<div class="phx-topic abstract-wrapper">Investment analysts who follow container shipping are offering some pointed advice to their clients:</div>

Investment analysts who follow container shipping are offering some pointed advice to their clients:

<div>Investment analysts who follow container shipping are offering some pointed advice to their clients: Steer clear of the industry.Trouble is looming, they say, in the form of an unprecedented surge in new ships set to arrive on the world market between now and the end of the decade.Even if optimistic projections for trade growth materialize, ships on the world's major trade lanes still would be sailing with much of their space unfilled through the end of the decade, pressuring freight rates further.''The differential between demand and supply (of vessel space) is going to widen dramatically in 1998,'' said James Winchester,...

Investment analysts who follow container shipping are offering some pointed advice to their clients: Steer clear of the industry. Trouble is looming, they say, in the form of an unprecedented surge in new ships set to arrive on the world market between now and the end of the decade.Even if optimistic projections for trade growth materialize, ships on the world's major trade lanes still would be sailing with much of their space unfilled through the end of the decade, pressuring freight rates further. ''The differential between demand and supply (of vessel space) is going to widen dramatically in 1998,'' said James Winchester, who follows container shipping for Lazard Freres & Co. in New York. ''We are going into uncharted territory in terms of the magnitude of new capacity coming into the market.'' Investment analysts point to a growing list of alarming statistics that underscore their trepidation about container shipping: * Fifty-five of the largest class of containerships - capable of carrying at least 4,000 20-foot containers - are in service. Over the next three years, 48 more will be delivered. * The current order book for containerships of all sizes represents more than 36 percent of the current world fleet capacity of 1.16 million 20-foot containers, or TEUs. * In recent years, no more than 2 percent to 3 percent a year of world capacity has been taken out of service for scrapping. * Charter rates for containerships have declined 17 percent to 23 percent since late 1995, an indication of existing overcapacity. * Maersk Line has taken delivery of four 6,418-TEU capacity K-Class ships, and has another 11 on order. P&O Nedlloyd has four similarly sized ships on order, while Hyundai Merchant Marine and Nippon Yusen Kaisha Ltd. have ordered vessels of 5,500 TEUs or larger. ''In the foreseeable future these ships will never sail at max payload,'' said Peter Shaerf, a principal of the Commonwealth Group, a charter broker in New York. A LONG-TERM TREND With analysts concluding from such figures that overcapacity is not likely to go away any time soon, it is no stretch to also conclude that overcapacity is likely to overwhelm shipping lines' ability to prop up rates through cooperation under antitrust immunity. Until carriers can drastically cut costs through consolidations, therefore, container shipping is probably an investment to avoid. ''The basic investment philosophy we have always followed is follow supply. Where supply is much greater than likely demand, you have to stay away,'' said James Dowling, a maritime analyst with Furman Selz LLC in New York who has been following shipping since the late 1960s. ''I'm not sure I've ever seen it this bad.'' Cost concerns pivotal The coming surge in capacity was the major issue facing container shipping cited by Mr. Dowling in his annual shipping investment review, released late last week. He said the trend toward overcapacity, which first came to light in late 1995, has accelerated as carriers desperate to reduce expenses invest in ever larger vessels to reduce per-unit costs of moving containers. Britain's Drewery Shipping Consultants recently found that replacing a 4,000-TEU ship with one capable of carrying 6,000 TEUs can reduce vessel costs by 20 percent. Pointing to figures compiled by Clarkson Research Studies, another maritime research firm, Mr. Dowling noted that the order book for container capacity expanded 35 percent between early 1996 and early 1997. Last month 1.162 million TEUs of vessel space were on order, representing 36 percent of existing world containership vessel capacity. The delivery of these vessels will mean that capacity expansion this year and in 1998 is likely to repeat the 13 percent to 14 percent expansion witnessed in 1995 and 1996, years that saw huge rate declines in several major trade lanes. That expansion is set against likely world container trade growth of 5 percent this year and 7 percent to 8 percent at most in 1998, Mr. Dowling said. ''A year ago, we noted in our annual review that we were afraid that a combination of a slowing world economy and new supply could result in a nasty rate environment,'' he noted in the report. ''This happened in 1996, particularly on the trans-Pacific and Asia-Europe routes, and 1997 could see more of the same.'' CONSOLIDATION IS COMING Where this will lead, beyond pressure on rates and profit, is toward an even more intense focus by ocean carriers on costs, one reason further industry consolidation is widely anticipated. ''I have heard more talk in the last six months from liner companies saying, 'What can we do to cut costs,' rather than 'what we can do to increase revenue,' '' Mr. Shaerf said. He said charter rates over the last 1 1/2 years have plunged more than 20 percent in some cases as carriers have taken deliveries of big ships. That is unusual because deliveries of big ships usually increase demand for smaller ships for use as feeder vessels. The fact that rates are sliding despite the delivery of larger ships is further evidence that capacity is getting out of control, he said. Concern about container shipping by investment analysts is clearly manifested in their increasingly bearish attitudes toward APL Ltd., the Oakland carrier whose stock represents the only pure container shipping investment in U.S. markets. Mr. Dowling said APL, financially, ''is in excellent condition,'' with its strong cash flow and cash on hand for stock buy-backs. But he noted that rate pressures will build in APL's main trans-Pacific markets. ''We see no fundamental reason to own the stock based on our 1997 industry outlook,'' he said. Steve Lewins, a Gruntal & Co. analyst, last week removed APL from his recommended list.

