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global

What does the 2020 Global Sulphur emissions policy mean in practise?

In little more than 2 years shipping will have to shift to low sulphur fuel. The International Maritime Organisation (IMO) has set a global limit for sulphur in fuel oil used on board ships of 0.50% m/m (mass by mass) from 1 January 2020. This will significantly reduce the amount of sulphur oxide emanating from ships and should have major health and environmental benefits for the world, particularly for populations living close to ports and coasts. 

IMO has been working to reduce harmful impacts of shipping on the environment since the 1960s and the regulations for the Prevention of Air Pollution from Ships seek to control airborne emissions from ships (sulphur oxides (SOx), nitrogen oxides (NOx), ozone depleting substances (ODS), volatile organic compounds (VOC) and shipboard incineration) and their contribution to local and global air pollution, human health issues and environmental problems.

Under the new global cap, ships will have to use fuel oil on board with a sulphur content of no more than 0.50% m/m, against the current limit of 3.50%, which has been in effect since 1 January 2012.

The interpretation of “fuel oil used on board” includes use in main and auxiliary engines and boilers.

Exemptions are provided for situations involving the safety of the ship or saving life at sea, or if a ship or its equipment is damaged.

Another exemption allows for a ship to conduct trials for the development of ship emission reduction and control technologies and engine design programmes. This would require a special permit from the Administration(s) (flag State(s)).

Ships can meet the requirement by using low-sulphur compliant fuel oil.

An increasing number of ships are also using gas as a fuel as when ignited it leads to negligible sulphur oxide emissions. This has been recognised in the development by IMO of the International Code for Ships using Gases and other Low Flashpoint Fuels (the IGF Code), which was adopted in 2015. Another alternative fuel is methanol which is being used on some short sea services.

Ships may also meet the SOx emission requirements by using approved equivalent methods, such as exhaust gas cleaning systems or “scrubbers”, which “clean” the emissions before they are released into the atmosphere.

Last month, an ExxonMobil survey highlighted an ongoing sense of confusion and a lack of preparedness, with 70% of respondents saying that they do not believe that the industry is ready for the deadline, when a global limit of 0.5% sulphur will be imposed on marine fuel for vessels trading internationally.

The survey suggests that only 500 ships have been equipped with scrubbers. There has been something of a backlash against scrubber technology, most notably from Maersk and Klaveness, who have said they see the technology as being expensive and immature.

Other respondents to the ExxonMobil survey said they were concerned that shipping companies would cheat and falsify the sulphur content of their marine fuel.

what mix of fuels will be available in 2020 and at what cost for each type? Refiners have not been so forthcoming with information about what new capacity they are adding to deal with the expected rise in demand. If ship operators do switch to gasoil, they will have to compete with truck drivers and SUV owners to buy the fuel, which could drive up prices and possibly lead to shortages in supply.

Meanwhile, there will be a loophole for shipowners in 2020: vessels will be permitted to sail without compliant fuel if none is available, even if they do not have scrubbers installed.

Panos Zachariadis – Technical Director at Atlantic Bulk Carriers Management Ltd doesn’t believe that the industry is ready either.

“The industry is not ready. And by “industry” I mean mostly the fuel producers, by their own admission. That is the main problem. There were two studies submitted to IMO, one by “industry” including refiners.  Industry said there will be no fuel available by 2020 even if we started preparations and the required investments yesterday. In addition a submission by ISO cautioned about the danger of “designer” fuels.  These were simply ignored.  The majority of IMO member-states wanted favourable news headlines for various reasons (to show the EU that they take action etc). It was a “political” decision.  We have seen before what happens when facts are ignored and political decisions are taken (remember Ballast Water Treatment?)

In short I expect a mess and I’ll be very surprised if this goes smoothly and on schedule.  One possibility I see is that, come 2019, IMO will have to face reality (not enough availability of safe fuel) and re-examine the application date.  One other – unfortunate – possibility is that, since MDO cannot be available in such quantities, untested “designer” fuels will be introduced to fill the void.  Current experience with hybrid (desulfurised) fuels is not good; they are very unstable.  But a further fear is that inappropriate blends may also appear pausing a safety threat!  ISO in its submission to IMO warned that cutting heavy fuel with e.g. naptha may show acceptable flash point limit but still may be explosive!  And there will be no ISO or other quality standards for such “designer” fuels by 2020.”

