future of shipping

New bunker adjustment fees keep spot rates firm

Asia-Europe ocean carriers from have announced further hikes in their FAK rates this month after successfully pushing through 1 January spot rate increases.

Alphaliner said rates on the route “remained firm in December, despite the resumption of the 2M’s AE2/Swan service”.

Hapag-Lloyd said that on 16 January, “due to strong demand”, it was increasing its FAK rates  from Asia to North Europe and the west Mediterranean to $2,200 per 40ft.

Maersk Line has increased its FAK rates to $2,300 per 40ft and CMA CGM has will raise its FAK rate by $200 to $2,400 per 40ft from 15 January.

This follows a surge in spot rates in the final week of last year, which saw the North Europe component of the Shanghai Containerized Freight Index (SCFI) leap 14.2% to $996 per teu, with spot rates for Mediterranean ports jumping 15.3% to $967 per teu.

There was no further increase for North Europe in today’s SCFI, although the Mediterranean saw a further increase of 3.1% to $997 per teu.

Moreover, since 1 January, carriers are implementing new bunker surcharge formulae, based on October/November fuel prices, which were a third higher than they are currently, at around $320 per tonne. So shippers should see the fuel surcharge element of their rates reduce in the coming months in line with the decline in bunker costs.

Elsewhere, the bear run on transpacific spot rates, which has seen prices tumble 32% and 24% respectively for Asia to the US west and east coasts since early November, was halted in the final week of 2018. In week 52, the SCFI recorded a 6.8% increase in spot rates for the west coast , to $1,883 per 40ft, and for east coast ports there was a jump of 9%, to $2,998 per 40ft.

The momentum continued this week, with the SCFI recording a 2.7% uplift for rates to the west coast to $1,933and to the US east coast by 4% to $3,119.

Phase 2 of the implementation of 25% tariffs on the import of over 5,700 Chinese goods is currently set for 2 March.

Source: The Loadstar

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

milan Maersk

The future of box shipping: less vessel cascading and fewer liner alliances?

Vessel cascading has been an ever-present feature of container shipping since liner executives first understood the benefits of economies of scale and began the box ship capacity arms race.

But over the next few years, there are likely to be only a few arenas where it will take place, according to Drewry Maritime Advisors’ director of ports, Neil Davidson.

Mr Davidson also suggested that, with an outstanding orderbook of some 130 vessels of over 10,000 teu still to be delivered, the main areas that cascading could take place would be the North American Pacific coast.

There the maximum vessel size is expected to grow from 14,500 teu to 18,000 teu, and the west Mediterranean, where it is forecast to grow from 14,000-16,000 teu to the 18,000-22,000 teu range.

Other trades where smaller vessels continue to be deployed – for example, the Australian trades this year saw its first 8,600 teu vessel call – would continue to be constrained by port dimensions, he said.

However, he suggested that the most recent increases in vessel size – the largest ships growing from the 18,000 teu Maersk Triple-E, to the 23,5000 teu vessels currently under construction – could well be the last box ship size increases for a considerable period.

“Our analysis is based on the orderbook, and although there are some units of 23,500 teu under construction, in terms of length and beam, they are not dimensionally larger.

“In fact, the impact of ULCVs on the wider supply chain suggests that the maximum vessel size may have be to large,” he added.

He was referring the widespread belief that one of the causes of the recurrent port congestion over the past few years has been the introduction of ULCVs and the sheer number of containers they can unload in a single call. This has put huge pressure on hinterland supply chains.

Mr Davidson added: “There are also clear commercial reasons for not going bigger – service frequency has had to be reduced to fill those ships, and there has been an impact on market share, and carriers have needed to enter into alliances to maintain market share and fill those ships.” And he believes this this could have a deep impact on how shipping alliances are formed in the future.

“In the long-term, the most interesting thing is that, if we have reached the ceiling of maximum vessel size, and if container volumes in the market continue to grow, operators that currently need alliance partners to help fill their vessels may well find themselves able to fill them on their own and we may begin to see the break-up of alliances,” he said.

Source: The Loadstar

air pollution

Maersk aims to achieve zero CO2 emission by 2050

Container shipping company AP Moller – Maersk has unveiled plans to completely cut carbon dioxide (CO2) emission from its operations by 2050.

In order to meet the goal, Maersk intends to have carbon neutral vessels commercially viable by 2030, as well as accelerate new innovations and adopt new technology.

The company has called for a strong industry involvement to reduce emission from the shipping sector, which is estimated to carry around 80% of the world’s trade.

