<div class="phx-topic abstract-wrapper">Vietnam’s increasing role in the final assembly of products was evident in the October trade figures that showed Chinese exports to Vietnam soaring 52.6 percent year-over-year to $61 billion.</div>

Vietnam’s increasing role in the final assembly of products was evident in the October trade figures that showed Chinese exports to Vietnam soaring 52.6 percent year-over-year to $61 billion.

<div><div><img></div>HONG KONG — Vietnam’s increasing role in the final assembly of products was evident in the October trade figures that showed Chinese exports to Vietnam soaring 52.6 percent year-over-year to $61 billion.In a note to customers, Barclays said this was consistent with low-end manufacturing continuing its relocation from China.“The strong growth in Chinese exports to Vietnam likely reflects Vietnam’s increasing role in final assembly in global supply chains and demand for inputs from China,” the note said.When it comes to light manufacturing goods exported to the U.S., the majority of products are made in China, but Vietnam is rapidly increasing...

HONG KONG — Vietnam’s increasing role in the final assembly of products was evident in the October trade figures that showed Chinese exports to Vietnam soaring 52.6 percent year-over-year to $61 billion. In a note to customers, Barclays said this was consistent with low-end manufacturing continuing its relocation from China. “The strong growth in Chinese exports to Vietnam likely reflects Vietnam’s increasing role in final assembly in global supply chains and demand for inputs from China,” the note said. When it comes to light manufacturing goods exported to the U.S., the majority of products are made in China, but Vietnam is rapidly increasing its market share in the making of footwear, handbags, apparel and furniture. Another bank, this time HSBC, also highlighted the migrating of manufacturing, with China’s loss in becoming Vietnam’s gain. The latest HSBC purchasing manager’s index (PMI) showed factory output in China during November at its lowest level since May, falling to 50. Anything above 50 indicates growth, with contraction below. By contrast, the Vietnam PMI showed its sharpest rise since April, reaching 52.1 in November as growth in its manufacturing sector gained momentum. It signalled the most marked improvement in business conditions in five months, with stronger operating conditions recorded in each month since September 2013. “The sharp rise of the PMI index in November reflects our view that Vietnam manufacturing sector is competitive. Thanks to lower labor costs than China, Vietnam manufacturing is gaining global market share,” said Trinh Nguyen, HSBC Asia Economist. By handling the final assembly of much of the low-end products, more complex trade patterns in Asia were emerging and Barclays analysts felt this should increasingly favor private, “more operationally nimble” container shipping companies such as Hong Kong-listed OOCL over more bureaucratic state owned enterprises such as China COSCO Holdings. But it is not only at the bottom end of the manufacturing scale where the growth is being generated. Vietnam’s Transport Ministry expects air cargo shipments to grow 23 percent in 2014, while industry experts say the country's exports total be about 80 percent of its GDP. From January through October, Vietnam’s export trade value increased 13.4 percent year-over-year to $123 billion, government statistics show. Korean giant Samsung Electronics announced recently that it would invest up to $3 billion in its facility near Hanoi to expand mobile phone production. The company is adding to its facilities in Ho Chi Minh City early next year to increase LCD monitor production. Samsung has been running factories in Bac Ninh province since 2009 and at Thai Nguyen since 2013. Microsoft recently acquired Nokia's production lines from several countries and moved them to Vietnam factories that will operate 39 smart phone production lines in 2015, with annual exports forecast to reach 50,000 tonnes a year. LG Electronics is investing $1.5 billion in a new production facility for smart phones at Hai Phong City, adding to its Vietnam production of televisions, refrigerators and air conditioning units, while Yusen Logistics recently opened a new 129,166-square-foot warehouse in Vietnam’s Hai Phong City to tap growing electronics and auto manufacturing production in the country’s northern region. Almost half of exports from Vietnam are destined for Europe and the U.S., while 33 percent go to Asian destinations. Ho Chi Minh City exports 50.5 percent to Europe and the US. Cargolux this month added a second weekly flight to Ho Chi Minh City and a fourth frequency to Hanoi to capture the increasing demand for products made in Vietnam. The Luxembourg-Zhengzhou carrier has been in the Vietnam market since 2009. Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler .

Container lines

Factory shift from China to Vietnam accelerates, Barclays data shows

<div class="phx-topic abstract-wrapper">The agency in charge of enforcing US shipping law reminded the market that any change in ocean tariffs must come with a 30-day notice period prior to implementation so it can be reviewed.</div>

The agency in charge of enforcing US shipping law reminded the market that any change in ocean tariffs must come with a 30-day notice period prior to implementation so it can be reviewed.