It seems apparent that the information regarding the switch is causing uncertainty with regards to what the choices will be to make sure that ships are properly equipped to deal with the change. It could be a case that companies are waiting for their competitors to go first so that they can then make an informed decision on the best way to go, but with little over 2 years to go this seems a difficult strategy.  Compliance seems to be something of a grey area, but companies should by now have plans in place to make sure that as of 1st January 2020 they are ready to go.

Sources:

Hellinic Shipping News

Green 4 sea.com

Iims.org

Imo.org

digital age

Can container shipping reinvent for the digital age?

In 1967, the British Transport Docks Board (BTDB) commissioned McKinsey & Company to assess the impact of a recent development from the United States: container boxes. The first purpose built ships for them were being launched, and a few US lines were carrying these novelties on their regular service. 

McKinsey & Company predicted:

Containerised cargo is effectively becoming homogenous, like other bulk cargoes, and is subject to the same economies of scale. Economics of scale will result in this concentrated cargo being handled by a small number of large organisations. Efficient use of expensive containers will require extensive route networks under unified control to allow load balancing.”

Now that standardised containers have been introduced in the shipping industry, the rush to ‘get on the bandwagon’ will probably lead to substantial overexpansion.

If container ships follow the tanker trend, ships of more than 10,000-container capacity could be available.

Feeder services will tend to replace direct calls when the large container ships come into service.

Rotterdam is an example of a European port which is in a good position to fill a major transoceanic role.

The role of British ports may tend to become that of feeders to the Continent…. Proximity of British East Coast ports to Europe will dictate their use.

In their October 2017 report they posed the question: In 1967, containers were disrupting the shipping business, so the players had to rethink everything. Now it’s digital, big data, and the Internet of Things. Is it time to rethink everything again? 

In 1956, the first ship to transport containers, named the Ideal X, carried only 58 of them. Since then, container-ship capacity has grown 370-fold: today’s largest vessels can hold more than 20,000 TEUs. Larger vessels provide greater cost efficiencies in fuel and crews, reduce greenhouse-gas emissions per container, and enable hub-and-spoke network strategies. Moreover, as operators collaborate in alliances, putting a single large vessel instead of two small ones on a given route has its advantages.

So, how much longer will this trend toward growth in capacity continue? In the long term, three factors could limit it.

The first is that returns to scale decline with increasing size, so a move from 20,000 to 40,000 TEUs wouldn’t reduce unit costs as much as a move from 10,000 to 20,000 TEUs.

Second, the narrowness and shallowness of some of the world’s waterways impose physical constraints: for example, the Strait of Malacca (between the Malay Peninsula and the Indonesian island of Sumatra) has a minimum depth of 25 meters, the most modern channels of the Suez Canal a depth of 24 meters. The latest designs for vessels that carry 24,000 TEUs have a depth of 16 meters, which leaves scope for further growth in capacity.

Third, over the past decade, the blitz for bigger vessels has strained terminal and port operators, forcing them to invest in new cranes, dredging equipment, reinforced quay walls, and extended berths. Unloading containers from bigger ships takes longer because cranes must reach farther across vessels, thus extending berth occupancy and reducing productivity.

On balance, we do not view 20,000 TEUs as the natural end point for container ships—50,000-TEU ones are not unthinkable in the next half-century. However, progress will probably be much slower than it was in the past decade: overcapacity means that new ordering will be slower over the next five to ten years. Lower slot costs materialise only when demand fills up larger ships, which hasn’t happened recently. But if demand catches up with supply, as it may well do in the early 2020s, the logic of scale will once again drive orders for bigger and bigger ships. Nonetheless, since 40 percent of all shipyard capacity is unutilised, and it’s not conceivable that governments will allow shipyard bankruptcies on a large scale, they could find a way to prompt some level of new ordering.

The size of boxes could also increase. From the original six-foot-long Conex box the US military used in the 1950s, they have grown to 20 and now 40 feet and above. The limitation on box size is compatibility with road, rail, and other modes of transport. On US and Chinese roads, the maximum box length is 53 feet, so containers of this size are common for US domestic trade. As road networks improve and trucking becomes autonomous on major routes, we may well see containers 60 or more feet long, as well as wider and taller containers.

Wholly automated terminal and inland operations, with self-driving trucks (and perhaps even self- driving containers or “hyperloops”) transporting containers to inland distribution centres, will probably become the norm in the next couple of decades. Self-loading trucks, arriving just in time to pick up the next container without waiting or moving around unproductively at terminals, would improve the interface between ports and inland transport. Imagine a terminal with no stacks in the yard; instead, customs would pre-clear boxes digitally, and autonomous trucks would take them straight from ships and out to customers.

