JUPITER SEA & AIR SERVICES PVT. LTD, EGMORE – CHENNAI, INDIA.

E-MAIL : Robert.sands@jupiterseaair.co.in   Mobile : +91 98407 85202

 

Corporate News Letter for  Wednesday  May 29,  2024.

                                                                                                                        

::               Today’s Exchange Rates           ::

Source : The Economic TimesR 

CURRENCY	PRICE	CHANGE	%CHANGE	OPEN	PREV.CLOSE	DAY's LOW-HIGH
USD/INR	83.18	0.040001	0.048113	83.13	83.14	83.0975- 83.1975
EUR/USD	1.0846	-0.0013	-0.119714	1.0859	1.0859	1.0846- 1.086
GBP/INR	106.2599	0.220505	0.207946	106.259	106.0394	106.1426- 106.2884
EUR/INR	90.4711	0.128197	0.1419	90.437	90.3429	90.3802- 90.509
USD/JPY	157.317	0.436996	0.278555	156.88	156.88	157.133- 157.408
GBP/USD	1.275	-0.0019	-0.148804	1.2769	1.2769	1.2749- 1.2764
DXY Index	104.449	-0.146004	-0.13959	104.577	104.595	104.411- 104.579
JPY/INR	0.53	0.00	0.00	0.53	0.53	0.5298- 0.5308

ATESRATES

///                    Sea Cargo News          ///

Port of Yokohama hndles nearly 240,000 TEUs in February 

Port of Yokohama in Japan

In February, the Port of Yokohama handled 239,633 TEUs of containers, a 6.2% increase from the previous year, according to the city of Yokohama’s Port and Harbor Bureau.

According to the Japan International Freight Forwarders Association, Inc. (JIFFA), foreign-trade containers made up 215,392 TEUs, an 8% rise. Exports slightly decreased by 0.5% to 112,709 TEUs, while imports surged by 19.1% to 102,683 TEUs. The remaining 24,241 TEUs were domestic shipments to and from Yokohama, a decrease of 7.1%. 

From January to February, Yokohama processed a total of 458,994 TEUs, up 3.4%. This included 412,341 TEUs of international shipments, up 4.1%, and 46,653 TEUs of domestic shipments, down 2.4%. Of the international shipments, 212,677 TEUs were exported, an increase of 0.2%, and 199,664 TEUs were imported, an increase of 8.7%.

Peak in China’s coal demand in sight as renewables jump 12%

Between January and April 2024, China’s electricity generation from renewables surged 12% y/y, significantly outpacing the 6% growth in generation from fossil fuels.

"While steam coal shipments to China rose 29% y/y, they are starting to feel the pressure from stronger renewables. Between March and April, the shipments fell 7% y/y as electricity generation from fossil fuels only rose 1% y/y,” stated Filipe Gouveia, shipping analyst at BIMCO.

So far in 2024, electricity generated from renewables in China accounted for 25% of the country’s electricity production. That is a record for this time of year when renewables are typically weaker.

Compared to 2019, China has more than doubled electricity generation from wind and tripled generation from solar, due to large investments in capacity additions. Investments in new hydropower capacity were less sizeable and generation has stagnated amid two consecutive years of low rainfall.

 

“Dry bulk shipping has benefitted from weak hydro power and a 4% y/y decrease in Chinese coal mining, due to safety concerns. While hydropower already rose 22% y/y in April, it is uncertain when coal mining could recover. Stronger domestic mining in the second half of 2024 combined with strong electricity generation from renewables would cool steam coal shipments into China,” added Gouveia.

Panamax and supramax ships would be most affected by a potential reduction in steam coal shipments into China. These account for 14% and 9% of all cargoes carried by panamax and supramax, respectively.

Looking ahead, the International Energy Agency estimates that China will account for almost 60% of the world’s new renewable energy capacity by 2028. This would be enough not only to cover the growth in electricity demand, but also to replace some of the existing electricity generation from coal power plants.