Feature image

<div class="phx-topic">The US Federal Maritime Commission (FMC) on Wednesday told shippers to check their ocean freight bills for any surcharges related to the war in the Middle East that have not been formally reviewed by the agency, as carriers look to recoup additional costs from rising bunker fuel prices and disrupted networks. In a statement Wednesday, the agency said it is “closely monitoring the impact the current conflict in the Middle East is having on shipping conditions through the Strait of Hormuz” and any rate adjustments ocean carriers are making in response. The FMC reminded shippers that any change in the ocean tariff must come with a 30-day notice period prior to implementation so it can be reviewed by the agency. The only exception is a “special permission” request, which can have a shorter notice period. “Shippers are encouraged to access and review their common carrier’s tariff,” the FMC said. “Ocean common carriers are responsible for ensuring that service contracts and their amendments are filed in a timely and accurate manner.” Ocean carriers began assessing war-related surcharges for any shipments to and from the Persian Gulf states on March 2, the Iran declared that any commercial ship passing through the Strait of Hormuz would be subject to attack. Within a day of that announcement, five commercial ships were attacked. While those surcharges were effective immediately for non-US trades, ocean carriers did say US trades to the Middle East would be subject to a 30-day notice period. By Monday, ocean carriers began telling customers of emergency fuel surcharges on all global trades. The closure of the Strait of Hormuz has throttled shipments of one-fifth of global oil supply and <a href="https://www.joc.com/article/maersk-forced-to-ship-fuel-from-us-europe-as-asia-bunkers-start-to-run-dry-6184651">resulted in fuel shortages</a> in an important bunkering region for the shipping industry. <h3>AgTC watching </h3>Speaking at the Journal of Commerce’s TPM26 event in Long Beach last week, Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said the 30-day review period was necessary for the FMC to assess whether the surcharges are justified. When similar surcharges were issued in early 2024 due to the Houthi attacks against ships transiting the Red Sea, Friedmann said the FMC waived a notice period for a surcharge from one ocean carrier. However, a subsequent economic analysis questioned whether the surcharge was warranted, given the ocean carrier was also saving on Suez Canal tolls by diverting around the Cape of Good Hope. “We were pretty upset that the waiver was granted like that, so we made a stink about it,” Friedmann told the conference. “But the key was if you do the analysis, the carrier is not really losing much money. “I have contacted all the FMC commissioners already that this could be repeated,” he added. “But apparently they learned the lesson.” In August 2021, the FMC <a href="https://www.joc.com/article/fmc-orders-carriers-to-justify-us-port-congestion-surcharges-5249012">ordered eight carriers</a> to show how congestion surcharges and other fees tied to the pandemic-driven supply chain disruption met legal and regulatory requirements. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The US Federal Maritime Commission (FMC) on Wednesday told shippers to check their ocean freight bills for any surcharges related to the war in the Middle East that have not been formally reviewed by the agency, as carriers look to recoup additional costs from rising bunker fuel prices and disrupted networks. In a statement Wednesday, the agency said it is “closely monitoring the impact the current conflict in the Middle East is having on shipping conditions through the Strait of Hormuz” and any rate adjustments ocean carriers are making in response. The FMC reminded shippers that any change in the ocean tariff must come with a 30-day notice period prior to implementation so it can be reviewed by the agency. The only exception is a “special permission” request, which can have a shorter notice period. “Shippers are encouraged to access and review their common carrier’s tariff,” the FMC said. “Ocean common carriers are responsible for ensuring that service contracts and their amendments are filed in a timely and accurate manner.” Ocean carriers began assessing war-related surcharges for any shipments to and from the Persian Gulf states on March 2, the Iran declared that any commercial ship passing through the Strait of Hormuz would be subject to attack. Within a day of that announcement, five commercial ships were attacked. While those surcharges were effective immediately for non-US trades, ocean carriers did say US trades to the Middle East would be subject to a 30-day notice period. By Monday, ocean carriers began telling customers of emergency fuel surcharges on all global trades. The closure of the Strait of Hormuz has throttled shipments of one-fifth of global oil supply and resulted in fuel shortages in an important bunkering region for the shipping industry. AgTC watching Speaking at the Journal of Commerce’s TPM26 event in Long Beach last week, Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said the 30-day review period was necessary for the FMC to assess whether the surcharges are justified. When similar surcharges were issued in early 2024 due to the Houthi attacks against ships transiting the Red Sea, Friedmann said the FMC waived a notice period for a surcharge from one ocean carrier. However, a subsequent economic analysis questioned whether the surcharge was warranted, given the ocean carrier was also saving on Suez Canal tolls by diverting around the Cape of Good Hope. “We were pretty upset that the waiver was granted like that, so we made a stink about it,” Friedmann told the conference. “But the key was if you do the analysis, the carrier is not really losing much money. “I have contacted all the FMC commissioners already that this could be repeated,” he added. “But apparently they learned the lesson.” In August 2021, the FMC ordered eight carriers to show how congestion surcharges and other fees tied to the pandemic-driven supply chain disruption met legal and regulatory requirements. Contact Michael Angell at michael.angell@spglobal.com .

