container port

Bunker market not ready for IMO 2020

The bunker market is far from ready for the substantial switch in demand to low-sulphur fuel, when the IMO’s 0.5% cap comes into force on 1 January next year, according to the Marine Bunker Exchange (MABUX). 

In an article published by international shipping association BIMCO, the bunker exchange cautions that “shipowners are readybut the bunker market is not” –adding that reports from oil majors regarding the delivery of LSFO (low-sulphur fuel oil) “are concerning”. 

MABUX estimates that the global shipping fleet consumes some 5.3m barrels a day, with about 4m of these being non-compliant after the new IMO regulations kick in. 

Given that the majority of demand is expected to shift to LSFO to comply with IMO 2020, it calculates that the market for some 3m barrels will effectively “disappear overnight”. 

Moreover, the premium for LSFO remains unclear, meaning ship operators cannot properly budget for the increase in their fuel costs, or for that matter advise clients how much extra they expect them to pay. 

“The 0.5% fuel is not physically in the market right now… we have only futures with delivery time in December 2019,” said Sergey Ivanov, director at MABUX.

We do not have all the answers as to when, where and how much, making it difficult to forecast what the exact margin will be between high-sulphur fuel oil (HFO) and LSFO,” he said. 

“Right now, we see that marine gas oil trades at a premium of about $250 per ton more than HFO, but the forward curve forecast is that it may rise to about $380 per ton at the beginning of 2020,” said Mr Ivanov. 

MABUX understands, from its discussions with the main global bunker suppliers, that the first regular deliveries of the maximum 0.5% compliant fuel to bunker ports around the world is expected some time in the third quarter. 

Operators with ships that do not have scrubbers installed, which enable vessels fitted with the exhaust gas cleaning systems to continue to burn HFO, will need to start cleaning their tanks and replenishing with LSFO several weeks before the IMO 2020 regulations come into force. 

And in discussions with the oil bunker suppliers, a confusing outlook has emerged. 

One oil major surveyed by MABUX said it would be delivering LSFO to 18 ports in the world, including main hubs, and would continue to deliver HFO to 15 ports. Another said it would only be delivering LSFO to seven ports, for now. 

“This picture suggests the question of availability of very low-sulphur fuel is critical at this point. No one is sure that there will be enough LSFO in all the main ports in the world,” said Mr Ivanov. 

“In our view, shipowners are ready. Many are in a position now where they can say ‘give me compliant fuel and I will adjust my power system, I will train my crew and start using it’.

“But they need the compliant fuel and they cannot get that now. They do not currently have much choice. Many of them are ready, but the bunker market is not,” he warned.

Source: The Loadstar

air freight

Air cargo carriers develop online distribution

After years of criticism that cargo airlines were failing to develop new distribution channels – the increase in digitisation and online sales means online distribution is on the increase. 

Air France-KLM Cargo has signed up to Freightos’s air freight WebCargo platform, which claims to be the world’s largest. It allows AF-KLM customers to view live rates, assess capacity availability and secure bookings on specific flights in real-time, following a pilot conducted with the carrier and Panalpina. While the platform is proving successful they are also researching others. 

Manel Galindo, chief executive of WebCargo, said the platform was used by more than 1,400 forwarders, with market pricing from more than 300 airlines. It also can provide airlines with API capability, which some other platform do not offer. It also offers an internal platform that can be used to manage offline rates, manage quoting and more. Freightos added that “real-time e-bookings would be launched in a number of countries and gradually expanded”. 

A spokesperson for cargo.one said it was an open platform for every cargo airline globally”, with a 12-week integration period. She added: “Because cargo.one is free of charge to any size freight forwarder, we have become a significant distribution channel for our partner airlines. We also offer a variety of integration methods and have successfully integrated with multiple established infrastructures. All our integration methods, whether based on legacy infrastructures or APIs, are designed to deliver the same outstanding digital user experience. 

Meanwhile, Etihad Cargo looks as if it could be next to launch a new distribution channel, following the success of its digitisation programme. 

It said it was “successfully completing trials for another major distribution channel, using automated Freight Forwarder Messaging to instantly allow bookings to be made and confirmed. These pilots were with DHL Express and DB Schenker, completed successfully in March and are in the process of being progressively rolled out across their global operations as well as to other key forwarder customers. 