SPACE ODYSSEY

<div class="phx-topic abstract-wrapper">The port will berth vessels at its smaller Ocean Terminal two miles downriver from the main Garden City terminal in order to cut waiting times outside the port and reduce ship backlogs. </div>

The port will berth vessels at its smaller Ocean Terminal two miles downriver from the main Garden City terminal in order to cut waiting times outside the port and reduce ship backlogs.

Feature image

<div class="phx-topic">The Port of Savannah is using underutilized berth space at its smaller terminal to park ships ahead of their unloading at the port’s main container terminal. The port is doing so to reduce the number of ships idling at anchor, an issue that hit the port hard during a particularly tough winter but will also require long-term improvements in navigating the Savannah River. The Georgia Ports Authority (GPA) said in late February it would open a lay berth at its Ocean Terminal as a place to stage large ships prior to their arrival at GPA’s main Garden City marine terminal two miles upriver. GPA Chief Executive Griff Lynch told the Journal of Commerce last week that the opening of the Ocean Terminal lay berth means a ship can be immediately ready to dock at Garden City when there is an open berth. Currently, ships wait at anchor outside the port for a berth to open at Garden City, then make the 13-mile transit up the Savannah River when the navigation conditions are right. “It’s a parking spot at Ocean Terminal where a ship can be docked,” Lynch said. Having the lay berth will allow GPA to handle two more post-Panamax ships per week than it can currently, he added. GPA will also get more utilization out of Garden City as the idle time between ship calls for berths will go from 12 hours to three hours. The plans to open the lay berth at Ocean Terminal — part of the GPA’s broader strategy to increase container handling at the facility that serves a variety of cargoes — comes after the port faced a rare snowstorm in late January that contributed to a backlog of ships at anchor to start 2025. Winter storm Enzo dropped three to four inches of snow at Savannah, which closed Garden City for four days, Lynch said. The warming trend following Enzo caused heavy fog conditions during early February that also periodically closed the Savannah River to navigation. Lynch said the port lost 143 work hours due to the January snowstorm, which he said was among the “worse months for weather” that he has ever seen at Savannah. While the port had little backlog during December, the terminal closure and the fog led to a backlog of anchored vessels outside the port that reached as many as 20 to 25 ships on some days, Lynch said. <h3>Limits of Savannah River </h3>For shippers, the backlog meant further delays on receiving cargo. The median delay between the estimated time of arrival and the actual time of arrival for container ships calling Savannah reached over 10 days in February, according to data from visibility provider p44. That compares with a median delay of around four days for other major East Coast ports. Lynch, who said customers asked about delays during TPM25, said the worst is well past Savannah. The port is seeing about eight or nine ships at anchor at a time now, he said, adding that the wait time for an open berth at Garden City is only about three days, which is close to typical at most East Coast ports. Outside of weather events, the Ocean Terminal lay berth also offers GPA a workaround for the capacity limits of the Savannah River. The river is only wide enough for post-Panamax ships to travel in one direction at a time, further limiting arrivals and departures at Garden City. The Savannah River also has one of the largest tidal shifts along the Eastern seaboard that can impact the berthing window for ships coming into the port. The river, which is dredged to 47 feet, sees an average tidal shift of seven feet. That shift can impact the air clearance for large ships under the Talmadge Bridge just downriver from Garden City. The Georgia Department of Transportation is in the early stages of coming up with a new bridge design as it plans to demolish the Talmadge Bridge. The US Army Corps of Engineers is also looking at modifications to Savannah’s lower harbor that would allow for two-way ship traffic in some spots. But those projects will take time, Lynch said. “We have a challenge with the shipping channel,” he said. “A harbor modification that would enable passing zones will take a number of years. In the meantime, we have a solution for that through developing Ocean Terminal for container handling.” Lynch said a second lay berth for large ships will open at Ocean Terminal by mid-2026, something that will allow another two big ships per week to call Garden