Container lines

The Asia-Europe trade will continue to hog the headlines in 2016 with a return to the bear market of 2009 looking increasingly likely against a backdrop of slumping freight rates, stagnating traffic, surging surplus capacity and shrinking vessel utilization.

Spot freight rates in the eastbound Pacific drifted lower this week, though they remained in a narrow range that reflects a Jan. 1 general rate increase by carriers in the trade.

The market completely ignored the Jan. 15 general rate increases levied by carriers on the Asia-Europe trades, with spot rates plunging 21 percent this week, according the latest reading of the Shanghai Containerised Freight Index.

Maersk Line said it will appeal Russia’s ruling that the container line violated anti-competitive laws, saying that the publishing of general rate increases is legal and key to informing customers.

The world’s fifth-largest container line, Hapag-Lloyd, expects no major tonnage changes on all-water container services through the Panama Canal before the end of this year.

A new player in the shipping business is making a move to take a majority stake in Log-In Logistica, leaving the three largest global container lines that were interested in the Brazilian coastal carrier and terminal operator out in the cold.

Maersk Line is still the world’s largest ocean carrier by capacity but its closest rivals, Mediterranean Shipping Co. and CMA CGM, posted higher fleet growth rates during 2015, according to Alphaliner.

CMA CGM announced it is upgrading its Swahili Express, or SWAX, service between India and East Africa by adding a fortnightly call at Nacala, Mozambique.

Asia’s shippers are beginning to devote more time and energy to understanding the new global container weight rule that will be enforced from mid-year, but it is no easy task to assess what the regulation will mean to their supply chains.

The G6 Alliance has announced a series of withdrawn sailings on the Asia-North Europe and Mediterranean trades for the post-Chinese new Year period when it is expecting demand to be weak.

TOTE Maritime successfully bunkered the world’s first liquefied natural gas fueled container ship at the Port of Jacksonville.

With two and possibly three mergers or acquisitions among container lines scheduled to occur this year, beneficial cargo owners are wondering how their supply chains will be impacted.

A Nittsu Research Institute and Consulting Inc. report predicts that Japan’s container throughput will contract 3.4 percent year-over-year in fiscal 2015 and grow just 1.3 percent in fiscal 2016, which begins April 1, due to weakness in China's economy.

What changes can shippers expect from the larger Panama Canal locks? There’s no consensus. Though ocean carriers already are factoring the canal expansion into their routing plans, most analysts expect the changes to play out gradually over several years. Wild cards include trade demand, intermodal rail rates, canal toll levels, fuel prices, carrier mergers and acquisitions, and shifts in ocean carrier alliances.

A record 214 new container ships were delivered in 2015, increasing the global fleet’s total capacity by 8.5 percent to 19 million 20-foot equivalent units by the end of the year, according to Alphaliner.

The average size of container vessels deployed on the Asia-U.S. West Coast route will continue to steadily increase, but mega-ships such as the 18,000-TEU Benjamin Franklin are unlikely to be deployed on the trade in the short term, Drewry believes.

Spot freight rates in the eastbound trans-Pacific edged down this week, which is probably a good sign for carriers considering that the rates had surged by more than 75 percent the week before.

Rafi Danieli, CEO of Zim Integrated Shipping Services since 2009, is resigning after a 37-year career with the Israeli carrier.

Atlantic Container Line’s first in a series of innovative container/roll-on, roll-off ships that the carrier is deploying in its trans-Atlantic service, will call the Port of New York and New Jersey this weekend on its maiden voyage.

The fleet of idle container ships over 500 twenty-foot-equivalent units increased five-fold in 2015 as the imbalance between the supply of ships and cargo demand worsened “dramatically” through the year, according to Alphaliner.

The freight rate volatility that characterized 2015 has continued into the New Year with spot prices falling across the major east-west trades and led by Asia-Europe and Mediterranean routes that gave back a good chunk of last week’s gains.

Industry-wide losses greater than $5 billion this year as the supply-demand imbalance widens and freight rates continuing to decline is what container shipping lines have to look forward to this year, according to Drewry.

The trans-Atlantic container trade is heading for further volatility this year after shedding its “boring” tag in 2015. But it also looks like one of the rare routes where carriers can turn a profit in a year many fear will be the toughest the industry has faced since the 2008-2009 global financial crisis.

If an uncertain global economy wasn’t enough for shippers and transportation providers, 2016 will be filled with major changes, from the massive container shipping weight mandate to liner consolidation. Other threats and opportunities will likely emerge during the year, but the 10 trends outlined here will definitely be in play and impact global supply chains. Don’t say we didn’t warn you.

Container lines are showing more interest in working with terminals to improve port productivity but it is not prioritized and there is a huge opportunity for improvement in the area, according to a major multi-location terminal operator.

Container shipping lines are making their first tentative push this year to raise freight rates on the troubled Asia-Europe and Mediterranean trades, despite the failure of GRIs to lift prices for any sustained period throughout 2015.

Ocean freight rates for cargo moving under contracts on the major East-West trade routes continued to decline in the last quarter, according to Drewry’s Benchmarking Club that tracks a group of multinational retailers and manufacturers that monitor their contract freight rates.

Crowley Maritime Corporation rung in the new year with a $25.5 million investment in new cargo carrying equipment, part of an ongoing investment in its Latin American services.

Mediterranean Shipping Co. has resumed calls to Iran after suspending services in 2012 in response to trade sanctions imposed on Tehran for its nuclear program.

Zim Integrated Shipping Services has delayed an initial public offering on Wall Street planned for the first half of the year because of deteriorating market conditions and slowing world trade, according to an Israeli news website.

Traditionally seen as a reliable barometer of the global trade environment, the most recent transit and receipt figures from the Suez Canal Authority (SCA) are less than encouraging.

Consultants McKinsey and Co. believes it has found one of those elusive win-win solutions for carriers and container terminals in the area of pricing that could potentially save the industry up to $3 billion a year.

Former American President Lines CEO W. Bruce Seaton, who pioneered the post-Panamax container ship and scheduled transcontinental stacktrains, died Dec. 26 at the age of 90 in Greenbrae, California.

Carriers are finally achieving some measure of relief in freight rates as vessel load factors improve with the approach of Chinese New Year. Spot rates on the Shanghai Containerized Freight Index spiked to both the West and East coasts this week in advance of the two-week celebrations that begin on Feb. 8.

Shares on the Shanghai and Shenzhen exchanges were suspended on the first trading day of the year after stock prices plunged following indications that December manufacturing activity in China contracted for the 10th consecutive month.

The U.S-flagged APL Guam called at the island of Guam for the first time on Jan. 1 to mark the maiden inbound shipment to the Western Pacific island as part of the carrier’s Guam Saipan Express (GSX) service.

The U.S. National Transportation Safety Board has opened its accident docket on the cargo ship El Faro and released the first underwater photos and video of the ship, which sank Oct. 1 off the Bahamas with the loss of its 33-member crew.

Softness in key parts of the global economy is producing cautious forecasts about U.S. containerized imports and exports in 2016. High retail inventory levels have cast a pall over imports. The strong dollar and weak overseas demand are putting a dent in exports.

High debt levels at Hanjin Shipping and Hyundai Merchant Marine will make it difficult for the South Korean container lines to take advantage of their government’s new S1.2 billion fund to assist the country’s struggling shipping and shipbuilding companies.

Despite growing at the slowest pace in four years, U.S. containerized imports of tableware and household goods reached an all-time high in 2015, riding on the back of increasing disposable income and an ongoing recovery in the home sales market.