However, managing an increasingly higher share of electricity generation from renewables has its own challenges. China’s electricity grid is already experiencing bottlenecks for new solar power, due to difficulty in storing excess production during the hours of stronger sunlight. Consequently, new solar installations fell to a 16-month low in March.

“The medium-term outlook for coal shipments rests in the Chinese government’s hands. To successfully continue to shift towards renewable energy, they must increase investment in China’s electricity grid and improve energy storage. If these investments are successful, we may soon see peak steam coal demand in China and a gradual decline in shipments,” explained Gouveia.

The article was written by Filipe Gouveia, Shipping Analyst at BIMCO.

HMM’s methanol-powered ships to ply world’s first green shipping route

South Korea is pursuing an ambitious project to launch the world's first green shipping route. And 9,000 TEU methanol-fueled container ships being built by the country’s flagship carrier HMM is expected to play a leading role in establishing green shipping routes.

Speaking at a recent seminar, Ministry of Oceans and Fisheries’ secretary of maritime industry technology, Lee Chi-kyung, stated, “With the goal of pilot operation in 2027, this green shipping route will connect South Korea’s Busan and Ulsan ports with Seattle and Tacoma in the US.”

The aforementioned ships were ordered in February 2023, at Hyundai Samho Heavy Industries and HJ Shipbuilding and Construction for delivery between 2025 and 2026.

The European Union (EU) introduced the Carbon Emission Trading System (EU ETS) for ships over 5,000 gt operating in ports in the region starting this year. The EU ETS obliges
companies to buy credits for 40% of emissions this year; 70% in 2025, and 100% after 2026.

As a result of this measure, 137 South Korean-owned ships operating in EU waters will face environmental costs of over US$500 million from this year to 2030. During the opening ceremony of Busan New Port Pier 7, a fully automated port, in April, president Yoon Seok-yeol declared that Busan will be the start and end point of a green shipping route.

A green shipping route is one without carbon emissions throughout the entire maritime transportation process by using carbon-free fuel and eco-friendly technology. Ports along this route will also have infrastructure to supply carbon-free fuel.

After conducting a preliminary feasibility study, the South Korean govern- ment decided to develop the Busan-Seattle-Tacoma section as a green route for container ships using methanol, and the Ulsan-Masan-Seattle-Tacoma section as a green route for methanol-fuelled car carriers.

Seattle and Tacoma, on the US West Coast, were merged into the Northwest Seaport Alliance in 2015 and are effectively operating as one port. The South Korean government plans to form a consortium involving shipping and bunker suppliers to provide clean fuels such as green methanol and e-methanol, and then begin pilot operations in 2027.

MSC reinstates Far East – Baltimore service

After the tragic incident at the Francis Scott Key Bridge on 26 March 2024, MSC announced the reinstatement of MSC's Far East – Baltimore service on the firm's Empire Service.

Starting from the YM TRUST voyage number 422E, scheduled to call Yantian on 28 May 2024, with an ETA in Baltimore on 13 July 2024.

The rotation will return to: Yantian, China – Xiamen, China – Ningbo, China – Shanghai, China – Busan, South Korea – New York, USA – Norfolk, USA – Baltimore, USA – Colombo, Sri Lanka – Tanjung Pelepas, Malaysia.

In addition, bookings for Baltimore are now open for acceptance, subject to space availability.

 

CMA CGM announces ESS from the Middle East Gulf to worldwide

CMA CGM has announced an Emergency Space Surcharge (ESS/FRT59) effective from 5 June 2024, until further notice, applicable for shipments originating from the Middle East Gulf to North Europe (including Scandinavia, Baltic States, and Poland), the Mediterranean, and North Africa.

This surcharge applies to Dry, OOG, and Paying empties cargo types, with a fee of US$250 per container.

Ras al-Khair SEZ spurs innovation and investment to establish major maritime hub

Aiming to become a hub for technology and innovation, the Ras al-Khair Special Economic Zone is expected to make significant contributions to the Saudi Arabian economy.