City. By 2027, Ocean Terminal is expected to start capital improvements that will enable it to become a dedicated container terminal for handling up to 1.5 million TEUs per year, Lynch said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The Port of Savannah is using underutilized berth space at its smaller terminal to park ships ahead of their unloading at the port’s main container terminal. The port is doing so to reduce the number of ships idling at anchor, an issue that hit the port hard during a particularly tough winter but will also require long-term improvements in navigating the Savannah River. The Georgia Ports Authority (GPA) said in late February it would open a lay berth at its Ocean Terminal as a place to stage large ships prior to their arrival at GPA’s main Garden City marine terminal two miles upriver. GPA Chief Executive Griff Lynch told the Journal of Commerce last week that the opening of the Ocean Terminal lay berth means a ship can be immediately ready to dock at Garden City when there is an open berth. Currently, ships wait at anchor outside the port for a berth to open at Garden City, then make the 13-mile transit up the Savannah River when the navigation conditions are right. “It’s a parking spot at Ocean Terminal where a ship can be docked,” Lynch said. Having the lay berth will allow GPA to handle two more post-Panamax ships per week than it can currently, he added. GPA will also get more utilization out of Garden City as the idle time between ship calls for berths will go from 12 hours to three hours. The plans to open the lay berth at Ocean Terminal — part of the GPA’s broader strategy to increase container handling at the facility that serves a variety of cargoes — comes after the port faced a rare snowstorm in late January that contributed to a backlog of ships at anchor to start 2025. Winter storm Enzo dropped three to four inches of snow at Savannah, which closed Garden City for four days, Lynch said. The warming trend following Enzo caused heavy fog conditions during early February that also periodically closed the Savannah River to navigation. Lynch said the port lost 143 work hours due to the January snowstorm, which he said was among the “worse months for weather” that he has ever seen at Savannah. While the port had little backlog during December, the terminal closure and the fog led to a backlog of anchored vessels outside the port that reached as many as 20 to 25 ships on some days, Lynch said. Limits of Savannah River For shippers, the backlog meant further delays on receiving cargo. The median delay between the estimated time of arrival and the actual time of arrival for container ships calling Savannah reached over 10 days in February, according to data from visibility provider p44. That compares with a median delay of around four days for other major East Coast ports. Lynch, who said customers asked about delays during TPM25, said the worst is well past Savannah. The port is seeing about eight or nine ships at anchor at a time now, he said, adding that the wait time for an open berth at Garden City is only about three days, which is close to typical at most East Coast ports. Outside of weather events, the Ocean Terminal lay berth also offers GPA a workaround for the capacity limits of the Savannah River. The river is only wide enough for post-Panamax ships to travel in one direction at a time, further limiting arrivals and departures at Garden City. The Savannah River also has one of the largest tidal shifts along the Eastern seaboard that can impact the berthing window for ships coming into the port. The river, which is dredged to 47 feet, sees an average tidal shift of seven feet. That shift can impact the air clearance for large ships under the Talmadge Bridge just downriver from Garden City. The Georgia Department of Transportation is in the early stages of coming up with a new bridge design as it plans to demolish the Talmadge Bridge. The US Army Corps of Engineers is also looking at modifications to Savannah’s lower harbor that would allow for two-way ship traffic in some spots. But those projects will take time, Lynch said. “We have a challenge with the shipping channel,” he said. “A harbor modification that would enable passing zones will take a number of years. In the meantime, we have a solution for that through developing Ocean Terminal for container handling.” Lynch said a second lay berth for large ships will open at Ocean Terminal by mid-2026, something that will allow another two big ships per week to call Garden City. By 2027, Ocean Terminal is expected to start capital improvements that will enable it to become a dedicated container terminal for handling up to 1.5 million TEUs per year, Lynch said. Contact Michael Angell at michael.angell@spglobal.com .