Maersk has so far decreased its relative CO2 emissions by 46% from the 2007 baseline, around 9% more than the industry average.

AP Moller – Maersk chief operating officer Søren Toft said: “The only possible way to achieve the so-much-needed decarbonisation in our industry is by fully transforming to new carbon-neutral fuels and supply chains.

“The next five to ten years are going to be crucial. We will invest significant resources for innovation and fleet technology to improve the technical and financial viability of decarbonised solutions.

“Over the last four years, we have invested around $1bn and engaged 50+ engineers each year in developing and deploying energy-efficient solutions. Going forward, we cannot do this alone.”

According to Maersk, the shipping industry’s solutions to reduce emission should be different from those of automotive, rail and aviation.

The electric truck, which is yet to make a debut, is expected to carry up to two twenty-foot equivalent units (TEU) and is estimated to cover 800km per charging.

A container vessel carrying thousands of TEU can cover around 8,800km during a voyage between Panama and Rotterdam in the Netherlands.

Maersk noted that, considering the 20-25-year lifespan of a vessel, the industry should come together and start developing a new type of vessel that will be used for sea journeys in 2050.

Next year, the company aims to start an open and collaborative dialogue with all potential parties to jointly tackle the issue of climate change.

Source: ship-technology.com

cmg

CMA CGM back in the black in Q3

CMA CGM moved back into the black in the third quarter, and recorded a net profit of $49m for the nine-month period.

However, in the third quarter, the French carrier was beaten to its ‘best in class’ financial performance ranking by Hapag-Lloyd which reported a stronger recovery.

CMA CGM’s turnover during Q3 increased by 6.3% on the same period last year, to $6.06bn, earned from a 5.5% rise in volume carried, at 5.26m teu.

The carrier said the 5.5% jump in liftings was mainly attributable to the strength of its transpacific, India, Oceania and Africa tradelanes.

Indeed, according to research by Alphaliner, on the transpacific eastbound trade from Asia to the US the Ocean Alliance carrier was the main beneficiary of the botched start-up of ONE, which resulted in the Japanese merged carriers’ combined volumes plummeting.

“After consolidating for the volumes of APL and ANL, CMA CGM has overtaken ONE to become the second-largest transpacific carrier,” noted Alphaliner.

However, CMA CGM saw its average rate per teu virtually flat, at plus 0.8%, while its unit costs jumped 7.7%, an increase of $55 per teu, compared with Q3 2017.

The disappointing increase in CMA CGM’s average rate is surprising, given the boost in its transpacific liftings and the 70-80% leap in freight rates on the route during the period, as shippers rushed to beat the hikes in US duty on Chinese imports brought in by the Trump administration.

This suggests the carrier had to discount rates on other tradelanes in order to protect market share. One UK-based forwarder told The Loadstar that CMA CGM was “now perhaps the most aggressive carrier” between Asia and North Europe.

On 7 September, The Loadstar reported: “CMA CGM has shocked the market by reducing Asia-North Europe FAK rates at a time when most carriers are trying to drive them up.”

The carrier’s FAK rates, valid from 24 September, lopped $200 off its 40ft rate, to $1,800.

CMA CGM said its increased costs – mainly due to the hike in the price of bunkers – “was only partially offset by the introduction of an emergency bunker surcharge”.

Operating income declined by 57.5% for an ebit of $241m and a margin of 4%, versus the 10.4% margin achieved in Q3 the previous year.

The net profit for the period was $103m, 68% lower than the year before, as CMA CGM admitted it had failed in its endeavours to pass on higher fuel costs to its customers.

By comparison, Hapag-Lloyd’s revenue during the same period, from liftings of 3.1m teu, came in at $3.5bn for an operating profit of $252m, an ebit margin of 7.1% and a net profit of $137m.

Source: The Loadstar

christmas

Christmas bookings for sea freight need to be organised as soon as possible

Are you feeling festive yet?! Maybe not, but sea freight imports need to be organised soon to get them in time for Christmas! Time is of the essence.

Please contact a member of our team as we have very competitive rates for this month – email enquiries@supremefreight.com or call 02380 337778

We handle all types of cargo, including full container load (FCL), less container load (LCL) and NVOCC groupage shipments. We have long standing relationships with a global network of agents at all origin ports which means that we can offer you the best possible service. We have over 30 years experience in the shipping industry, and we can arrange all the necessary documentation to make sure that your goods are transported as seamlessly as possible.