Advances in the use of data and analytics will bring further step changes in productivity. Shipping companies could heed the example of today’s state- of-the-art aircraft, which generate up to a terabyte of data per flight. Coupled with the introduction of more sensors, the better usage of the data that ships and containers generate would allow enhancements such as optimising voyages in real time (by taking into account weather, currents, traffic, and other external factors), smarter stowage and terminal operations, and predictive maintenance. Data could also improve the coordination of arrivals at port—a major benefit, since 48 per- cent of container ships arrive more than 12 hours behind schedule, thus wasting the carriers’ fuel and underutilising the terminal operators’ labor and quay space.

Data can create additional value for customers too. Full transparency on shipments, from one end of the value chain to the other, would be an enormous boon to carriers, forwarders, and shippers alike, giving them access to real-time information and enabling them to predict a container’s availability, arrival times, and so forth. Some ports (such as Antwerp, Hamburg, and Singapore) are already starting to share information in real time across data ecosystems, which could eventually extend throughout the whole industry. That would create a truly integrated end-to-end flow of containers and therefore make the industry more productive by reducing handovers, waiting times, and unnecessary handling.

A data-enabled shipping industry could also support its customers’ supply chains in important ways— but that will require a truly new order of performance and efficiency. The real-time visibility of all container movements, reliable forecasts, and integrated flow management will pave the way for flexible, dynamic supply chains that all but eliminate waiting times and inefficiencies. This achievement will be especially beneficial for industries (such as automotive) that have increasingly complex supply chains or for those with special needs (suchas cold chains). It will also allow smart logistics providers to differentiate themselves and earn premiums. But these opportunities won’t appeal to all customers; other sectors will demand only basic logistics services at the lowest possible cost.

By 2067, we believe shipping will have some or all of these characteristics: 

Autonomous 50,000-TEU ships will plow the seas—perhaps alongside modular, dronelike floating containers—in a world where the volume of container trade is anything from two to five times greater than it is today.

Short-haul intraregional traffic will increase as manufacturing footprints disperse more widely because of converging global incomes and the increasing use of automation and robotics. Container flows within the Far East will continue to be huge, and the secondmost significant trade lane may link that region to Africa, with a stopover in South Asia.

After multiple value-destroying cycles of overcapacity and consolidation, three or four major container-shipping companies might emerge. These businesses could be either digitally enabled independents with a strong customer orientation and innovative commercial practices or small subsidiaries of tech giants seamlessly blending the digital and physical realms. Freight forwarding as a stand- alone business will be virtually extinct, since digital interactions will have reduced the need for intermediaries to manage logistics services for multiple participants in the value chain. Across the industry, all winners will have fully digitised their customer interactions and operating systems and will be closely connected via data ecosystems.

A fully autonomous transport chain will extend from initial loading, stowage, and sailing all the way to unloading directly into autonomous trains and trucks and drone-enabled last- mile deliveries.

The needs of customers will diverge: some will expect their shippers to be fully integrated into their supply chains—and be willing to pay a premium for that—while others continue to demand sea freight at the lowest possible cost. Both sets of customers will expect transparency and reliability to be the norm, not the exception.

What therefore has to be done to move shipping and containerisation further into the digital age?

First, invest in digital, which is the main way to differentiate products, disintermediate value chains, improve customer service, raise productivity, and cut costs. The risk is that tech giants and would-be digital disruptors will move faster than incumbents and capture most of the value from customer relationships.

Second, think about consolidation: the industry’s natural end game may involve fewer, larger operators. The past few decades of explosive trade growth created an environment that could sustain many players. Now that growth has slowed, the industry must rationalise overcapacity. Although some companies and investors could be candidates to lead the next wave of consolidation, becoming a target may sometimes be better for shareholders than struggling to be the winner at any cost. McKinsey research shows that from 2000 to 2015, in a range of industries, the value from deals was nine percentage points higher for average target companies than for average acquirers.21

Third, integrate. Some next-generation innovations now on the drawing board require careful orchestration across the value chain. Carriers and terminal operators share a particularly rich agenda: bigger vessels paired with investments in infrastructure for terminals, complete transparency on ship arrivals and berthing (thanks to geospatial analytics), and larger containers. Integrated logistics providers could make today’s freight forwarders largely irrelevant by mastering the complexity and the customer interface.