Container lines

Marine terminals

North American ports

Savannah’s ‘parking spot’ targets idle time for ships, main terminal

<div class="phx-topic abstract-wrapper">Ports across the continent are struggling to clear bottlenecks as containers stack up in terminals and delay inland and feeder connections.</div>

Ports across the continent are struggling to clear bottlenecks as containers stack up in terminals and delay inland and feeder connections.

<div class="phx-topic">Severe congestion continues to plague ports across Europe with new alliance vessel plans combining with strikes, bad weather and fully occupied container yards to delay ships and disrupt terminal operations. The bottlenecks are being felt in both North Europe and the Mediterranean, with carriers, terminals and forwarders reporting lengthy delays in some ports. Maersk said in its latest Europe advisory that all terminals in Antwerp were congested “due to the phase-in and phase-out of vessel plans,” a factor that was being exacerbated by late vessel arrivals from delays in previous ports. Maersk and Hapag-Lloyd are phasing in Gemini Cooperation services, with the new network expected to be fully deployed by the end of the second quarter. Likewise, Mediterranean Shipping Co. is moving services from its 2M Alliance with Maersk to a standalone network, and the Premier Alliance is adjusting to services without Hapag-Lloyd. Carrier executives have warned customers that operational disruptions to port schedules will be experienced, with some old and new services running in parallel. The new networks will require two full cycles from Asia to Europe and back to Asia before they will be fully rolled out. Maersk also reported delays in Bremerhaven, where several services were arriving late due to bad weather en route to the German port. In Rotterdam, the carrier said the Hutchinson Ports Delta II terminal was back to full operational productivity <a href="https://www.joc.com/article/strikes-storms-and-record-volumes-adding-to-north-europe-port-delays-5942119">after a month of slowdowns</a> following a tentative agreement between the company and dockworkers, but a backlog of inland cargo was still being cleared. South Korean carrier HMM warned customers it was taking an average of three days to secure a berth at Hamburg that was experiencing a strike by boat pilots, while berth waiting times at Le Havre were up to 5.7 days because of recurring strikes in the French hub. French unions are holding four-hour stoppages in Le Havre on eight separate days in March, in addition to a three-day strike planned this week from March 18–20. Significant disruption is already being experienced from the rolling industrial action, and the full-day strikes are set to bring container operations in France to a standstill this week. Spillover effects of the Le Havre strike are also affecting Rotterdam, according to HMM, which said the average berth waiting time at Europe’s largest container port was 5.6 days. <h3>Yards and berths fully occupied </h3>Kuehne + Nagel’s SeaExplorer visibility platform reported heavily disrupted operations at Rotterdam, Hamburg, Antwerp and Le Havre, with full container yards and most berths fully occupied. Although SeaExplorer put the average waiting time at Hamburg at 1.25 days, it said the port was experiencing “heavily disrupted operations.” The bottlenecks saw Hamburg terminal operator HHLA imposing container delivery restrictions from Monday at Container Terminal Burchardkai (CTB) and Container Terminal Tollerort (CTT). Export container deliveries will be managed on a ship-by-ship basis, “potentially causing delays and complicating daily operations,” HHLA noted. At Rotterdam’s ECT Euromax terminal, Hutchison Ports has announced that container stacks are so high it will not be able to accept empty containers delivered by road ​​from​March 23 “​​to prevent an unworkable situation.” The port bottlenecks are also impacting inland connections from Rotterdam and nearby Antwerp. Intermodal operator Contargo on Monday reported average waiting times for the handling of its barges have reached 75 hours in Antwerp and 72 hours in Rotterdam. Adding to the port congestion issues are seasonal low water levels in the Rhine River that restrict the loading of containers for inland destinations and are generating surcharges of about €50 ($54) per box. The low-water surcharges will rise as water levels drop further through the summer, with shifting cargo putting pressure on road and rail services. In the Mediterranean, HMM noted that the Greek hub of Piraeus has a berth waiting time of 4.4 days and six days for feeder vessels, while average berth wait times at Genoa and La Spezia were four days. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>.</div>

Severe congestion continues to plague ports across Europe with new alliance vessel plans combining with strikes, bad weather and fully occupied container yards to delay ships and disrupt terminal operations. The bottlenecks are being felt in both North Europe and the Mediterranean, with carriers, terminals and forwarders reporting lengthy delays in some ports. Maersk said in its latest Europe advisory that all terminals in Antwerp were congested “due to the phase-in and phase-out of vessel plans,” a factor that was being exacerbated by late vessel arrivals from delays in previous ports. Maersk and Hapag-Lloyd are phasing in Gemini Cooperation services, with the new network expected to be fully deployed by the end of the second quarter. Likewise, Mediterranean Shipping Co. is moving services from its 2M Alliance with Maersk to a standalone network, and the Premier Alliance is adjusting to services without Hapag-Lloyd. Carrier executives have warned customers that operational disruptions to port schedules will be experienced, with some old and new services running in parallel. The new networks will require two full cycles from Asia to Europe and back to Asia before they will be fully rolled out. Maersk also reported delays in Bremerhaven, where several services were arriving late due to bad weather en route to the German port. In Rotterdam, the carrier said the Hutchinson Ports Delta II terminal was back to full operational productivity after a month of slowdowns following a tentative agreement between the company and dockworkers, but a backlog of inland cargo was still being cleared. South Korean carrier HMM warned customers it was taking an average of three days to secure a berth at Hamburg that was experiencing a strike by boat pilots, while berth waiting times at Le Havre were up to 5.7 days because of recurring strikes in the French hub. French unions are holding four-hour stoppages in Le Havre on eight separate days in March, in addition to a three-day strike planned this week from March 18–20. Significant disruption is already being experienced from the rolling industrial action, and the full-day strikes are set to bring container operations in France to a standstill this week. Spillover effects of the Le Havre strike are also affecting Rotterdam, according to HMM, which said the average berth waiting time at Europe’s largest container port was 5.6 days. Yards and berths fully occupied Kuehne + Nagel’s SeaExplorer visibility platform reported heavily disrupted operations at Rotterdam, Hamburg, Antwerp and Le Havre, with full container yards and most berths fully occupied. Although SeaExplorer put the average waiting time at Hamburg at 1.25 days, it said the port was experiencing “heavily disrupted operations.” The bottlenecks saw Hamburg terminal operator HHLA imposing container delivery restrictions from Monday at Container Terminal Burchardkai (CTB) and Container Terminal Tollerort (CTT). Export container deliveries will be managed on a ship-by-ship basis, “potentially causing delays and complicating daily operations,” HHLA noted. At Rotterdam’s ECT Euromax terminal, Hutchison Ports has announced that container stacks are so high it will not be able to accept empty containers delivered by road ​​from​March 23 “​​to prevent an unworkable situation.” The port bottlenecks are also impacting inland connections from Rotterdam and nearby Antwerp. Intermodal operator Contargo on Monday reported average waiting times for the handling of its barges have reached 75 hours in Antwerp and 72 hours in Rotterdam. Adding to the port congestion issues are seasonal low water levels in the Rhine River that restrict the loading of containers for inland destinations and are generating surcharges of about €50 ($54) per box. The low-water surcharges will rise as water levels drop further through the summer, with shifting cargo putting pressure on road and rail services. In the Mediterranean, HMM noted that the Greek hub of Piraeus has a berth waiting time of 4.4 days and six days for feeder vessels, while average berth wait times at Genoa and La Spezia were four days. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Port News

