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23 September 2023 - Year XXVII
Independent journal on economy and transport policy
03:12 GMT+2
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CENTRO INTERNAZIONALE STUDI CONTAINERSANNO XXXVIII - Numero LUGLIO 2020

MARITIME TRANSPORT

SKY-HIGH OCEAN SHIPPING RATES MAY HAVE FINALLY PEAKED

Ocean container rates remain exceptionally high but may have finally hit their ceiling. Spot rates have not only stopped rising, they've pulled back by single digits. Is this a new plateau or the start of a longer-term reversal as liner alliances bring more capacity back online?

The share of idle containership tonnage is declining. The number of box ships being chartered by carriers is increasing. Charter rates are on the rise. All of this implies there will be more slots available for containers, a headwind for freight rates.

Spot rates halt their ascent

"As carriers restore capacity, ocean rates dipped slightly," said Freightos Chief Marketing Officer Eytan Buchman in the company's weekly report.

The Freightos Baltic Daily Index tracks the price to ship a forty-foot equivalent unit (FEU) container in various trades. Rates peaked on July 8 on the China-West Coast route (SONAR: FBXD.CNAW) and on July 7 on the China-East Coast route (SONAR: FBXD.CNAE). China-West Coast rates hit a high of $2,855 per FEU before falling 4% to $2,753 per FEU on Wednesday - still more than 65% above rates in the past two years.

Demand in flux

"Volumes and capacity are still not at equilibrium, keeping rates up, with reports of some carriers even requesting premiums on top of these rates to prevent rolled shipments," noted Buchman.

The COVID-19 crisis could push importers to bring even more cargo in quickly, he continued. "As infections rates, closures and restrictions grow in the U.S., these extreme freight rates may point to the urgency importers are feeling to ship as soon as possible, as the pandemic has made it impossible to know how long consumers will still be buying."

On one hand, this could lead to more orders in the coming weeks. On the other hand, importer urgency could have already brought orders forward, implying demand weakness ahead.

U.K.-based consultancy MSI warned in a new report: "There is some need for caution, since the recent rebound in volumes is potentially being driven by one-off inventory restocking dynamics. There are signs that the U.S. economic recovery in particular is slowing," it said. This raises the question of "how durable current volume rebounds will prove."


Blank-sailing data

Demand could be either positive or negative for rates. Given COVID-19, demand is a wildcard. Supply appears more one-sided, in favor of rates declining. An unprecedented amount of capacity was artificially removed from service by carriers to support rates in the wake of coronavirus-stricken demand declines. That capacity is now returning.

Carriers "blanked" (canceled) sailings to calibrate supply to demand. According to the data updated on Thursday from eeSea.com, carriers blanked 14.7% of their sailings from Asia to North America arriving in the second quarter, but have only blanked 4.7% of third-quarter arrivals.


(Chart: eeSea.com)

The data also shows that carriers are much more optimistic about North American consumer demand than European demand. In the second quarter, 21% of Asia-Europe sailings were blanked, with 15.3% blanked in the third.

This implies that carriers are as pessimistic about European imports in the current quarter as they were about U.S. imports in the previous quarter.


(Chart: eeSea.com)

Inactive fleet on the decline

The fewer blank sailings, the fewer ships are idled. Data on idled ships tracked by Alphaliner is pointing to a major change.

Alphaliner reported that the inactive containership fleet fell to 1,847,871 twenty-foot equivalent units (TEUs) as of July 6, down 20% from the previous count in late June.

"The inactive fleet capacity level has dropped below the 2-million-TEU mark for the first time since mid-February, indicating improving market conditions," said Alphaliner.

NOO: Non-owner operated ships. SR: ships undergoing scrubber retrofits (Charts: Alphaliner)


Charter rates rebounding

Carrier fleets are composed of owned tonnage and chartered vessels. This mix provides the flexibility to manage costs. Carriers renew fewer expiring charter contracts in weak markets. This increases the number of ships available for hire and decreases charter rates.

Those charter rates plunged in the wake of the coronavirus. Now, they're coming back.

According to MSI, "Recent weeks have been encouraging, at least for mid-size and larger benchmarks, as a chartering spree has greatly reduced the number of spot units and placed upward pressure on time-charter earnings."

Charter rates for 8,500-TEU ships are up to $18,000 per day from a low of $11,000 per day. "The specific driver was chartering by MSC [Mediterranean Shipping Co.], which fixed essentially the entire market in the space of a week," reported MSI.

Will carrier willpower break down?

Ocean carriers have been surprisingly adept at averting a price war during the pandemic - so much so that the word "profiteering" has been voiced.

But the real test of carrier willpower will come when vessel supply returns to the market. In other words, now.

More services, fewer blanked sailings and more chartered-in ships equate to more container slots that need to be filled. If carriers don't maintain price discipline, a mid-single-digit drop in spot rates could snowball into something more substantial.

As Simon Sundboell, founder of eeSea.com, previously told FreightWaves, "Now that things are starting to open back up, it'll be interesting to see how well carriers manage not just the shutdown but the reopening. It's way too early to claim that carriers have gotten the upper hand in the perpetual supply/demand-balance game." Click for more FreightWaves/American Shipper articles by Greg Miller

MORE ON BLANK SAILINGS: For an in-depth Q&A on blank sailings with Sea-Intelligence CEO Alan Murphy, see story here. For extensive data on blank sailings from eeSea.com, see story here. For a comparison of second and third-quarter blank sailings to U.S. ports, see story here.