Contact us as soon as possible with your needs so that we can make sure that you don’t miss out. Demand will see a massive increase at this time of year and we can help make sure that stress levels are kept to a minimum!

port terminal

Port terminals need to be more cost effective

Pressure is mounting on container ports to improve efficiency in terminal operations, as wholesale change in the shipping industry continues to increase competition and drive down revenue per box.

According to Mark Welles, Navis vice president and general manager Asia Pacific, terminal operators are “aggressively attacking their cost base and figuring out ways to use some of their tools to do more with less”.

This includes using automation to drive incremental changes that improve operational efficiency, whether waterside or at the terminal gate.

“Terminals are making the small or large changes they need to keep their businesses moving ahead against the challenges from consolidation on the carrier side,”

“Some terminals are handling more volume, but in some markets the revenue per teu is decreasing – or certainly not increasing the way it used to – so they’re having to manage their business in a different way.

“That efficiency drive has two parts: one is to be the better service provider [than regional port competitors]; but also to reduce your costs, which therefore either gives you more flexibility on the commercial side, or it means you’re a more profitable business,” he added.

Mr Welles was speaking after a visit to the Qingdao New Qianwan Container Terminal (QQCTN), which uses Navis N4, the port software specialist’s flagship terminal operating system (TOS).

“Full automation is working well for them and helping to set the stage for what’s possible in China and Asia, in terms of the success they’ve had,” he explained.

Navis has worked with ports to implement around 120 software “go-lives” at terminals around the world over the past two years. The port of Tianjin managed to install N4 at six terminals in less than 12 months, a feat Mr Welles described as “almost unheard of”.

The importance of a well-functioning TOS was brought into sharp focus by the IT failure experienced recently at Felixstowe. The botched installation of an in-house TOS led to prolonged operational interruptions and subsequent diverted vessel calls. The resulting supply chain disruption – which was at first contained to UK ports – has now spread to northern Europe.

It appears Hutchison, the Hong Kong port group that runs Felixstowe, was bucking a trend with the decision to develop its own TOS.

“It’s fair to say, from a macro-level, over the past five years we’ve seen more and more of the regional and global terminal groups partnering with an experienced solutions provider to ‘buy don’t build’,” said Mr Welles.

He claims ports generally prefer suppliers that provide turnkey solutions for the full spectrum of systems and equipment required for each aspect of terminal operations.

Source: The Loadstar

maersk

MSC, CMA CGM Present Plans for Fuel Surcharges

Following the footsteps of Maersk Line, the Swiss and French container shipping giants MSC and CMA CGM have unveiled their intention to introduce a new fuel adjustment surcharge ahead of the 2020 sulphur cap.

Mediterranean Shipping Company plans to introduce a new Global Fuel Surcharge as of January 1, 2019. The company expects its operating costs to increase significantly in preparation for the 2020 low-sulphur fuel regime.

MSC said that the cost of the various changes to the fleet and its fuel supply is in excess of USD 2 billion per year, the same as with Maersk Line.

“The new MSC Global Fuel Surcharge will replace existing bunker surcharge mechanisms and will reflect a combination of fuel prices at bunkering ports around the world and specific line costs such as transit times, fuel efficiency and other trade-related factors.”

Separately, CMA CGM informed that it decided to favor the use of 0.5% fuel oil for its fleet, and to invest significantly by using LNG to power some of its future container ships, and by ordering several scrubbers for its ships.

The company said that all these measures represent a major additional cost estimated, based on current conditions, at an average of 160 USD / TEU. The additional cost will be taken into account through the application or adjustment of fuel surcharges on a trade-by-trade basis, CMA CGM explained.

“The implementation of this new regulation, which represents a major environmental advance for our sector, will affect all players in the shipping industry. In line with its commitments, the group will comply with the regulation issued by the IMO as from 1 January 2020. In this context, we will inevitably have to review our sales policy regarding fuel surcharges,” Mathieu Friedberg, Senior Vice President Commercial Agencies Network, said.

The new International Maritime Organization (IMO) Low Sulphur Regulation will be effective from 1 January 2020 and will require all shipping companies to reduce their sulphur emissions by 85%.

Sulphur content in the fuel used for international shipping will have to be limited globally to 0.5%, compared with the current standard of 3.5%, in order to minimize the emissions.

However, Shippers have joined forwarders in condemning Maersk’s plan, pointing out that as the charge is per box, those shipping west with higher charges will end up paying for more collectively than they need to, to compensate for empties returning east. As  a result, the most profitable routes will enjoy higher-than-average surcharges.

In addition, Maersk is introducing the scheme a year before the higher fuel prices come in.