Key activities in the zone include shipbuilding, offshore rig fabrication, and related services such as maintenance, repair, and operations (MRO). 

This zone, along with others, supports the Kingdom's Vision 2030 by promoting economic growth and diversification through import substitution, exports, and innovation.

A crucial element of this strategy is positioning Saudi Arabia as a global maritime hub, capitalizing on its strategic location between three continents and the fact that 6% of global maritime trade passes through Saudi ports. These ventures into new sectors have driven the substantial growth and transformation of the Kingdom’s economy in recent years.

"The most dramatic shift has been Saudi Arabia's emergence as an investment destination, with FDI quadrupling since 2016 and the kingdom experiencing the second fastest post-COVID investment rebound in the world," stated Khalid al-Falih, Saudi Arabia’s minister of Investment and chairman of the Economic Cities and Special Zones Authority.

The Ras al-Khair Special Economic Zone (SEZ) and surrounding areas are supported by a robust network of infrastructure and cutting-edge technologies. Industry 4.0 technologies, such as artificial intelligence (AI) and the Internet of Things (IoT), are integrated at various levels to enhance efficiency.

These technologies optimize schedules and reduce delays, with IoT tracking cargo containers and AI processing the data for real-time insights, thus minimizing inefficiency and fostering data-driven decision-making.

In addition, incorporating these technologies from the outset helps future-proof Ras al-Khair SEZ and maintain its global competitiveness.

Major investments from Saudi Aramco, Bahri, Lamprell, Hyundai Heavy Industries (HHI), Baosteel, and the Saudi government finance these advancements. Several incentives have been introduced to attract further investment, including:

- Permanent 0% withholding tax for profit repatriation from the SEZ to foreign countries.
- Flexible and supportive regulations for foreign talent during the first five years.
- 0% VAT for all intra-SEZ goods exchanged within and between zones.
- 5% corporate income tax for up to 20 years.
- 0% customs duties deferral for goods within the SEZ.
- Exemption from expat levy fees for employees and their families in the SEZ.

International Maritime Industries (IMI) has already signed offtake agreements totalling US$10 billion over 10 years with partners Aramco and Bahri, for the delivery of 20 rigs and 52 vessels, fulfilling at least 75% of Bahri's commercial vessel needs from the shipyard over this period.

These factors, combined with the current economic climate, create significant growth potential for Ras al-Khair and the Kingdom as a whole.

The Saudi shipbuilding and MRO market is projected to grow by approximately 23% between 2021 and 2030, while the offshore rigs market is expected to grow by 20% during the same period.

Between 2021 and 2030, Ras al-Khair SEZ is projected to contribute US$32 billion to exports, US$1.4 billion in FDI, US$22 billion to GDP, and create over 80,000 jobs.

The country's maritime and mining sectors are crucial to achieving these goals, with Ras al-Khair SEZ at their core. Saudi Arabia has the lowest aluminium production costs globally, thanks to significant bauxite deposits and untapped mining reserves estimated at US$2.5 trillion.

With increasing demand for offshore platforms in the Arabian Gulf and the broader Middle East, Ras al-Khair SEZ is well-positioned to become a major supplier through its shipbuilding, rig fabrication, and MRO activities. Supported by substantial investment and modern infrastructure, the SEZ offers an attractive environment for business growth and investment.

Red Sea bounce gives carriers bottom line boost

Port of Ningbo.

 Container shipping, it appears, loves a crisis. With the pandemic supercharging carrier incomes, the latest dip has been abruptly halted by the Red Sea diversions which have boosted the major lines’ net income by over US$6 billion.

Those same diversions could further boost carrier incomes as the peak season volumes see demand soar, according to consultants Maritime Strategy International (MSI).

A quarter-on-quarter increase from a US$700 million net loss in Q4 2023 to a net income of US$5.4 billion in the first three months of this year. That is still a major decline from the first quarter of last year when carriers achieved US$13.7 billion in profits.

