Container lines

Fundamentally, current data on ocean freight rates supports the notion that the market has, overall, reached a low point and is about to rebound slightly to be brought back in line with long-term trends, writes analyst Lars Jensen.

Highlighting the fall in demand, total liftings at Cosco Shipping Lines and OOCL fell more than 10 percent in the first quarter, to 5.5 million TEU.

High inventories, falling consumption in key markets and an influx of capacity from recovering supply chains pulled down fiscal year earnings at Ocean Network Express.

When it became apparent the carriers’ recent GRI had succeeded in bumping up spot rates by several hundred dollars, sources say customers moved to sign their contracts out of concern that rates would only go higher the longer they waited.

The FMC is poised to implement potentially far-reaching changes in how detention and demurrage fees are assessed, a move that could cloud how to incentivize the movement of cargo through US marine terminals.

The use of slow steaming, which will also reduce emissions, is one method for MSC to absorb more ships coming into its fleet this year without adding more weekly capacity.

The scale of PSA International’s ambitions to expand its reach beyond its 60 container port terminals by leveraging the acquisition of a non-asset-based global logistics provider parallels Maersk’s own integrator ambitions.

A period of record profitability for ocean carriers is coming to a stark end, and amid a worsening supply-demand balance, the industry will find it increasingly difficult to raise rate levels, according to the maritime consultancy.

Coming to an agreement on the manning issue at Los Angeles–Long Beach would allow the ILWU and PMA to move on to other big matters such as wages and retirement benefits, sources say.

Elevated US inventories and inflation in South America are weighing on freight demand at the same time container carriers are increasing capacity between the two regions, dragging down pricing.

Vancouver’s proposed Robert Banks Terminal 2 cleared a major federal environmental hurdle this week, putting the focus on who will construct and build the facility with a planned annual capacity of 2.4 million TEU.

The ILWU statement comes even as Local 13 continued to engage in job action this week that has been slowing cargo handling at the ports of Los Angeles and Long Beach.

The scale of demand for green methanol and the number of market participants involved in producing the zero-carbon fuel will play a crucial role in setting prices and maintaining price stability, observers say.

The inclusion of shipping in Europe’s ETS carbon pricing mechanism is almost a done deal, with legislators having one more bureaucratic hurdle left to clear.

The ocean carrier has its eyes on another multi-billion-dollar logistics prize as it continues to use its immense profitability to build out end-to-end solutions across its supply chains.

Despite the sharp decline in ocean freight rates, current market fundamentals point to carriers, to some degree, becoming better at pricing and yield management than they were prior to the pandemic, writes analyst Lars Jensen.

Forwarders said the capacity increase is due to carriers no longer skipping or blanking calls at Japanese ports following the normalization of demand and the easing of port congestion in the US.

The carrier executive says despite a slow start to 2023, a return to seasonal shipping patterns in August and September could follow a mid-summer lull in import demand.

Growing tension among shippers, ocean carriers, and logistics service providers over free time fees has ratcheted up with Hapag-Lloyd accusing subcontractor CSX of profiting from rail demurrage.

Although the two carriers are partners in the 2M Alliance, it was the addition of extra capacity in their standalone services that led them to handle a combined 40 percent of the cargo coming into the Gulf Coast last year.

The addition of a new location in Singapore is meant to help supply chain technology accelerator ZEBOX reach a “strategic gateway to the Asian market,” it said.

The long-term impact of container shipping’s moment in the sun — and in the crosshairs of regulators — will come down to which of two starkly divergent versions of reality carries sway in Washington in the coming months.

The assessment of storage fees inside a terminal creates competitive pressures among marine terminal operators, their container line customers, and the importers that contract with container lines.

After the flurry of April contracting action and a rush of cargo to avoid new GRIs, carriers in May will show the industry the extent of their capacity control for their second half of the year, writes Executive Editor Mark Szakonyi.

The first-quarter profit estimates came as Cosco Shipping announced plans for a general rate increase on all dry and reefer cargo to the US from Asia, the Indian subcontinent and the Middle East from May 15.

How successful ocean carriers are in securing general rate increases comes down to the health of so-called green shoots of demand and the effectiveness of increased blanking of capacity.

Looming federal rulemaking over detention and demurrage billing policy continues to compel container lines to refrain from assessing free time fees on weekends and holidays, with Hapag-Lloyd the latest to make such a change.

Valued at more than $3 billion, CMA CGM’s order for 12 15,000-TEU dual-fuel methanol ships and four 23,000-TEU dual-fuel liquefied natural gas (LNG) ships is the largest ever placed with a Chinese shipyard, according to state media reports.

The closure of the international terminals at Los Angeles and Long Beach is sure to further raise the ire and frustration of US cargo interests who worry about disruption linked to the ongoing coastwide negotiations and resultant loss of discretionary cargo.

The company’s revenue for the 2023 first quarter is one of the ocean shipping market’s very first indications of how the plunge in rates will affect carriers’ bottom lines.

Forwarder sources in India say they view the latest GRI attempts as nothing more than contract negotiation posturing on the part of the carriers.

The Hawaii deal would appear to highlight the growing impatience by some longshore locals and employers over the slow pace of coastwide negotiations, with negotiators under pressure from retailers and other cargo interests to reach an agreement soon.

A slight rate bounce in Asia-Europe does not signal an improvement in demand, say forwarders, who expect a sustained increase in rates will only come with a restocking drive by European importers.

On top of erratic berth availability at JNPT, ocean carriers have received a cost escalation blow with India’s national port regulator approving significant tariff hikes at two key terminals.

The 10-year partnership between Air France-KLM and CMA CGM will dramatically expand the available air cargo capacity and global network of the France-based fleet.

The normalization of container shipping markets on the major trade lanes out of Asia will slash carrier profits this year, but falling rate levels will also yield significant savings for shippers.

While it may be easy to understand the desire to fix container shipping’s perceived problems with government intervention, no amount of reform would have prevented the shortage of capacity or record freight rates during the pandemic disruption, writes analyst Lars Jensen.

Reliability on the world’s busiest trade lane, the trans-Pacific, remains well below the global average, with recent performance to the West Coast showing ongoing deterioration.

NSAC says it supports reasonable detention and demurrage practices, but wants to correct “abuse” of the system by regulating that rail operators directly invoice ocean carriers for storage, not importers.

A series of challenges lies ahead for the container shipping industry, but the effects of slowing demand and a surplus of capacity will be softened by a record financial performance in 2022.