International ports

Longshore labor

Maritime

New alliance vessel plans add to ongoing port congestion in Europe

<div class="phx-topic abstract-wrapper">Multiple sources who spoke with the Journal of Commerce have confirmed ongoing negotiations between the two liners covering India’s larger westbound trades to the US East Coast and North Europe. </div>

Multiple sources who spoke with the Journal of Commerce have confirmed ongoing negotiations between the two liners covering India’s larger westbound trades to the US East Coast and North Europe.

<div class="phx-topic">The growing pressure of overcapacity on trades out of India is pushing major container lines to re-strategize their network operations. Those regrouping signals conspicuously surround services led by CMA CGM and Ocean Network Express (ONE), market updates reveal. Multiple industry sources who spoke with the Journal of Commerce have confirmed ongoing negotiations between the two liners on new vessel-sharing agreements (VSAs) covering India’s larger westbound trades to the US East Coast and North Europe. “Two rounds of talks are over and they could strike a deal on at least one trade lane soon,” said an industry insider who didn’t want to be identified. “A realignment or reconsolidation is critical for them as the market has descended into a vicious price war.” Sources also added that CMA CGM likely will join forces with ONE to open a South India-Europe direct string to rival the Gemini Cooperation network that calls at Ennore Port, near Chennai. Currently, CMA CGM and ONE operate standalone services on the West India-US East Coast trade but have fewer vessels to guarantee weekly sailings via the longer Cape of Good Hope route. Ongoing void calls have made schedule reliability a serious challenge for their services. Moreover, the French liner now has significantly higher allocations to fill on its West India-North Europe “Epic” routing after Hapag-Lloyd’s Gemini-linked exit from the consortium. Last month, ONE began a new India-Europe string (IOX) as part of the Premier Alliance, which includes HMM and Yang Ming, spoiling an already oversupplied market and pushing rates to levels profoundly unattractive to carriers. Local carrier sources also generally believe with current supply and demand dynamics unlikely to improve anytime soon, the westbound trade lane is becoming increasingly unviable without a full strategic review. But a Mumbai-based freight forwarder holds the view that major liners could continue “staying put” until they have clarity on tariff and geopolitical issues. Meanwhile, many carriers have adjusted West India-Europe spot rates downward yet again, a second revision over the past week, as they desperately push for bookings. Forwarders also anticipate India-USEC rates to drop in April with most sailings on track, following some rate recovery signs during the month because of lower capacity from an array of sailing cuts. Rates were $2,250 per FEU as of March 13, up 54% in just one week. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="56199e2b-5df4-468f-a149-b18ae7c32e51"></dynamic-object></div>There are other factors hurting mainliner interests, sources say. “On top of excess mainline tonnage, several smaller opportunistic newcomers willing to ply over the Suez Canal/Red Sea have now entered the market,” a source at a European carrier told the Journal of Commerce. “This [influx] poses systemic risks for mega carriers.” As competition builds, Mediterranean Shipping Co. and Maersk recently reorganized their India-US networks with port call changes to boost market share. “On our Indus and Indusa services, we could not compete in terms of transit times and schedule reliability,” MSC India said. “Going ahead, we have better coverage to USEC/Gulf ports and a stable product to service our clients.” Similarly, Maersk’s enhanced MECL loop is reporting higher loads out of West India at the expense, in particular, of CMA CGM’s Indamex service. Contact Bency Mathew at <a href="mailto:bencyvmathew@gmail.com">bencyvmathew@gmail.com</a>.</div>