However, Blue Alpha Capital’s analyst John McCown pointed out that the turnaround in profits comes on the back of six straight quarters of declining profits, which itself followed seven quarters, with each of these quarters a record profit for the industry.

“Just as pricing drove those roller-coaster results, it drove the latest quarter,” said McCown, adding, “The difference is that the catalyst for the latter was pricing increases emanating out of the Red Sea situation. The actions of the Houthi terrorists have resulted in most container ships in the Asia to Europe trade lane avoiding a Red Sea routing in favour of the longer routing around Africa.”

According to the analyst, the Asia to Europe trades a quarter of global container miles and has had the effect of absorbing some 8% of capacity.

The absorption of that capacity has seen a rapid return to profitability for the lines as MSI noted in its March Horizon report, spot rates from Asia to Europe had declined US$3,189/FEU by late March, from US$5,492/FEU in January.

By May, MSI’s Horizon noted, “After three months of decline over February-April, spot freight rates shot up significantly and unexpectedly in the first half of May.”

Using Xeneta data, MSI said Far East-North Europe headhaul trades stood at US$3,805/FEU on 14 May, about 20% higher than at the end of April.

“This was partly driven by a push by major carriers to lift rates through GRIs on the 1 May. However, for the GRIs to stick, the market must be grounded in healthy demand-supply fundamentals.”

According to MSI, the General Rate Increases were successful because of a combination of reasons, including increased demand, the North European trades saw an increase of 7.7% in volumes; port congestion in Asia and Europe, particularly in the Western Mediterranean; and the diversions around the African Cape explains the surge in rates.

A significant increase in transshipment volumes in Spain and Morocco, particularly Barcelona, Valencia and the Port of Tanger, has meant congestion due directly to the restrictions caused by Houthi actions in the Red Sea, which has seen vessels divert around the Cape, and using feeder vessels to service Eastern Mediterranean destinations, rather than calling direct after transiting Suez.

MSI data show that deployment on intra-Med routes increased by 36,000 TEUs and on North Europe-Med routes by 68,000 TEUs.

Looking forward, MSI believes, “As the Red Sea crisis has no end for the foreseeable future and with the peak season ahead, the explosive cocktail of severe port congestion, increased seasonal demand, and the continuation of the Cape of Good Hope diversions could end up supercharging Asia-Europe spot freight rates to significantly higher levels than they already stand.”

Visayas Container Terminal welcomes inaugural CPX6 service call

SITC’s CPX6 service commenced at VCT with the arrival of the SITC Port Klang, one of the four vessels operating the service. Photo shows (from left) Jason Karaan, VCT chief financial officer; Timothee Jeannin, VCT executive director; Capt. Liu Chengxuan, SITC Port Klang vessel master; Mikkel Puyat, ICTSI commercial director – Philippines cluster; and Song Junping, SITC Philippines managing director.

Visayas Container Terminal (VCT), a business unit of International Container Terminal Services, Inc. (ICTSI) at the Port of Iloilo in Panay, Philippines, welcomed the inaugural call of SITC Container Lines' CPX6 service on 6 May.

"Iloilo is strategically located at the centre of the Visayas, the second largest economic region in the Philippines. With the region earmarked for future economic development, we are pleased to collaborate with SITC in connecting the Visayas to China directly. The service will help local industries thrive by expanding their market access," said Timothee Jeannin, VCT executive director.

This weekly service represents a significant enhancement in connectivity for industries in the Western Visayas region, establishing a crucial trade link to Mainland China markets.

The CPX6 service offers extensive coverage, including calls to the following major ports: Tianjin, Yantai, Qingdao, Shanghai, Ningbo, Qinzhou, Xiamen, Subic Bay, Manila, Iloilo, Cebu, Davao, and back to Tianjin.

The service is operated by four vessels with capacities ranging from 2,400 to 2,700 TEUs.