Fourth, be bold. The shipping industry has been built on the vision of audacious leaders with the per- severance to sail through the storms. It now faces a wave of digital disruption. The ability to convey a sense of purpose for employees, to create optimism about the journey ahead, and to maintain a steady course will be the hallmarks of the leaders shaping the industry for the next.

McKinsey and Company’s 1967 predictions were on point, so their analysis of the next 50 years of evolvement cannot be ignored. These changes seem massive and unachievable at the moment, but that would have been the case 50 years ago as well, and the industry is unrecognisable from then.  It is exciting to watch what the next years have in store, and the advances that can be made to make sure that shipping does truly come alive during the digital age.

To view the full report please go here, where you can download the full report at the bottom of the page.

golden week

ALERT: Golden week and the implications for shippers

As part of celebrations for golden week, also called National Day, a major holiday is coming up in China from Saturday 1st October for a week, officially ending on the 7th but with effects lasting until the 10th.

It has been celebrated in mainland China and Hong Kong since 2000. The holiday was implemented by the Government to encourage domestic tourism and allow families to make long distance trips. This means that businesses come to a standstill.

All businesses will be closed, cargo flights are cancelled and ports operate on basic crews. Shipping quotes will be hard to obtain as nothing moves in or out.  Vessels are usually under capacity at this time so don’t sail.

Our advice is plan ahead! Contact us as soon as possible for rates and availability to secure your shipment in time. Please also be advised that there will be a back log of orders and freight after golden week which will mean that space will be at a premium.  If a shipment is time critical it is important to be organised before next week.

You can submit an enquiry through our website, send us an email or call us on 02380 337778.

We look forward to hearing from you.

future of shipping

The future of UK Shipping

At the end of London International shipping week, the transport secretary Chris Grayling set out his thoughts on the future of UK shipping. 

His speech focused on the changes in transport, and how the maritime industry is not only contributing to that change, but are increasingly leading it.

His first point concerned new technology and the advances in maritime autonomy.  Today, 90% of accidents at sea are caused by human error, and so there could be a huge safety benefit to keeping away from the risky routes.  Drones that are being increasingly deployed in other areas could also be used over our seas, inspecting ships and further improving safety.

This increase in efficiency could make maritime even more competitive against road freight, which in turn offers big environmental benefits.  Grayling also points out that this would obviously lead to concern over the effect of automation on jobs, and that these concerns quite rightly should be taken seriously.  However, he continues by saying that there is also evidence that rather than destroying jobs, automation creates wealth, and that wealth creates opportunity, and opportunity means new jobs. So, the seafarer of today might be the unmanned vessel operator of tomorrow – supervising several ships from a control station on-shore. He or she might help design intelligent software, or contribute to new naval architecture.

These type of new roles require different skills, and that is why it makes sense to invest in training. This week maritime industries have been called on to double to amount of people taken on as apprentices, and this will improve the capability of the work force. The government has also written to heads of maritime businesses and training colleges asking what more can be done to increase the number of women working in the industry. In the UK, too, of our 14,000 certified officers, only 3% are women. Only 4% of our technical officers are women. Of our engine officers, only 1% are women. The industry is missing out on 50% of the talent, and the potential progress that could be made.

Brexit and the EU was also a pertinent point.  Grayling believes that both the EU and the UK will work better as friendly neighbours than as part of a strained union. For instance, in less than 2 years, for the first time in more than 4 decades, the UK will begin to enjoy an independent trade policy.  Our departure from the EU will allow us to build those closer trading ties with countries around the world.  Trading with our neighbours in the EU is important, but trading with other countries such as the USA, Australia, China, India, Mexico, South Korea, India and Brazil will enable us to expand our trade, receiving the worlds goods, and exporting our own. That is why the government announced that it wants to draw up plans for the maritime industry stretching up until 2050.

To read the full report please go here

2016 port freight statistics are encouraging

According to the Department for Transports recently published 2016 final figures, total freight tonnage handled by UK ports declined by 3% in 2016. This decline is attributable to a large reduction in demand for coal imports. Despite this, steady growth has been experienced in unitised traffic, which saw its fourth consecutive year of growth in 2016.