The growing pressure of overcapacity on trades out of India is pushing major container lines to re-strategize their network operations. Those regrouping signals conspicuously surround services led by CMA CGM and Ocean Network Express (ONE), market updates reveal. Multiple industry sources who spoke with the Journal of Commerce have confirmed ongoing negotiations between the two liners on new vessel-sharing agreements (VSAs) covering India’s larger westbound trades to the US East Coast and North Europe. “Two rounds of talks are over and they could strike a deal on at least one trade lane soon,” said an industry insider who didn’t want to be identified. “A realignment or reconsolidation is critical for them as the market has descended into a vicious price war.” Sources also added that CMA CGM likely will join forces with ONE to open a South India-Europe direct string to rival the Gemini Cooperation network that calls at Ennore Port, near Chennai. Currently, CMA CGM and ONE operate standalone services on the West India-US East Coast trade but have fewer vessels to guarantee weekly sailings via the longer Cape of Good Hope route. Ongoing void calls have made schedule reliability a serious challenge for their services. Moreover, the French liner now has significantly higher allocations to fill on its West India-North Europe “Epic” routing after Hapag-Lloyd’s Gemini-linked exit from the consortium. Last month, ONE began a new India-Europe string (IOX) as part of the Premier Alliance, which includes HMM and Yang Ming, spoiling an already oversupplied market and pushing rates to levels profoundly unattractive to carriers. Local carrier sources also generally believe with current supply and demand dynamics unlikely to improve anytime soon, the westbound trade lane is becoming increasingly unviable without a full strategic review. But a Mumbai-based freight forwarder holds the view that major liners could continue “staying put” until they have clarity on tariff and geopolitical issues. Meanwhile, many carriers have adjusted West India-Europe spot rates downward yet again, a second revision over the past week, as they desperately push for bookings. Forwarders also anticipate India-USEC rates to drop in April with most sailings on track, following some rate recovery signs during the month because of lower capacity from an array of sailing cuts. Rates were $2,250 per FEU as of March 13, up 54% in just one week. There are other factors hurting mainliner interests, sources say. “On top of excess mainline tonnage, several smaller opportunistic newcomers willing to ply over the Suez Canal/Red Sea have now entered the market,” a source at a European carrier told the Journal of Commerce. “This [influx] poses systemic risks for mega carriers.” As competition builds, Mediterranean Shipping Co. and Maersk recently reorganized their India-US networks with port call changes to boost market share. “On our Indus and Indusa services, we could not compete in terms of transit times and schedule reliability,” MSC India said. “Going ahead, we have better coverage to USEC/Gulf ports and a stable product to service our clients.” Similarly, Maersk’s enhanced MECL loop is reporting higher loads out of West India at the expense, in particular, of CMA CGM’s Indamex service. Contact Bency Mathew at bencyvmathew@gmail.com .

CMA CGM, ONE in India VSA talks as standalone capacity pressures rise

<div class="phx-topic abstract-wrapper">Freight rate declines coupled with ship supply and cargo demand worries are rippling through the MPV sector. </div>

Freight rate declines coupled with ship supply and cargo demand worries are rippling through the MPV sector.

<div class="phx-topic">Increasing geopolitical unpredictability and the apparent onset of economic warfare via import tariffs are being blamed by brokers for a significant weakening of the current multipurpose ship market and forward-looking market sentiment. In its March multipurpose vessel (MPV) market briefing, shipbroker Toepfer said that recent developments regarding Russia’s war against Ukraine “are adding further uncertainty,” all the while triggering huge increases in investment in defense and infrastructure in the EU. “Such investment initiatives tend to create future demand for MPV tonnage,” said Toepfer.The broker cautioned that the uncertainty would cause both the demand and supply sides of the market to exercise extreme caution when making mid-term or long-term decisions.The March Toepfer Multipurpose Index (TMI) dropped 0.88% month over month to settle at $12,800 per day for March, although that is up 1.31% year over year. Toepfer’s TMI is based on expected average rates for six- to 12-month time charters for 12,500 deadweight-ton (dwt) “F-Type” vessels with safe working loads of 240-360 metric tons, as reported to Toepfer by owners and operators.<div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="ea382181-08cd-4298-912f-87c79836bcf7"></dynamic-object></div>An analysis by the Journal of Commerce of data from shippers revealed there was a healthy amount of spot tonnage for general cargo and heavy lift in February and that there was capacity available in the market. However, it was a different picture for niche deck carriers. Increasing demand coupled with a smaller fleet meant that more than three months were needed to secure specialist deck carriers for project cargoes.The data also showed there was an increasing trend of chartering MPVs with less than 240-metric-ton lifts in February. As a result, supply is expected to contract in the coming months.On the demand side, a global engineering, procurement and construction (EPC) source confirmed to the Journal of Commerce it had increased imports ahead of the Mar. 11 implementation date for breakbulk import commodity tariffs under the US government’s Section 301. “We asked, ‘what’s ready, what can we bring in early and pay storage fees on?’” the source said. Longer term, the EPC is pushing out deliveries where it can until there is more certainty on breakbulk cargo tariffs. However, the source raised concerns about the “stuff in the middle,” especially in lump sum project contracts where costs are locked in. “That is the problem,” the source said. “For certain volatile items, we can lock in fluctuation relief clauses, but not all.”Contact Carly Fields at <a href="mailto:carly.fields@spglobal.com">carly.fields@spglobal.com</a>.</div>