"The arrival of this service ushers a new era of collaboration and trade opportunity for Western Visayas, which holds immense economic potential across multiple sectors including agriculture and manufacturing. Strategic investments, infrastructure development and sustainable practices are key to realizing this potential. This service underscores our commitment to fostering trade growth and economic development in the region, and supports our goal to become the leading trade facilitator in Central Philippines," stated Jeannin.

VCT commenced commercial operations in early April after securing a 25-year concession from the Philippine Ports Authority to develop and operate the Iloilo Commercial Port Complex. Planned upgrades for the port include dredging and the introduction of modern cargo handling equipment.

Stolt-Nielsen to pay MSC US$290 million to settle MSC Flaminia claim

Photo of the MSC Flaminia taken on 22 August 2012.

Norwegian chemical shipping group Stolt-Nielsen will pay US$290 million to MSC to settle claims resulting from the fatal explosion that claimed the lives of three crew members on MSC Flaminia in 2012.

The parties informed the US courts this week that the matter has been settled. While the terms are confidential, the settlement amount was disclosed in Stolt-Nielsen’s 1Q 2024 results, which stated that the Norwegian company received US$133 million from its insurers to partially settle the MSC Flaminia claim.

On 14 July 2012, the 2001-built 6,732 TEU MSC Flaminia was sailing from Charleston, US, to Antwerp, Belgium, when a fire broke out in cargo hold #4. Stolt Tank Containers had 29 tank containers loaded on the ship, and three of these, containing divinylbenzene were in the aforementioned cargo hold.

When the crew attempted to extinguish the flames, an explosion occurred. Twenty other crew members were rescued.

The divinylbenzene was manufactured by US-based Deltech. MSC blamed Deltech and Stolt, saying the cargo risks were not fully declared. Divinylbenzene can explode when exposed to heat.

In 2018, New York courts ruled that Deltech and Stolt had liabilities of 55% and 45%, respectively.

However, Deltech and Stolt appealed, delaying the payouts. Furthermore, German tonnage provider Conti Reederei, the owner of the MSC Flaminia, also sought compensation from MSC, whose efforts to cap its liability under the 1976 Convention on the Limitation of Liability for Maritime Claims failed.

In 2021, London arbitrators awarded Conti US$200 million, as MSC was held liable for costs arising from the accident and lost revenue while the vessel was out of service.

In July 2023, the US appeals court upheld the lower court’s ruling on the liabilities to be borne by Deltech and Stolt.

MSC Flaminia underwent intensive repairs and resumed service in 2014; the ship remains owned by Conti and has been renamed CMA CGM San Francisco, having been chartered to the French line since 2021.

///                     Air Cargo News            ///

Levu Air Cargo scores Latin American first with A321F partnership

Source: SmartLynx

Levu Air Cargo will lease an Airbus A321 freighter from SmartLynx Airlines to become the first carrier in Latin America to operate the type.

The dry-leased aircraft last week arrived in Recife, Brazil to begin the registration process under the National Civil Aviation Agency of Brazil (ANAC) and change the aircraft number to PS-LVU.  The aircraft will be operated by Levu in Brazil on behalf of DHL Express.

The freighter previously operated under registration number 9H-CGD (MSN 775) for DHL Aviation in partnership with SmartLynx. Levu said it is in final steps with ANAC for its certification process and expects to obtain its AOC 121 in Jun 2024. It will be able to transport all types of goods including dangerous goods.

After obtaining its AOC, it will start the process of certification under European (EASA), and US (FAA and DOT) in order to perform international flights in 2025.

Rodrigo Pacheco, chief executive of Levu Air Cargo, said: “We specifically sought out SmartLynx due to their extensive knowledge of the aircraft as they are the biggest operator for A321F in the world today. “Their partnership with DHL in Europe makes the learning curve much more efficient for us as we will operate for the DHL supply chain here in Brazil. This strategic decision helps us deliver top-notch performance and ensures the best results for our valued customers.”