Etihad last year completed its migration to IBS iCargo’s system, and launched its own online booking portal. It claims to make more sales through this channel than any other cargo airline: 16.4% of its monthly bookings coming through the platform in March. It said it had more than 6,000 registered users making online bookings every month, and volumes sold on the channel are increasing steadily. 

The new distribution channel, using API and web services, will launch by the end of the second quarter. 

“Within such a short period of time we have gone from being a very conventional air cargo operator to being the most digitised air cargo carrier of our size globally,” said Rory Fidler, head of technology and innovation. “As we move forward, we will continue to invest in technology and seek to put ourselves at the forefront of the industry’s drive for digitalisation”. 

Source: The Loadstar

air pollution

Vessel emissions won’t be cut by sailing slower

Policy director of the UK Chamber of Shipping Anna Ziou has slammed French proposals to impose speed limits as a way to cut shipping emissions.

She claims it would give a “false impression” of the industry taking action. 

Ms Ziou’s objection follows an outcry from container lines following the French IMO delegation’s proposals becoming public last month. 

“To achieve a 50% cut in emissions, the shipping industry needs continued investment in green technologies that will allow ships to conduct their business through a range of low-carbon fuels, such as battery power, hydrogen fuel cells or even wind power,” said Ms Ziou. 

“Shipowners have already limited speeds considerably in the past decade and while these proposals are well-intentioned, slow-steaming as a low-carbon [plan] is just not good enough. 

“It will give a false impression that the industry is taking action, when in reality it will deliver no meaningful reduction in emissions, and the scale of ambition required for the industry to meet the 50% target should not be underestimated.” 

Ms Ziou noted that if selected, the plan could penalise companies developing and installing low-carbon technologies and could discourage “meaningful” attempts at cutting emissions. 

At best, she claimed, speed limits would delay any form of transition to low-carbon fuels and in so doing would store up greater costs for the industry. 

She added: “Speed reduction could result in supply chains using alternative modes of transport, such as road haulage, which would increase overall emissions. 

“In addition, ships may call at certain ports that are tidally constrained where a delay of just one hour could result in a knock-on delay of 12 hours to the vessel as it awaits the next tide, unnecessarily creating further emissions during the additional waiting time.” 

Despite the objections, it seems there is mounting support for the introduction of speed limits after chief executives from more than 100 shipping companies described climate change as “possibly the greatest challenge of our time” in a recent open letter to IMO member states. 

Source: The Loadstar

China flag

China-Europe rail service exports grow by 106%

China’s Belt and Road initiative (BRI) may have faced recent strong criticism from the EU, but that has not dented the growth in its exports to Europe.

Chinese officials have claimed a 106% increase in the value of cargo travelling by rail from China to Europe, equating to some $33bn.

Xiao Weiming, from the office of the leading group for promoting the BRI, told Xinhua that 14,691 trips have been made by China-Europe freight trains since 2011.

Operator United Transport And Logistics Company Eurasian Rail Alliance (UTLC ERA) recorded a 54% (62,622 teu) upturn in volumes between China and Europe.

While the bulk is exports from China (35,536 teu, up 69%), imports from Europe have been closing the gap, recording a 44% increase to more than 27,000 teu in Q1.

The Russian-Kazakh-Belarussian-owned UTLC ERA has furthered its links between the two regions, having announced cooperation agreements with two European partners.

President of UTLC ERA Alexey Grom said: “I am perfectly confident the agreements signed with our partners will contribute to the active growth of the transit transportation market, enabling UTLC ERA to strengthen its leading positions in cargo shipments on Europe-China-Europe routes.”

During this month’s TransRussia exposition the operator entered an agreement with Slovakia’s public rail company, ZSSK Cargo, to facilitate IT collaboration on container shipments from China, to include route scheduling and an analysis of potential customer bases between Slovakia and China.

“This is the first time we have fixed in writing the intention to build a direct transit transportation technology process,” said Mr Grom. “We will be solely responsible for the 1520 gauge, whereas ZSSK Cargo will be in charge of the 1435 gauge.

