Global Shipping Update: Surging Fleet Expansion, Rising Rates, and Escalating Challenges

16 Jul Global Shipping Update: Surging Fleet Expansion, Rising Rates, and Escalating Challenges

Global News:

Expansion of Global Container Fleet:

The global container fleet has grown by 2.8 million teu in the past year, with most of the new capacity added to the Asia-Europe route.

“While the fleet growth between Asia, the Indian Subcontinent, and Europe was expected due to the Red Sea crisis, the strong growth in liner services to and from Latin America might surprise some,” the research firm writes, noting that Hapag-Lloyd, Cosco Shipping, and CMA CGM have added new reefer capacity on this route.

Suez Canal Blockage:

The crisis in the Red Sea, where the Houthis have been attacking merchant ships since November, has led to empty containers being transported 20% further, according to Sea-Intelligence.

The United Kingdom Maritime Trade Operations (UKMTO) office reported three new attacks in the southern Red Sea, including two on Monday (July 15th). One vessel reported minor damage.

China:

Shipping Rates:

Rates from China to Northern Europe more than tripled in May, while rates to the US East Coast more than doubled.

“Time will tell, but shipping goods from Asia Pacific will be much more expensive by September,” said Niall van de Wouw, head of air freight at Xeneta.

South East Asia + ISC:

Delays in Singapore:

According to a press release from PSA International, the Port of Singapore has successfully reduced waiting times to two days or less. 

Since late 2023, Singapore’s transport ministry and port authorities have been collaborating with PSA and other stakeholders to enhance capacity and mitigate congestion resulting from the Red Sea crisis.

Cape of Good Hope Storm Effects:

A CMA CGM ship lost 44 containers in extreme weather off South Africa, the latest event causing problems for the shipping industry.

The French shipping company said the CMA CGM Benjamin Franklin encountered unexpectedly violent weather off the South African coast at the Cape of Good Hope on Tuesday.

44 containers went overboard, and another 30 were damaged.

NA East Coast:

Looming Strikes:

The leader of the International Longshoremen’s Association (ILA) has warned that a strike at all Atlantic and Gulf Coast ports is increasingly likely as time runs out to negotiate a new contract.

With the current contract set to expire in 80 days on September 30, 2024, ILA President and Chief Negotiator Harold J. Daggett expressed concerns over the slow progress in negotiations with the United States Maritime Alliance (USMX). He noted that employers represented by USMX are running out of time to reach a new Master Contract agreement, potentially leading to a coastwide strike starting on October 1, 2024.

Daggett emphasized that ILA members are fully supportive and prepared to strike if their demands are not met by October 1, 2024. He also stated that the union would not consider extending the current contract or accepting outside interference from agencies such as the Biden Administration or the Department of Labor.

USA:

Is Peak Season Coming Early?:

The alternative route to the Suez Canal, around Africa takes longer requiring more ships to move the same amount of cargo. This causes shortages, schedule disruptions, and delays, driving up costs for sea transport, which handles about 80% of international trade volume.

U.S. retailers and other shippers have responded by bringing in goods earlier, quickly making rates more expensive during the busy “peak” season for importing back-to-school, Halloween, and Christmas merchandise.

Outlook on the Near Future:

After discussing with the various steamship lines it is their opinion that sea rates should start to stabilize after the end of August, assuming that no other particular new issue develops. Rates will not reach the level we saw earlier this year, but should be at a more reasonable level. We will continue to monitor the situation and will keep you posted.



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