Edvinas Demenius, chief executive of SmartLynx Airlines, added: “Our partnership with Levu marks a significant milestone, not only for the Brazilian aviation market with the introduction of the first A321F registered in the country and region, but also for SmartLynx as we extend our cargo capacity management services to Latin America.

“This important step is a part of our strategic efforts to expand our geography and we see much potential in this region.” Brazil-headquartered Levu Air Cargo operates in both national and international markets through its fleet and strategic partnerships. The company is headquartered in Campinas, one of the primary air hubs in Brazil. It also has bases in Recife, Belém, and Manaus.

The A321F is the only aircraft in its category capable of handling container- ised cargo on both the lower and main deck, significantly improving turnover efficiency.

Avia Solutions Group-owned SmartLynx operates Airbus A320, A321, A321F, A330, and Boeing 737 MAX 8 aircraft.

US FAA legislation includes review of airport truck delays

AfA members. Source: AfA

US president Joe Biden has signed into law the Federal Aviation Administration Reauthorization legislation, which includes a section on reviewing truck congestion issues at US airports.

The US Airforwaders Association (AfA) said that under the new law, the General Accountability Office will assess air cargo operations across the US with a section dedicated to the issues with truck delays and lacking infrastructure.

“This gives the current administration a year to carry out this investigation and take the necessary steps to tackle this problem,” the AfA said.

The AfA sponsored the legislation and worked with the National Customs Brokers and Forwarders Association (NCBFAA) to campaign for its approval.

“This legislation is music to our ears. We have been working relentlessly with our members and the NCBFAA to make sure it is supported and passed,” said Brandon Fried, executive director, AfA.

“Unnecessary costs from delays and inefficient loading bays ripple down the supply chain to our local stores and shoppers, which means prices are increasing because of tired infrastructure that needs a 21st century refit – this is the first step on the long road ahead.

“Our members are working around the clock to make sure we stay competitive and have a world-class logistics and supply chain industry, and we need Capitol Hill to invest as well, to keep prices low and our sector efficient.”

AfA president Bob Imbriani added: “This is a major step forward in addressing the cargo congestion problem that has existed for quite some time at many airports across the country.”

“The AfA is proud to be the primary sponsor of this legislation and it is only through the support of our members and the hard work of our executive director, legislative consultant, industry partners and board of directors that we can be successful in addressing issues such as this that are of vital concern to our industry.”

The overall FAA Reauthorisation legislation aims to modernise the US aviation system. It includes more than $105bn in appropriations for the FAA for the next four years, including $19.35bn for airport infrastructure improvement grants to support more than 3,300 airports across the US.

Last year, the association ramped up its efforts to tackle cargo infrastructure concerns at US airports by employing a senior lobbyist.

Also, in 2022, the AfA and NCBFAA called for a State or Federal-backed ‘Air Cargo Support Fund’ to tackle the infrastructural crisis facing the US air cargo industry.

The recommendations form part of a whitepaper following a major national survey of 400 air cargo stakeholders in the public and private sectors undertaken by the organisations, identifying the critical issues and the airports where the challenges are greatest.

Mesa Airlines stops 737F operations for DHL Express

Photo: DHL Group

US regional air carrier Mesa Airlines has stopped providing air cargo services for DHL due to a “reduction in cargo demand”.

Mesa Air Group said in its first quarter 2024 results release that Mesa Airlines had agreed to reduce its freighter service with DHL from February.

“As a result of the reduction in cargo demand, Mesa and DHL mutually agreed to wind down cargo operation as of February 2024.”

Mesa did not provide any further details about the nature of its operations for DHL, but in July 2020 the company won a contract to provide air cargo services for DHL Express utilising Boeing 737-400F cargo aircraft. 

The agreement involved Mesa operating two 737-400F from the DHL Express Americas global hub at Cincinnati/Northern Kentucky International Airport (CVG) for a five-year term. The company leased the aircraft from DHL and began operations in October 2020.