“That is how we will be able to offer our customers the end product – a comprehensive shipping service solution.

UTLC ERA has also announced a deal to assist Lithuanian Railways with its postal container traffic from China to Lithuania, providing containers loaded with postal items at Dostyk and Altynkol stations, operated by Kazakhstan Railways.

Lithuanian Railways would then take over handling at Kena near Belarus, delivering packages to the warehouses of Lietuvos Pastas, Lithuania’s public postal service.

Despite the BRI’s growth, a report from EU high representative for foreign affairs and security Federica Mogherini slammed China’s handling of the trillion-dollar project, describing Beijing as both a partner and a strategic competitor.

Those words may have little impact on the BRI’s momentum, with the project now boasting the involvement of more than 120 countries. Its development was enshrined in the Chinese Communist Party’s constitution in 2017, but cracks have begun to show.

According to the Asian Development Bank, a $26trn investment shortfall between now and 2030 looks likely, while at home the Chinese have expressed concerns over a litany of faults.

Source: The Loadstar

 

LNG tanker

LNG is the most environmentally friendly fuel for shipping

LNG is the most environmentally friendly, readily available fuel for shipping today – and in the foreseeable future, according to a new study.

With the IMO’s 0.5% sulphur cap regulations coming into force next January, along with its target of halving C02 emissions from shipping by 2050, decisions need to be taken on alternative fuels.

At today’s launch in London of an independent study, commissioned by the not-for-profit collaborative industry foundation SEA/LNG, its chairman, Peter Keller, said the study aimed to prove the efficiency of LNG at this “challenging time for shipowners, operators and regulators”.

Mr Keller, also executive vice president of US flag line Tote, the first to operate LNG-fuelled containerships, said there had been “a significant amount of investment in LNG bunkering capabilities around the world”, a lack of which had in the past deterred most carriers from ordering LNG-fuelled vessels.

CMA CGM is the first, and so far only, global carrier to opt for LNG-fuelled ULCVS, with its order last year for nine 22,000 teu ships to be delivered next year.

Mr Keller conceded it was not viable to retrofit ships to run on LNG.

“Conversions are difficult,” he said, given the size of the tanks required and the complexity of the work.

Indeed, Hapag-Lloyd’s chairman, Rolf Habben Jansen, told The Loadstar recently that a ballpark figure for retrofitting one of its 17 so-called LNG-ready ULCVs, inherited from its merger with UASC, was $25m – at least four times the cost of installing a scrubber system.

He said only one of the 15,000 teu ships was being retrofitted to run on LNG, as a trial, and he did not expect this to be rolled out to the sister vessels.

The Well-to-Wake study (a well-established approach for assessing the life-cycle analysis of fuels used in ships) was undertaken by consultant thinkstep. Using testing and data in cooperation with engine manufacturers,it found that the use of LNG as a marine fuel showed GHG reductions of up to 21%, compared with current oil-based fuels for two-stroke slow-speed engines. These account for about 70% of the power units used in shipping.

Mr Keller admitted that LNG was not a final answer to cutting emissions from shipping, but “it is the only alternative fuel that is available now”.

Maersk said recently it had invested some $1bn in research and development on alternative fuels, which it said was being driven by its customers, the carrier having seen a 30% increase in tenders stipulating the use of sustainable fuel. Other options being researched include bio-diesel and ammonia (hydrogen), solar and wind power.

Source: The Loadstar

Port of Shanghai

Shanghai is still the world’s busiest container port

The port of Shanghai has maintained its position as the world largest container port.

However, new data from Alphaliner today shows its lead over second-placed Singapore narrowed last year.

Shanghai posted 2018 throughput of 42.01m teu, 4.4% growth on 2017, while Singapore handled 36.6m teu, representing growth of 8.7%.

And the 5.41m teu differential between them was narrower than the 6.56m teu difference this time last year.

The 2.93m teu Singapore gained made it the largest-growing port globally, in terms of volumes, although Shanghai’s 1.78m teu gain puts it in second place in that sub-list.

According to Alphaliner, together the world’s largest 120 box ports handled 654m teu last year, an increase of 4.9% on 2017, which was broadly in line with analysts’ consensus.

