Trans-Atlantic

The carrier has pledged to remain loyal to its core container shipping segment but at the same time is rapidly expanding its terminal business and increasing its share of inland transport capacity.

Firm growth in imports from Europe in the first quarter has lifted rates to more sustainable levels for carriers as the trans-Atlantic trade lane appears to have finally turned the page on a dismal 2023.

The import strength goes beyond restocking, showing the impact of a recovery in housing and the US manufacturing resurgence, writes Peter Tirschwell.

Ocean carriers have signaled their belief that US consumer buying will remain strong into the second half of the year by announcing the launch or restart of 11 services involving the trans-Pacific and north-south trades.

Carriers have been unable to shake a perception among shippers that surcharges were being set above cost-recovery levels, with a report this week directly accusing carriers of “profiteering” from the ETS.

With the fifth-largest container port on the US East Coast now effectively isolated from waterborne traffic, the collapse of the Francis Scott Key Bridge after it was struck by a container ship will, at least temporarily, reconfigure the region’s supply chain.

Hapag-Lloyd's CEO insists the total cost of the network will be lower because Gemini will be able to better utilize controlled assets and deliver more efficient cargo connections in the hub and spoke model.

Even as the industry seemingly adjusts to the new status quo of routing ships around southern Africa, there are significant — yet less apparent — changes afoot in container shipping, writes Journal of Commerce Executive Editor Mark Szakonyi.

A drop in schedule reliability was expected on trade lanes such as Asia-Europe and Asia-US East Coast, but the diversions around southern Africa have also affected routes not directly connected to the Red Sea.

The Port of Jacksonville said the first ship on the newly combined trans-Atlantic and north-south service from Mediterranean Shipping Co. called the port this month.

The move has already prompted Busan, one of the ports most affected by the downgrade, to urge Maersk and Hapag-Lloyd to rethink their Gemini vessel schedules and restore some calls at the South Korean gateway.

Container shipping networks from Asia to North Europe and the Mediterranean are being reshaped as carriers redeploy capacity to compensate for the additional transit time needed to sail around southern Africa.

Rates on the westbound trade lane were at loss-making levels last year and have only deteriorated further, giving carriers no leverage to lift prices.

The Cosco subsidiary’s operational update did not provide profit and loss figures but gives an indication of the impact plunging rate levels will have on ocean shipping’s annual results.

Rates on the headhaul corridor have been loss-making for the last few months, so carriers are trying to get prices up to what they consider more sustainable levels.

While carriers have been revising their ETS surcharges with carbon pricing on the markets becoming clearer ahead of the implementation date, the price differences have shippers and analysts scratching their heads.

While the preferred approach by carriers is to calculate exposure to the ETS and recover costs per container in a separate surcharge, that will not be possible for Chinese exports to Europe under Shanghai Shipping Exchange regulations.

Carriers are reporting some successes in convincing shippers to use their emissions-reduction services, but acceptance of premium — and costly — green products remains a hard sell in a market where rate levels are at record lows.

Carriers and shippers, however, believe there is little room left to fall for spot rates that are already below pre-pandemic levels.

Carriers are already beginning to adjust schedules ahead of Europe’s new shipping carbon tax, something forwarders say could reduce direct port connections and boost transshipment activity.

The Cosco subsidiary reported mostly positive volume metrics for both the third quarter and nine months through September, although revenues were down sharply.

To comply with the European emissions trading system, ocean carriers will essentially need to become experts in carbon credit trading, on top of monitoring, verifying and reporting CO2 emissions.

A significant misalignment in ETS surcharges among ocean carriers can be expected if the per-FEU levies already announced by Maersk and Hapag-Lloyd are any indication, according to Sea-Intelligence Maritime Analysis.

Cargo owners want complete transparency from carriers in their “emission surcharges” that will be levied on customers from the first quarter of 2024 and are looking at how the surcharges can be handled in long-term rate agreements.

Carriers appear reluctant to make the drastic capacity reductions required to match supply with demand on the westbound trade lane, leaving rates far below pre-pandemic levels.

The spot market from North Europe to the US East Coast continues to weaken and lackluster attempts by carriers to withdraw capacity are having little effect on balancing supply and demand.

The completion of the terminal acquisitions gives the carrier a stronger footprint in the US’s largest East Coast gateway.

Weak European demand for containerized trade through the first half is hurting port throughput at the region’s top three gateways, but signs are emerging of recovering volume on certain routes.

Getting shippers to commit to premium-priced, low-emissions shipping services is a hard sell for ocean carriers and forwarders as cargo owners enjoy rates that are now mostly below pre-pandemic levels after two years of record highs.

Rolf Habben Jansen has hinted that capacity cuts on the trans-Atlantic could be made “fairly soon” as supply outstrips weak demand for US imports.

Ocean rates for North Europe to North America have fallen significantly below pre-pandemic levels on some trade lane indices after a wild three-year ride that took container shipping prices to record levels.

Inclusion in the European Union’s emissions trading system will affect not only the cost of shipping to and from the EU, but will likely put upward pressure on pricing for cargo that doesn’t touch the EU at all, writes analyst Lars Jensen.

The extent to which the rapidly cooling container shipping market is hurting China’s main carriers is likely to be repeated across the industry as reporting season approaches.

Sustained weakness in demand, excess capacity and ongoing economic uncertainty are undermining the container trade in and out of Europe, making a third-quarter rebound increasingly unlikely.

The shift to green fuels needs to be “supercharged” by establishing a clear zero-emissions target at the IMO’s July meeting, according to an Oslo-based shipowner group.

Although the container shipping order book is the highest it has been in many years and demand remains subdued, the ground is shifting under the ocean market in new and unfamiliar ways, writes Peter Tirschwell.

Price is once again on the side of shippers, with excess ocean capacity allowing them to extract lower rates from service providers.

While indicators may point to a “normal” container shipping market in the wake of the pandemic, it is important to remember that disruptions large and small are all part of that normality, writes analyst Lars Jensen.

While rates on the trans-Pacific and Asia-Europe trades may have hit bottom, there is still some way to go before headhaul trans-Atlantic prices reach pre-pandemic levels, but the gap is narrowing by the week.

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