Increasing geopolitical unpredictability and the apparent onset of economic warfare via import tariffs are being blamed by brokers for a significant weakening of the current multipurpose ship market and forward-looking market sentiment. In its March multipurpose vessel (MPV) market briefing, shipbroker Toepfer said that recent developments regarding Russia’s war against Ukraine “are adding further uncertainty,” all the while triggering huge increases in investment in defense and infrastructure in the EU. “Such investment initiatives tend to create future demand for MPV tonnage,” said Toepfer. The broker cautioned that the uncertainty would cause both the demand and supply sides of the market to exercise extreme caution when making mid-term or long-term decisions. The March Toepfer Multipurpose Index (TMI) dropped 0.88% month over month to settle at $12,800 per day for March, although that is up 1.31% year over year. Toepfer’s TMI is based on expected average rates for six- to 12-month time charters for 12,500 deadweight-ton (dwt) “F-Type” vessels with safe working loads of 240-360 metric tons, as reported to Toepfer by owners and operators. An analysis by the Journal of Commerce of data from shippers revealed there was a healthy amount of spot tonnage for general cargo and heavy lift in February and that there was capacity available in the market. However, it was a different picture for niche deck carriers. Increasing demand coupled with a smaller fleet meant that more than three months were needed to secure specialist deck carriers for project cargoes. The data also showed there was an increasing trend of chartering MPVs with less than 240-metric-ton lifts in February. As a result, supply is expected to contract in the coming months. On the demand side, a global engineering, procurement and construction (EPC) source confirmed to the Journal of Commerce it had increased imports ahead of the Mar. 11 implementation date for breakbulk import commodity tariffs under the US government’s Section 301. “We asked, ‘what’s ready, what can we bring in early and pay storage fees on?’” the source said. Longer term, the EPC is pushing out deliveries where it can until there is more certainty on breakbulk cargo tariffs. However, the source raised concerns about the “stuff in the middle,” especially in lump sum project contracts where costs are locked in. “That is the problem,” the source said. “For certain volatile items, we can lock in fluctuation relief clauses, but not all.” Contact Carly Fields at carly.fields@spglobal.com .

Breakbulk carriers

Project cargo

Breakbulk News

Geopolitical uncertainty, tariffs start to weigh on MPV market

<div class="phx-topic abstract-wrapper">Despite banking a collective operating profit of about $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.</div>

Despite banking a collective operating profit of about $60 billion in 2024, a worsening supply-demand imbalance could make the next three years difficult for the container shipping industry.