Cargo Facts reported that Mesa had been using three 737-400Fs.

Mesa said in its recent results release that as part of the agreement, DHL will reimburse certain costs associated with winding down operations. It added that pilots from the cargo operation are transitioning to operate Mesa’s E-175 aircraft.

Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 79 cities in 36 states, the District of Columbia, Canada, Cuba, and Mexico.

As of March 31, Mesa operated a fleet of 80 aircraft, with approximately 263 daily departures. The Company had approximately 2,110 employees. Mesa operates all its flights as United Express pursuant to the terms of a capacity purchase agreement entered into with United Airlines, Inc.

Worsening box line disruption to have limited air cargo impact

Disruption to container shipping operations out of Asia has unexpectedly worsened over recent weeks but the development is expected to have limited impact on air cargo.

The last few weeks have seen the return of port congestion and container shipping capacity shortages out of Asia push up ocean freight rates.

Figures from analyst Xeneta show that ocean rates from Asia to Europe are currently up 198% year on year and from the Far East to west coast US there is a 214% increase.

DSV said that the “significant development” had “caught most by surprise”.

Photo: Shutterstock

However, while capacity shortages and port congestion in ocean shipping often result in rising airfreight demand, Xeneta chief airfreight officer Niall van de Wouw said there may be limited impact on airfreight this time.

He explained that in Xeneta’s view, much of the surge in demand was caused by shippers preparing for possible disruption in the shipping peak season rather than an urgent rush to move cargo.

“We think that the spike in rates on the ocean side is caused by shippers front loading in anticipation of a capacity squeeze in the third quarter, which is the shipping peak season,” he told Air Cargo News.

“If that is the case, then it is a safety measure and not so much an urgency measure which I think will have limited impact on airfreight.

“They are moving inventory around and if that is delayed a little bit, you don’t need airfreight to compensate for that.”

He added that the move may even result in less supply chain urgency in the final part of the year.

“If they are moving peak season cargo now, it means that they will have quite a bit of inventory at destination which would restrict the need for urgent airfreight shipments because they will have the inventory at a higher level than they would normally have to avoid a potential capacity crunch,” he said.

In a market update, freight forwarder DSV said that there were several reasons for the rising pressure in ocean shipping.

It said that the impact of elongated sailing times around Africa to avoid missile attacks in the Red Sea on capacity levels was starting to worsen despite extra capacity being added to the market.

“The weekly capacity offered from Asia to Europe is about 10% lower than the same period last year, even though significantly more vessels and thus more capacity are being used to operate a network,” the forwarder explained.

“Perhaps the most important factor causing the pressure we are experiencing on the market is congestion at many central ports around the world.”

Figures from market analyst Sea-Intelligence show that only about 37% of all vessels from Asia to Europe arrive on time, which is the lowest in more than a year.

The port congestion can result in vessels becoming so delayed that they miss their next departure from Asia adding to ocean shipping’s woes.

DSV said it expects the issues to continue until at least July.

In a Xeneta webinar earlier this week, Tiaca director general Glyn Hughes also highlighted the issues faced by the ocean market this year.

“The maritime sailings (around Africa) can add two weeks sailing time from Asia to Europe and also adds additional cost,” he said.

“Fuel burn, operational costs, it’s therefore putting the price of [containers] up in some cases more than double.

“It is also having a secondary effect as the returning of the empty containers is now taking up to four weeks.

“We’ve also heard reports that it is actually a lack of containers which means they can’t even get the containers to the ports in some parts of China and Southeast Asia.

“That is a secondary push that is moving to air because they can’t wait for containers to come back into the distribution cycle.”

He added that the higher cost of ocean shipping was also making air cargo a more attractive option.

“These are very positive indications for the air cargo sector but a shame for the overall disruption of supply chains in the next few months,” he said.

I  hope  you have enjoyed reading this update.  Have a nice day.

With kind regards

Robert Sands

Joint Managing Director

 

Jupiter Sea & Air Services Pvt Ltd

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