“Asking customers to contribute to new environmental costs is to be expected, but this charge lacks transparency; no data is available to let customers work out how the charge has been calculated,” said James Hookham, secretary general  of the Global Shippers’ Forum.

“Given historical experiences with surcharges, shippers are naturally suspicious over something shipping lines say is ‘fair, transparent and clear’.

“GSF will be taking this piece of financial engineering apart piece by piece, as we suspect this has more to do with rate restoration than environmental conservation.”

He added that Maersk could have chosen to fit scrubbers on all its ships, triggering a one-off expense, as some of its rivals are doing.

“For shippers, this is a better option than paying sulphur surcharges indefinitely.”

But he added that the unilateral manner in which Maersk introduced the change had also upset its customers.

“What also disappoints shippers is the lack of negotiation about the timing and the structure of the charge. It would have been better if Maersk had discussed its plans with individual customers in the course of confidential contract reviews, rather than just publishing something that wouldn’t be out of place in the puzzles section of your daily newspaper.

“We suspect that other shipping lines will be tempted to follow suit, but it would surely be of concern to competition authorities around the world if the same formula were to be used by other shipping lines, especially in the same Alliance.

“GSF would encourage Maersk to consult with customers and reconsider the strategy. These new charges may be all about low-sulphur fuel, but they still stink to us!”

Last week forwarders also revealed their anger over the “very major increases”.

“Rises of this magnitude are unjustified, and could be construed as blatant profiteering by shipping lines determined to exploit the situation,” said BIFA director general Robert Keen.

Source: The Loadstar / World Maritime News

port of Southampton,

As peak season approaches so could crisis point

One forwarder told The Loadstar all UK ports had been affected by problems ranging from driver shortages and rail failures to issues arising from M&A activity.

Advance road bookings now require up to 10 days lead time.

“We are seeing failures on some 20% of the boxes we handle; that’s thousands of boxes, and from what we are hearing some of our competitors have it worse,” said the forwarder.

The port of Felixstowe has borne the brunt of the industry’s ire, thanks to the delays and congestion resulting from its efforts to integrate a new IT system. Last week, OOCL and CMA CGM announced they were withdrawing services and redirecting them to other UK gateways.

MSC has now announced it will divert its India/Pakistan-Europe IPAK service to London Gateway from next week.

“People are now actively avoiding Felixstowe, because of its IT issues, and redirecting services into regional ports,” the forwarder continued. “Liverpool generally does not experience any issues but even there we are seeing delays and backlogs.”

However, another forwarding source noted that while the port of Liverpool had experienced some issues, they had been relatively short-lived. He said “a few” larger ships had been diverted from southern ports into Liverpool, affecting operations for a “couple of days”.

He added: “Drivers were waiting up to eight hours to collect a container, but only in a certain area of the port – which did create some unrest.

“It didn’t take long to get back up to speed, with us collecting five to six containers per day, delivering to our warehouse, unloading and returning the empty with one driver.”

For the wider industry however, another forwarder told The Loadstar, the core issue was a lack of haulage – a view that appears to be supported by carriers demanding seven to 10 days advance booking. Those that fail to book this far in advance have been unable to get access to haulage space.

“If expectation for booking is 10 days, whereas previously the entire turnaround could be completed in three days, that tells you there isn’t the haulage capacity,” said the forwarder.

“This causes its own problems, with ‘pay and play’ taking effect and hauliers only working for the highest rates. Those unwilling to pay? Tough, the hauliers will find work elsewhere.”

Alongside the lack of available road haulage, the UK is also suffering from limited rail capacity, and with peak season approaching it is likely to get worse.

We request that you please contact us at your earliest convenience to secure your bookings.

The port of Southampton is at the moment experiencing delays which mean it can take 10-14 days to get an available space rather than the usual 2 or 3.  Planning in advance is of upmost importance.

Haulage capacity seems to have dropped quite significantly and this needs to be taken into account when planning for the next few months.

Please contact us for further information or if you require any help or assistance. We will keep you updated of any developments.

Source: The Loadstar

Beast from the East

We are now entering storm and typhoon season…

Typhoons and tropical storms have already hit Asia during July and August which have had a serious impact on port operations.

This in turn means that we may experience delays caused by the inclement weather.

The number of vessels arriving into port is likely to be disrupted with ports closing because of poor weather conditions.  Port closures will therefore lead to longer waiting times and delays.

We will keep you updated of any developments and if you have any questions or concerns please contact us at your earliest convenience.