freightwaves.com



Turkish shipyard Med Marine delivers a new tugboat to the Vernicos Scafi
Istanbul
It is the first means of new construction of the fleet of the Greek-Italian joint venture
Kenya Ports Authority privatizes benches at ports of Lamu and Mombasa
Mombasa
Launched an international competition that also includes a special economic zone
Last month, freight traffic in the port of Taranto increased by 6.9% percent.
Taranto
In the first eight months of 2023, a decline of -4.0%
New paints to contain the propagation of fires on ships and construction sites
Palermo
Messina Group has taken delivery of its second full container ship
Genoa
Has a transport capacity of 4,600 teu
Approda in Genoa the first container ship of the FIM service of HMM
Genoa
Scalo to container terminal of PSA Italy
SAILING LIST
Visual Sailing List
Departure ports
Arrival ports by:
- alphabetical order
- country
- geographical areas
First meeting of the technical table on security of work in the port
Rome
Among the proposals, insert some port job profiles between the "usurante/gravest" job categories
Hapag-Lloyd will equip all of its internet connection ships through the Starlink satellite network
Hamburg
Success of tests started in May
In the June-August period, FedEx Group revenues fell by -6.7% percent.
Memphis
Net profit marked a growth of 23.2%
Cooperation of ICHCA and PEMA to improve the safety of handling goods
London
Spearport, necessary to minimize red tape in ports
Genoa
Botta : paper documents are an absurdity in the age of digitalization
Germany's Rhenus acquires the two terminals of the Rietlanden Terminals in the port of Amsterdam
Germany's Rhenus acquires the two terminals of the Rietlanden Terminals in the port of Amsterdam
Singapore / Holzwickede
Dutch company will be ceded in two stages by Singaporean JERA Global Markets
In August the port of Algeciras handled 424mila containers (+ 1.5%)
Algeciras
In the first eight months of 2023, the total was 3.16 million teu (-0.4%)
Conference on the Promotion of Health in the Port Workers of the Straits
Messina
It will be held on October 2 in Messina
Ukrzaliznytsia-RCG Agreement for the development of intermodal transport between Ukraine and Austria
Kiev
In short, the testing of the transport of semi-trailers on the Kiev-Budapest line will begin.
In the first half of 2023 the revenues of the Chinese terminalist group CMPort decreased by -10.8%
Hong Kong
Container traffic grew by 0.3%
Union Pilots has strongly criticized the procedure for renewing the piloting tariffs
Taranto
Bellomo : well the updating of the fares of local practical
At the MITO terminal of the port of Cagliari the first container ship coming out of a Ukrainian port
Genoa
Landed 2,114 containers
The Cool Logistics Global event will be held for the first time in Italy
Genoa
The event is scheduled from 10 to October 12 next in Genoa
In the first quarter of this year, the traffic of goods in Greek ports has returned to growth
Athens
However, the total was lower than pre-pandemic levels.
Last month, shipping containers handled by the port of Valencia fell by -11.7% percent.
Valencia
In the first eight months of this year, the decline was -10.6% percent.
In August, container traffic in Hong Kong port fell by -9.4% percent.
Hong Kong
Decline of -15.1% in the first eight months of 2023
Last month, container traffic in the port of Los Angeles returned to growth.
Los Angeles
In the first eight months of 2023, a decline of -21.0% percent was marked
PORTS
Italian Ports:
Ancona Genoa Ravenna
Augusta Gioia Tauro Salerno
Bari La Spezia Savona
Brindisi Leghorn Taranto
Cagliari Naples Trapani
Carrara Palermo Trieste
Civitavecchia Piombino Venice
Italian Interports: list World Ports: map
DATABASE
ShipownersShipbuilding and Shiprepairing Yards
ForwardersShip Suppliers
Shipping AgentsTruckers
MEETINGS
Conference on the Promotion of Health in the Port Workers of the Straits
Messina
It will be held on October 2 in Messina
The Cool Logistics Global event will be held for the first time in Italy
Genoa
The event is scheduled from 10 to October 12 next in Genoa
››› Meetings File
PRESS REVIEW
España demanda una revisión instantánea de los puertos vecinos de transbordo
(El Mercantil)
Shipping minister resigns in aftermath of ferry passenger's death
(Kathimerini)
››› Press Review File
FORUM of Shipping
and Logistics
Relazione del presidente Daniele Rossi
Napoli, 30 settembre 2020
››› File
Last month freight traffic in the port of Singapore grew by 1.7% percent
Singapore
The containers were over 3.3 million (+ 2.0%)
On October 2 in Lugano, the sixth edition of "A Sea of Switzerland" will be held in Lugano.
Lugano
The conference will be articulated in three sessions
In August, freight traffic in Russian ports grew by 5% percent
St. Petersburg
Increase in dry goods. Decline of liquid bulk bulk
New agency of Negro families, Clavarino and Schenone to provide services to the construction of the new Genoa Dam
In August, container traffic in the port of Long Beach decreased by -15.4%
Long Beach
In the first eight months of 2023, the decline was -24.4%
New freight train service Verona-Wuppertal of Rail Cargo Group
Vienna
Made three weekly rotations
Cargill yields 25% percent of the KSK grain terminal of the port of Novorossiysk
Vladivostok
The share will be acquired by Russia's Delo
Stranded a drug trade in the port of Salerno
Naples
Detected 104 pans of cocaine and the deposit to which they were intended
Ferrante (MIT) : amendments to the European Directive 2023/959 to avoid distortions that penalise Italian transhipment ports
Rome
It would allow Gioia Tauro to be placed on the same list in which ports such as Tangeri Med and Port Said are included.
MOL Chemical Tankers will buy the Fairfield Chemichal Carries
Singapore / New York
The Singaporean company's fleet will rise to 121 chimichiere vessels
In the second quarter, freight traffic in Tunisian ports grew by 13.0% percent.
The Goulette
Loads at landing and boarding increasing by 14.3% and 11.0%, respectively
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