Of those, 104 ports saw volumes grow, while 16 saw declines – and there were some high-losers among them.

Hong Kong saw the largest decline in volumes, down 1.1m teu over the year, dropping from fifth to seventh place in the top 120 as it posted a 56.7% fall to finish the year with 19.6m teu throughput, prompting its major terminal operators to form an alliance to try and arrest further declines.

DP World’s flagship Dubai facility also saw volumes decline, by 2.7%, and with an annual throughput of 14.95m teu, it fell out of the top 10 to eleventh place – overtaken by the northern Chinese port of Tianjin.

Other ports which saw large losses included other high-profile transhipment hubs: Panama’s Pacific hub of Balboa continued to see fall-out from the Panama Canal expansion as larger vessels now able to transit the canal bypassed it as volumes declined 29.3%, losing around 850,000 teu, to end the year at 2.05m teu; Oman’s Salalah lost 560,000 teu, representing 14.2% of its previous year’s volumes; Dubai rival Khor Fakkan dropped 13.8% to end the year at an estimated 2m teu; while Gioia Tauro, whose problems were recently reported by The Loadstar, lost 4.9% of its volume, equating to 120,000 teu.

The two largest gateway ports to see volume declines were the Iranian hub of Bandar Abbas, where new sanctions had the catastrophic effect of cutting to 600,000 teu, or 22.4%; and the UK’s Felixstowe, whose well-publicised IT transformation project resulted in an estimated loss of some 360,000 teu, representing 8.7% of the previous year’s total.

And Felixstowe’s loss was London’s gain, where scores of ad hoc calls were handled and which recorded a 23.2% increase in volumes to an estimated 1.7m teu.

Three ports, Beirut, Puerto Limon and Dandong, fell out of the top 120 last year, and were replaced by Buenaventura, Lome and Jinzhou.

Source: The Loadstar

heathrow

Christmas drone chaos shows an over reliance on southern airports and shaky infrastructure

The chaos at Gatwick last month emphasised the UK air freight sector’s over-reliance on the south-east region.

When Heathrow and Gatwick are working at full tilt – which is almost all the time – they can claim to be the most efficient airports in the world.

Between 19 and 21 December, thousands of flights were grounded and cancelled after drone sightings sparked safety concerns at Gatwick.

Although few cargo flights were affected then, the sighting at Heathrow caused major industry concern.

Last month, the government launched a 16-week consultation on its aviation strategy, outlined in the publication of Aviation 2050: The Future of UK Aviation.

Throughout the document, the government refers to supporting continued growth of the air freight sector by making best use of existing capacity at airports.

Head of cargo at Manchester Airport Group (MAG) Conan Busby, speaking to The Loadstar said “MAG has the third- and fourth-largest airports and the UK’s largest dedicated cargo aircraft operation, at East Midlands (EMA). All are perfectly positioned to continue to facilitate global trade for UK businesses and consumers.”

Mr Busby added there was “significant” transformation under way at EMA with its cargo operation, DHL having doubled its capacity while UPS is building its new UK air hub there.

“Also, beyond our boundary there is the East Midlands Gateway Rail Freight development under construction, which will further support UK logistics.”

Mr Busby said MAG was “not interested in a speculative approach to growth”, but some in the forwarding community believe this may be the best way forward.

Namely, if regional airports were serious about challenging Heathrow, they would “need to be less risk averse and use any options to attract more carriers providing cargo services”.

However, Mr Busby expected EMA to lead MAG’s cargo growth in the years to come, with both Manchester and Stansted in support. He added the group would be “pushing” to make best use of the runway capacity at both airports.

He added: “All three airports will play a key role in facilitating UK global trade especially as attention turns to understanding what trade deals might look like post-Brexit.”

Both airports are now reported to be investing in anti drone technology and have invested several million pounds in providing ourselves with the equipment and the technology that the armed forces deployed over Christmas,”

Source: The Loadstar / Independent.co.uk / Fin24.com

maersk

Sea Machines gains financial support to develop autonomous containerships

The prospect of unmanned container vessels serving global container supply chains has taken another step forward.

Sea Machines Robotics, a US developer of autonomous vessels, announced it had raised $10m from venture capital funds.