<div class="phx-topic">Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has declined beyond seasonal norms. Despite reporting a highly profitable 2024 — operating profit will be near $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis — analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 [down from the previous estimate of negative 15%],” the bank’s transport analysts wrote. “This leads to ocean EBIT [earnings before interest and taxes] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&amp;P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. <h3>Short-lived rate increases </h3>Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia-to-US West and East coast trades despite a series of general rate increases (GRIs). Maersk CEO Vincent Clerc <a href="https://www.joc.com/article/excess-capacity-hangs-over-recovering-container-market-maersk-ceo-5214234">said during the carrier’s earnings call</a> earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. <h3>Flurry of air strikes on Houthi positions </h3>The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&amp;P Global’s Sea-web, sister company of the Journal of Commerce, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. “We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it’s the Panama Canal situation, the complex reciprocal tariffs or the initiative <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">to tax ships with a Chinese connection</a> each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has declined beyond seasonal norms. Despite reporting a highly profitable 2024 — operating profit will be near $60 billion across the industry, according to estimates from Sea-Intelligence Maritime Analysis — analysts are predicting a sharp downturn beginning this year. “We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J.P. Morgan wrote in a market update Monday, noting that the losses will likely emerge even if capacity does not fully return to the Red Sea this year. “Our demand-supply analysis now points to a 30% reduction in freight rates year over year in 2025 [down from the previous estimate of negative 15%],” the bank’s transport analysts wrote. “This leads to ocean EBIT [earnings before interest and taxes] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.” On the trans-Pacific, North Asia-US West Coast rates are down 65% since early January, falling an additional $400 last week to $1,800 per FEU. North Asia-US East Coast rates of $2,800/FEU lost $500 in the past week and are down 58% so far this year, according to Platts, a sister company of the Journal of Commerce within S&P Global. Similarly, Asia-North Europe spot rates are down 50% since the beginning of January at $2,549/FEU and are now $148/FEU below the long-term contract rate, according to rate benchmarking platform Xeneta. Short-lived rate increases Carriers levied freight-all-kinds (FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’s chief analyst. “The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on the Asia-to-US West and East coast trades despite a series of general rate increases (GRIs). Maersk CEO Vincent Clerc said during the carrier’s earnings call earlier this month that no matter how long the Red Sea disruption lasted, the fundamentals of increasing overcapacity in container shipping would “eventually” prevail and could start hitting the market as early as the third quarter. “Even if the situation on the Red Sea was to endure for two years, three years or four years, the current orderbook would eventually be bigger than what we expect market growth to be,” Clerc said. Flurry of air strikes on Houthi positions The container shipping order book is currently just over 7 million TEUs, representing 25% of the existing fleet, according to S&P Global’s Sea-web, sister company of the Journal of Commerce, with the supply-demand imbalance expected to be particularly acute over the next two years. Niels Rasmussen, chief shipping analyst at shipping association BIMCO, had forecast cargo volume growth at 3% to 4% in both 2024 and 2025, which will be easily outstripped by fleet growth that was due to top 9.5% in 2024 and is forecast for 4.9% in 2025. An estimated 10% of global capacity has been absorbed by the longer transits around southern Africa to avoid the Red Sea. The Houthi’s move last week to renew attacks on Israeli-linked ships and a flurry of air strikes from US warplanes on the militants’ positions in Yemen over the weekend highlighted the ongoing volatility in the region. “The next incremental addition in capacity will result near term from the reopening of the Red Sea, which we think will likely happen in 2026 as it will take time for the full capacity to return,” J.P. Morgan noted in its update. The bank has forecast 2% growth in global volume this year, with volume rising 5% in the first quarter before falling to 1% growth for the remaining quarters of 2025. “We continue to see the freight backdrop as challenging and it remains subject to heightened demand risks as we enter a global trade war, given recent announcements of reciprocal tariffs with business confidence subject to downside risks,” J.P. Morgan said. John McCown, founder of private equity firm Blue Alpha Capital, agreed in his McCown Report released earlier this month. “The year 2025 could be a return to the roller coaster volume swings that most of us had hoped were in the past,” he wrote. “Whether it’s the Panama Canal situation, the complex reciprocal tariffs or the initiative to tax ships with a Chinese connection each time they call on a US port, these initiatives inject chaos, uncertainty and unnecessary costs into the container supply chain.” Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

Asia-Europe

Trans-Pacific

Oversupplied ocean carriers sailing into new downcycle: analysts

Use code GTW695 at checkout and save $800 on first year of an annual Gold subscription!

Upgrade Subscription - Gold Trials

Become a Gold Subscriber and Save!

Arm your team with the most trusted information portal for the international container shipping industry.

Group Subscriptions - Wide Box

Get into a group subscription today

Use code STSW20 at checkout to save 20% on the first year of any annual subscription! 

Subscribe Now - Free Trials - Wide Box

SUBSCRIBE AND SAVE

Use code GUW795 at checkout and save $700 on first year of a Gold subscription!

Upgrade Subscription - Wide Box

UPGRADE AND SAVE

Access Journal of Commerce content for 30 days

Free Trial - Wide Box

START A FREE TRIAL TODAY

Subscribe Now - Anonymous - Wide Box

SUBSCRIBE TODAY

The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

SMC3rates_shutterstock_5247046.jpg

Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

SMC3rates_shutterstock_5247046 (1).jpg

Filling the Supply Chain Education Gap with LTL Education Courses

SUBSCRIBE TODAY: Choose a plan that works best for you!

Subscribe Now - Anonymous - Offer Box

Subscribe Today

START A FREE TRIAL: Access Journal of Commerce content for 30 days

Free Trial - Offer Box

Free Trial

SUBSCRIBE AND SAVE: Use code STSW20 at checkout to save 20% on first year of any subscription plan!


Subscribe Now - Free Trials - Offer Box

GET INTO A GROUP SUBSCRIPTION: Arm your team with unlimited Journal of Commerce content

Group Subscriptions - Offer Box

Group Subscriptions

UPGRADE TO GOLD AND SAVE: Use code GTW695 at checkout and save $800 on first year of a Gold subscription!

Upgrade Subscription

UPGRADE AND SAVE: Use code GUW795 at checkout and save $700 on first year of a Gold subscription! 

Upgrade Subscription - Offer Box

An in-depth analysis of transport trends in the multipurpose and heavy-lift fleet segment

Breakbulk Report - Rectangle Box

Breakbulk Quarterly

Customers scoring their intermodal partners to identify the best service providers

Intermodal Service Scorecard - Rectangle Box

Intermodal Service Scorecard

The only editorially independent conference for the breakbulk & project cargo industry

Latest News

Attend Breakbulk25

Filling the Supply Chain Education Gap with LTL Education Courses

More News & Analysis

Savannah’s ‘parking spot’ targets idle time for ships, main terminal

New alliance vessel plans add to ongoing port congestion in Europe

CMA CGM, ONE in India VSA talks as standalone capacity pressures rise