* total tonnage decreased by 3% to 484.0 million tonnes
* coal handled showed the biggest decline of any cargo category more than halving to 12.0 million tonnes
* liquid bulk goods, which account for 40% of total tonnage, decreased by 2%
* crude oil handled has halved since 2000, to 87.1 million tonnes
* unitised traffic rose by 2% to 24.1 million units
* container units reached a record high of 5.9 million units
* overall roll-on roll-off traffic rose 1.4% to 18.2 million units
* the volume of import and export motor vehicles increased 1% to 4.5 million units
* 18.2 million Ro-Ro units passed through UK major ports via roll-on roll-off services, up 1.4% compared to 2015.
* 10.2 million TEUs of LoLo container traffic passed through UK major ports in 2016, up 4% from 2015. Felixstowe had a 0.3% increase to 24.8 tonnes.
* Maritime freight with the European Union grew 2% to 206.8 million tonnes in 2016, and accounted for 44% of all tonnage through UK major ports.

In 2016, major port tonnage fell whilst minor port tonnage increased . There are 51 major ports in the UK. UK major port tonnage fell by 3% in 2016 to 472.8 million tonnes. The major port share of UK port tonnage has remained stable at 98% since 2005. Minor port tonnage increased to 11.3 million tonnes, an increase of 3% on the previous year.

Overall domestic major port traffic – coastwise and one-port – fell to 98.6 million tonnes in 2016, a drop of 5% from 2015. However, one- port traffic, rose 13% to 20.0 million tonnes in 2016.

The proportion of domestic traffic c carried by UK registered ships increased 3% in 2016, to 23.5 million tonnes. This makes up 24% of all UK domestic traffic.

Imports made up 56% of all tonnage handled between the UK and EU countries. UK major ports received 116.6 million tonnes from countries in the EU in 2016, an increase of 4% compared to 2015. Among EU countries, the highest amount of imports was from the Netherlands, 31.5 million tonnes, 10% higher than 2015. Freight received from ports in the Netherlands now makes up over a quarter of all inward tonnage from the EU.

In contrast, exports from the UK to the EU fell 1.6% between 2015 and 2016, down to 90.1 million tonnes. This is due, in part, to a fall of 11% in exports to both France and Germany, primarily driven by falling liquid bulk imports. In contrast, exports to Italy nearly doubled to 1.8 million tonnes, with an increase in crude oil imports from 0.4 million tonnes in 2015 to 1.3 million tonnes in 2016.

Container traffic with the European Union rose 8% in 2016 to 2.0 million units. In terms of twenty-foot equivalent units (TEUs), container traffic rose 9% to 3.6 million TEUs.

Container traffic between the UK and International deep sea destinations rose to 5.3 million TEUs, up 3% from 2015.
China is our largest partner for container traffic in 2016, resulting in 2.5 million TEUs, up 3% from 2015. This makes up 47% of all deep sea LoLo handled by UK ports. Second place is taken by the USA which contributes 0.4 million TEUs to our container traffic; this is 8% of all deep sea LoLo trade.

The full report can be found here

 

container port Southampton

Southampton on the list of top container growth in 2016

During 2016 126 ports handled more than 1 million teu containers.

According to DynaLiners report entitled millionaires roundup, 82 ports had experienced growth in the year with 5 ports showing growth of 25% or more.

These ports were Chittagong, Bangladesh (26%), London (26%), Salalah, Oman (29%), Tangshan, China (27%) and Southampton (26%).

14 ports reached over 10m teu. These included Antwerp, Belgium; Busan, South Korea; Dubai, UAE; Hong Kong; Kaohsiung, Taiwan; Port Kelang, Malaysia; Rotterdam, Netherlands; Singapore and Tianjin, Shenzhen, Guangzhou, Ningbo, Qingdao and Shanghai, China.

New entrants to the table included Itajai with 1,104,100 teu and growth of 12%, Izmit with 1,143,000 teu and growth of 16%, Port Qasim with 1,124,000 teu and growth of 16% and Qinzhou with 1,138,000 teu and growth of 24%.

No ports dropped out of the table but 43 saw negative growth on 2015, of which Freeport (Bahamas) recorded the largest decline of -14%. Lagos and Port Said each had a 12% decline, Santos had a 10% decline, Tanjung Pelepas had a 9% decline, Hai Phong had an 8% decline, Lianyungang had a 7% decline, Long Beach had a 6% decline and Kingston had a 5% decline.

The total teu handled by the ports was 589,350,800, with other ports not on the list accounting for 117,649,200.

