstar.

Shortage of equipment will be a concern for Indian exporters, as trade prospects brighten. India’s merchandise export trade reported an impressive 9% year-on-year increase in May, according to new provisional government data.

“A positive growth momentum for the second month in a row on the back of buoyant order bookings goes to show the resilience of the export sector and Indian exporting community,” said Ashwani Kumar, president of the Federation of Indian Export Organisations.

Pushpank Kaushik, CEO of Hyderabad-based ship agent and forwarder Jassper Shipping, also believes this capacity pressure could cause some trade impacts for India, given that China remains its largest trading partner.

“The combination of high demand and limited capacity is resulting in increased costs and cargo delays,” he said. “Addressing vessel shortages is crucial to keep two-way trade flowing,” he added.

© Narisa Hongsuwan 

Martina Li in Taiwan (Loadstar) 14/05/2024

Container output reached 521,000 teu last month – a post-Covid peak, according to Linerlytica today.

And its report adds that all manufacturing slots in container factories are reserved until the end of July, with more than 4m teu of new boxes expected to be delivered this year – more than double the 1.97m teu produced in 2023.

Container production achieved a record high in 2021, with more than 6m teu built to meet the demand caused by the slow return of empty containers during the pandemic.

Linerlytica said: “Carriers are fanning the panic, with Maersk claiming capacity loss on the Asia-Europe and Mediterranean routes has reached 15-20%. Although the effective capacity situation is not as dire as the carrier suggests, the strong demand has taken the market by surprise, with box equipment and vessels also in short supply.”

Its report shows that so far this year, of the mainline operators MSC has ordered the most containers, just under 400,000 teu, followed by ONE and Evergreen.

Last week, Cosco Shipping Development (CSD), the holding company for Dong Fang Container, the world’s second-largest box manufacturer, and equipment lessor Florens, suggested at a post-results briefing that container demand was expected to stabilise this year, after demand plunged in 2023.

In Q1 24, CSD’s net profit of CNY447m ($61.91m) was up 12% on Q1 23, as demand recovered. In contrast, net profit last year fell 64% year on year, to CNY1.41bn.

CSD chairman Zhang Mingwen said: “Since the fourth quarter of 2023, container shipping has recovered rapidly, due to the impact of the Red Sea situation, which has pushed up container demand to a certain extent.

“In fact, this year, the Red Sea situation has slowed container turnover, the allocation of ships and shipments before Chinese New Year. Due to this, liner operators and shippers are more willing to buy containers. We predict that the demand for new containers and the need to replace old boxes, as well as new container applications will give us a strong foundation this year.”

Dong Fang has no dry container slots available until after August, while reefers are all booked until July.

Sam Chambers (Splash 247.com) May 14, 2024

India’s shipping minister, Sarbananda Sonowal, was in Iran yesterday for the official signing of a 10-year contract to jointly run Chabahar port, a giant complex that has been on the drawing board for more than a decade. 

At the event, Sonowal’s Iranian counterpart, Mehrdad Bazrpash, hinted that the two countries could reestablish a joint venture shipping line. Through to 2013, the two countries used to run Irano Hind Shipping together, a company that was eventually disbanded as sanctions rained in on Tehran. 

On signing the 10-year port agreement, Sonowal said, “Today is a historic day for the maritime sector of the region as India and Iran signed this long term agreement on Chabahar Port heralding a new age of trade, marine cooperation as well as transhipment while boosting trilateral trade among India, Iran and Afghanistan.”

Located in Sistan-Baluchistan province on Iran’s southwestern coast, Chabahar is located on the Arabian Sea with easy access from India’s west coast. For shippers from landlocked Afghanistan, it gives an alternative outlet to the Pakistani ports of Gwader and Karachi.

Chabahar will be run by India Ports Global (IPGL) and an Iranian state-backed port operator. IPGL first took over operations of the port at the end of 2018. 

IPGL, which is 100% owned by the Ministry of Ports, Shipping and Waterways, has also recently won the rights to operate another overseas port at Sittwe in Myanmar. 

Sam Chambers (Splash 247.com) May 13, 2024

After a decade of declining output, shipyard production has begun to edge up in recent years with deliveries in Q1 reaching a seven-year quarterly high of 10.1m cgt, according to new data from Clarksons Research. Clarksons is projecting a 15% increase in shipyard output for full year 2024 to 40.6m cgt. 

“With increased pricing (up ~40% since 2020, albeit with significantly increased costs for yards), a strong forward orderbook (3.5 years versus 2.5 years) and good, cross-sector, order demand, shipyard capacity has been a limiting factor in output,” Clarksons noted in its most recent weekly report.

The total number of active yards has dropped by two-thirds since 2010, according to the British broker. 

Analysts at Danish Ship Finance are bullish on the outlook for the shipbuilding industry, but only in the short term, with global utilisation rates forecast to peak in 2024 before potentially softening in the following two years. 

“Continuously firm contracting activity and limited yard availability are pushing newbuilding prices ever closer to an all-time high,” Danish Ship Finance noted in a report issued last week.