The investors were led by Accomplice VC and Eniac Ventures, but also include Toyota AI Ventures, TechNexus Venture Collaborative, NextGen VP, Geekdom Fund, Launch Capital and LDV Capital, and brings Sea Machines’ external funding up to $12.5m.

Boston-headquartered Sea Machines, which in April signed up Maersk Line to pilot its “perception and situational awareness technology aboard one of the company’s new-build Winter Palace ice-class containerships”, said it would use the new funds to grow its R&D and engineering teams as well as expand its sales efforts globally.

“We are creating the technology that propels the future of the marine industries and this investment enables us to double down on our commitment to building advanced command and control products that make the industry more capable, productive and profitable,” said Michael Gordon Johnson, founder and chief executive.

Jim Adler, founding managing director of Toyota AI Ventures, added: “We believe autonomous mobility can help improve people’s lives and create new capabilities – whether on land, in the air or at sea.

“Sea Machines’ autonomous technology and advanced perception systems can reduce costs, improve efficiency and enhance safety in the multi-billion dollar commercial shipping industry. This marks our first investment in the maritime industry, and we’re excited to embark on this journey.”

Vic Singh, founding general partner at Eniac Ventures, added: “The level of traction Sea Machines has from the global maritime industry is a tell-tale sign that the industry is the next frontier for autonomy.”

And Michael Rodey, senior manager at AP Møller-Maersk, said: “I think this investment sends a strong signal on the types of technologies that will come to define the maritime industry in the future.”

Source: The Loadstar

bunker surcharge

CMA CGM group announce raise to emergency bunker surcharge from December 1st

CMA CGM Group, which includes ocean carrier APL, has raised its emergency bunker surcharge (EBS) to $100 per teu for all deepsea cargo movements from 1 December.

Introduced by the French carrier and a number of its peers on 1 June, in response to higher fuel prices, the controversial EBS was initially set by CMA CGM at $55 per teu.

The charge varied between carriers, for instance Maersk Line’s EBS was $60 per teu, while MSC did not publish its EBS and referred to it as a “temporary measure”.

Shippers expressed anger about the attempt by carriers to impose similar surcharges, which they suggested could be construed as price signalling, and also questioned the validity of the word “emergency”, alleging the container lines were attempting to claw back compensation for the gradual rise in bunker costs over the past quarters.

Indeed, the European Shippers’ Council (ESC) complained to the European Commission, saying: “The application of any emergency surcharge should be reserved for events that cannot be foreseen (such as a crisis influencing the availability of oil). In those situations, it would be unreasonable to have the carrier bear alone the impact on the price of bunker fuel.”

In practice however, many shippers had contracts that were inclusive of bunker surcharges and were therefore unaffected, while for spot business the EBS was gradually rolled up into the freight rate.

It is surprising therefore after the failure of carriers to make their EBS notices stick to see that CMA CGM is persisting with its surcharge.

CMA CGM justifies its EBS hike based on the historical average price of Brent crude in October. However, from its high of $86 a barrel last month its price has fallen to a six-month low of $72, due to supply and trade war concerns.

Meanwhile, most of CMA CGM’s peers are focusing on preparing shippers for a surcharge to compensate for the higher cost of low-sulphur fuel after the IMO’s new 0.5% sulphur cap regulations commence on 1 January 2020.

Equally controversial, given the opaque nature of the carriers’ various low-sulphur fuel surcharge formulae, many shipping lines are proposing to roll out their new bunker surcharge recovery mechanisms from 1 January next year – some 12 months before the IMO regulations come into force.

Currently, heavy fuel oil (HFO), which ships consume in the main legs of their voyages, is at around $450 per tonne,, whereas low-sulphur marine gas oil (LSMGO) is $200 -$250 per tonne more expensive.

Some analysts predict the ‘spread’ could double come January 2020, but equally there are a few experts that suggest that the gap could eventually be much narrower, given that in terms of supply and demand, the majority of ships will need to consume low-sulphur fuel, with perhaps only 5% fitted with exhaust gas cleaning scrubbers still requiring HFO.

They also put forward an argument that the higher demand for low-sulphur fuel will induce more refiners to produce more, leading to long-term decline in prices.

Source: The Loadstar

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.