China topped the list of teu growth by country in 2016, maintaining its position from 2015.

The Far East, North Europe and North America retained position one, two and three respectively from 2015, with the Far East seeing a 2% YoY growth, 3% for North Europe and 1% for North America.

Of the terminal operators included in the data, PSA remained in first place with 56,300,000 teu, growing 6%, Hutchinson Ports also maintained second place but with a 3% dip in growth, followed by APM Terminals also staying at number three with a 3% growth. DP World was fourth, keeping its rank but with zero growth, Cosco Shipping Ports also stayed at number five with a 4% growth.

The report took into account full and empty, loaded and discharged, including transhipment containers. It noted that “Chinese port statistics often include (large) unknown quantities of containerised river cargo. Without these, some of them might even not qualify for millionaire status.”

• Source: Port Strategy

gridlock customs

Gridlock for British ports if additional customs checks approved

As government negotiations to facilitate Britain’s exit from the European Union gather pace, the UK Chamber of Shipping says the EU is ignoring the risk Brexit could bring to European ports. According to one group of MPs the increase would be five fold and confidence in border arrangements post Brexit is alarmingly low. Her Majesty’s Revenue and Customs have told the Treasury select committee that it estimates a customs declaration rise from 60million a year to over 300million a year after the UK leaves the EU.

Chief executive of the chamber, Guy Platten, said: “The EU sells £240bn of goods to the UK each year, most of which travels through ports. So the negative impact of a so-called hard Brexit on ports such as Dover will be felt just as severely if not more so by European ports. I don’t think the EU has fully grasped this yet.”

The chamber said the proposed return of border controls would lead to increased bureaucracy, “guaranteed” lorry gridlock and threats to the prosperity of both EU member states and the UK. Platten continued: “Much of the attention on the impact of leaving the customs union has been on UK ports, but major EU ports such as Calais, Zeebrugge and Dublin would find themselves equally as vulnerable. The UK government understands the importance of sorting this out around the negotiating table, but we are yet to see evidence that the EU negotiators fully understand their own vulnerability.”

Dover has no room to expand from its 2.6 million lorries a year, and Eurotunnel, which caters for 1.6 million lorries a year faces the same issue. John Keefe, its spokesman, said: “On one side of Eurotunnel we have an area of outstanding beauty, so you can’t build to the left, and on the right we have the motorway; then you have to look at moving up, down, or back along the motorway.” Earlier this year, senior freight industry leaders including Eurotunnel said the introduction of customs checks at Dover after Brexit could cause gridlock in south-east England, with lorries queueing in Kent for up to 30 miles (48km) to get across the Channel.

In the summer of 2015, a French ferry workers strike led to more than 7,000 trucks backed up the motorway almost as far as Maidstone. With as many as 16,000 trucks a day using Dover, the potential for a repeat of that episode alarms business. An emergency traffic management strategy at the time, called Operation Stack, is estimated to have cost the Kent economy £1.5m a day, with parts of the M2 turned into a vast lorry park.

Concerns that this could be the case again seem to be well founded, and there doesn’t seem to be any evidence of a hard and fast plan for the UKs customs situation. With under two years to go until this would have to come into force, decisions need to made fast.

shipping alliance

The new shipping alliances are in place. How are they impacting?

The changes in shipping alliances recently put in place have have already had a big impact on European ports. Coming into effect on April 1st, shippers have experienced significant changes in their carriers’ service networks. On the trans-Pacific trade alone, the alliances will offer 18% fewer direct routes and 33% of the routes will have transit times that are shorter or longer by three or more days compared to the member carriers’ alliance offerings before April.

Rotterdam is feeling the change the most. According to CargoSmart, the Hong Kong based shipment services provider, Rotterdams services from the alliances have fallen by 3 to 23, but the number of vessels passing through and being deployed has increased by 30.  Southampton, Antwerp and Hamburg have also seen the number of deployed vessels increase by 18, 16 and 13 respectively.

Felixstowe have seen a decrease in services through the port by 21, and Bremerhaven by 17.  Bremerhaven has also seen the average vessel capacity rocket by 1000 ten, and Southampton and Le Have have both seen capacity jump by 1200 teu.

Hamburg Port Authority chief executive Axel Mattern, speaking to Container Shipping & Trade said that berth availability and hinterland connections are “key factors” when it comes to dealing with the new alliances and their services. “The challenges with the big ships are on the navigational side. You need to be able to cope with the volumes which are being churned out from all of these big ships. Facilities need to handle all these volumes in a very limited time frame. They are not designed for the storage of containers. They are designed for perfect handling. That is the challenge. You need the capability to enable the volumes to flow.”