Since the start of 2023, annual global yard capacity has increased by 6m cgt to 59m cgt, according to Danish Ship Finance. 

“Additional active second-tier yards in China have been the main contributor to this growth,” the report noted. 

Splash has been reporting a great deal about new shipyard capacity hitting the market.

For instance, Jiangsu-based New Times Shipbuilding, one of China’s largest privately owned shipyards, is awaiting government approval for a new drydock with broker Gibson reporting Q1 2027 deliveries will open up once the yard gets the green light. 

After several years of capacity reduction, last year saw several attempts to reopen some Chinese facilities. 

Hengli Heavy Industries Group, a subsidiary of the Hengli Group, is running the assets of STX Dalian. The yard restarted in January 2023. 

In August 2023, Wuhu Shipyard took over the land and facilities of the former Samjin Shipbuilding Industry part of the automobile group Chery. 

Kouan Shipyard has been going through a reorganisation process since 2019 and is currently building blocks and ships for the account of third-party shipbuilders including Dajin, Taizhou Changqin and Taizhou Changyue. 

Jiangxi New Jiangzhou Shipbuilding lndustry was established on March 31, 2023. The main investors are Qinshi (Xiamen) Trading and Jiangsu Yangchuan Investment Development. Qinshi (Xiamen) is the parent company of a listed company, Bestway Marine & Energy Technology, whereas Jiangsu Yangchuan is a subsidiary of Yangzijiang Shipbuilding Group. The yard has signed contracts for stainless steel tankers with Chinese buyers. 

Private company Fujian Guanhai Shipbuilding, which stopped production in 2013 and went bankrupt in 2019, has now been taken over by Fujian’s private steel giant Jinshenglan Group and renamed the Fujian Songmin Group. 

Quanzhou Shipyard, which was established in 2004 and entered bankruptcy in 2019, reached an agreement with a local government-owned company to invest and reorganise the yard. In September 2023, a ceremony was held for the resumption of work and production. 

The Review of Maritime Transport 2023, published in September by the United Nations Conference on Trade and Development (UNCTAD), urged shipyards to expand quickly to aid with shipping’s green transition.

“Shipyard capacity is currently facing constraints. Tanker and dry bulk owners are anticipating long waiting times and high building prices. Increasing shipbuilding capacity is crucial to ensure that shipping meets global demand and its sustainability goals,” the UNCTAD report stated.

While many other analysts are predicting bottlenecks at shipyards, with shipbuilding executives mulling expansion plans for the first time since the global financial crisis, the Danish Ship Finance report takes a contrarian view, based on how it sees seaborne trade volumes declining in the coming decades. Demand for shipyard capacity may decline by 25% towards 2040, the Danish report predicted. 

© Mr.siwabud Veerapaisarn

By Martina Li in Taiwan, Loadstar 07/05/2024

Trading of China’s container shipping futures (CoFIF) rallied last week, as Middle East peace talks collapsed and Israel indicated it was going to attack Rafah.

Rates on the two main Asia-North Europe futures contracts, EC2406 and EC2408, traded higher on 30 April and yesterday, despite the shortened work week due to the US Labour Day holiday on 1-2 May.

Both contracts rallied as Israeli prime minister Benjamin Netanyahu said Hamas’s proposed ceasefire deal fell short of meeting Israel’s demands.

EC2406 and EC2408 contributed nearly 80% of daily trading volumes, while the longer-dated contracts for EC2412, EC2502 and newly launched EC2504 tactically sold off as trading hedges.

Average daily volumes were unchanged but open interest was up 15% on the previous week, indicating that shippers believe rates will stay elevated.

EC2406 contracts rose for the third consecutive week, gaining 11% to reach 3,101 for the week, and currently trade at 40+% premium on the latest rate of $2,209 per teu, published by the Shanghai Containerised Freight Index (SCFI) on 26 April.

Linerlytica’s latest report, today, notes that spot market rates have risen by almost $1,000/feu over the past month, with capacity utilisation at its highest level since January 2023.

Linerlytica says: “Further gains are imminent, with the CoFIF freight futures for end-June contracts currently trading at a 40% premium to the SCFI. Capacity utilisation to North Europe jumped to a three-year high, with capacity still constrained by the Red Sea diversions.”

Overcapacity concerns are on the backburner, with containership diversions to the Cape of Good Hope effectively removing more than 7% of the total fleet.

And Container xChange’s Container Price Sentiment Index suggests an expectation of stable and gradual price increases over the coming weeks. Prices for a 40ft container now stand at $2,500-$2,700, up 13%-17% on last month. Container xChange suggests container sellers may be hoarding stocks in anticipation of further price hikes this month.

It added: “Traders in China are witnessing significant volatility, with new container prices emerging every 48 hours, reflecting the market’s sensitivity to geopolitical tensions and uncertainties. Depots in the US and Europe are reporting higher utilisation rates, with increased equipment usage fees and storage rental charges since the Houthi attacks began in November.”