According to the Wall Street Journal, American farmers are concerned that the restructuring will make it far harder for them to deliver US commodities abroad. Port calls have been falling since before the new alliances formed, though. Sailings to U.S. ports from Asia recently were running at a weekly rate of 57, down from 65 four years ago, according to Alphaliner, which tracks such activity. However, with larger vessels coming into use, overall capacity has risen 4% to the U.S. West Coast and 22% to the East Coast in that same period, the data show.

With the alliances only having been in place for less than 3 months, the full impact is yet to be seen. Vessels into ports and numbers of containers are bound to fluctuate whilst the alliances find their feet, but with less capacity and demand always changing, it will be interesting to see how the changes affect the ports long term.

air freight

Space issues causing trouble for shipping routes

Unusually tight capacity for the time of year is leading to rising rates, booking restrictions and backlogs for European exporters needing to ship from Europe to the Middle East and Asia.

This is in part attributed to exceptionally high levels of post Chinese New Year shipping cancellations, which have meant price increases for Europe to Asia container rates.

At this point, all bookings are being honoured, even though there seems to be a perception that this isn’t the case.

Hapag-Lloyd have introduced a US$200 peak season surcharge (PSS) for containers from Europe North Continent to East Asia, effective for sailings as of 15 March and valid until further notice. Many forwarders are recommending at least 3 weeks advanced notice of bookings.

The bankruptcy of the Hanjin shipping line last year has had a knock on effect from when it ceased to accept new cargo. Hanjin was the 7th largest container shipper in the world and the news has meant that their cargo has had to be distributed amongst an already nearly full to capacity fleet. Other shipping lines eventually took over their cargo, but at a price, with vessels already operating at high capacity.

Patrik Berglund, CEO of containerised ocean freight data specialist Xeneta said that data indicates that the current short-term rates for 40’ containers from North Europe to Asia averaged US$969. This level of pricing started in November and December ahead of Chinese New Year and had stayed high – and slightly continued to move upwards, Berglund said.
He said it was difficult to give a precise and short answer to the reasons for the current unexpected capacity crunch and high prices, but suggested it was due to a combination of carriers extracting more capacity than predicted demand and re-routing of capacity onto other corridors.

Xeneta had indicated in the lead-up to Chinese New Year that container lines operating on Asia-Europe trades were taking stronger measures than usual to maintain the recent recovery in ocean freight prices by making major cuts to capacity in the weeks after Lunar New Year. Since towards the end of 2016, the market has experienced a strong and sustained recovery, with container rates around 125% higher than they were around this time last year for Asia-Europe routes, Xeneta said. Xeneta’s sources had indicated that carriers were “taking stronger measures to deal with overcapacity to make sure the market stays up”, indicating that lines were attempting to prop up prices by reducing westbound sailings by 33% in the week immediately after Lunar new year and by around 43% from full capacity the following week. Xeneta noted at the time that this behaviour from carriers may mark a distinct difference compared with this period normally in previous years, when rates traditionally slide in the aftermath of Chinese New Year.

china uk

First rail freight service to China has departed from the UK

The first rail freight service from the UK to China departed on its 17 day, 7500 mile journey on April 10th.

British goods including soft drinks, vitamins and baby products are in the 30 containers carried by the train, which will be a regular service.The DP World locomotive left its terminal in Stanford-le-Hope, Essex, for Zhejiang province, eastern China. It will pass through France, Belgium, Germany, Poland, Belarus, Russia and Kazakhstan. It is cheaper to send goods by train than by air and faster than by sea, according to its operators.

The first rail freight service in the opposite direction, from China to the UK, arrived three months ago, the link to the news article we wrote is here. The new service is linked to Chinas One Belt One Road initiative, something we discussed in our news post here.

International trade minister Greg Hands said: ‘This new rail link with China is another boost for global Britain, following the ancient Silk Road trade route to carry British products around the world.‘It shows the huge global demand for quality UK goods and is a great step for DP World’s £1.5 billion London Gateway port as it also welcomes its first regular container ships from Asia.’

The train finally arrived in China on the 29th April (2 days later than the predicted 27th) and was greeted by traders and shipping company officials when it arrived at Yiwu West station.