Transport, Trade and Regulation News

FMC says ‘closely monitoring’ carrier rate moves tied to Middle East war

<div class="phx-topic abstract-wrapper">The average price for a gallon of diesel fuel rose 96 cents for the week ending March 9, according to the Energy Information Administration, the biggest seven-day spike since the agency began releasing the data in 1994. </div>

The average price for a gallon of diesel fuel rose 96 cents for the week ending March 9, according to the Energy Information Administration, the biggest seven-day spike since the agency began releasing the data in 1994.

<div class="phx-topic">The US trucking industry may be showing signs of coming out of a nearly four-year-long freight recession as spot rates have remained elevated, especially along the East Coast and in the Midwest, after the disruption caused by snow and ice storms in January and February. And now lending support to rates is the uncertainty tied to the war in the Middle East and the resulting surge in fuel prices. The average price for a gallon of diesel fuel rose 96 cents for the week ending March 9, according to the US Energy Information Administration. That’s the biggest seven-day spike since the agency began releasing data in 1994, topping the previous record of a 75-cent spike in March 2022 after Russia invaded Ukraine. Diesel now sits at nearly $4.90 per gallon nationally and more than $6/gallon in California. For the shipper, it means the average fuel surcharge has risen between 15 and 20 cents per mile, causing rates on long hauls across the US to rise sharply. Shippers will notice when they receive invoices from brokers and carriers in the coming weeks. Trucking executives believe the bullish fundamentals will push contract rates higher as those deals are renegotiated. Indeed, the process has already begun, according to multiple shippers; sources have told the Journal of Commerce that brokers are refusing to handle loads on contracts signed as recently as Jan. 1 unless rates are renegotiated. “Tender rejections are up 13 to 15%,” said ITS Logistics Chief Commercial Officer Josh Allen. “That’s the first rejection. If shippers have done [requests for proposals], maybe as recently as 90 to 180 days ago, some of those contract rates are already underwater.” According to a Journal of Commerce analysis, shipper-paid spot rates nationally increased between 15% and 20% year over year in February. But rates are surging in pockets, rather than nationally. Rates between November and February jumped 52 cents per mile on loads originating in the Midwest, but only rose 10 cents for originations in the Southwest. <h3>‘Signs of disruption’ </h3>Tightening capacity is the result of both slower economic conditions causing some carriers to go bankrupt, and by the Trump administration’s crackdown on non-domiciled drivers and push for English language proficiency rules. There is also the proposed Dalilah’s law, which would prohibit states from issuing commercial driver’s licenses (CDLs) to undocumented immigrants and retroactively cancel all existing licenses to those individuals. “For the first time in roughly three years, routing guides are showing signs of disruption,” said Nolan Transportation Group President and Chief Operating Officer Drew Herpich. “Many transportation RFPs that went live this year were priced in Q3 and Q4 of last year when market conditions were significantly more stable.” Herpich added that as tender rejection rates increase, more freight is going to the second, third, or fourth contract carriers in the shipper’s routing guide or directly posted on the spot market. He also said that carriers and brokers are “becoming more disciplined” around capacity commitments, and communication with customers is becoming clearer as the weekly volume approaches or exceeds the total outlined in the contract. “Conversations around contract alignment are occurring across the market,” Herpich said. “The most effective approach has been collaborative discussions with customers to address market shifts and ensure sustainable pricing that supports service reliability and execution.” Allen said the so-called “waterfall” is beginning as rates need to be adjusted. “I think it’s happening everywhere,” he said. “A shipper calls and says ‘you are 12th in line from a rating perspective in the routing guide. The 11 before you have declined, would you like these opportunities at these published rates?’” At the Raymond James Investor Conference last week, truckload carrier J.B. Hunt Transport Services said the tightening capacity shows similarities to the last major regulatory crackdown in 2017. “We’ve really not had a supply market shrinkage since probably ’17 or ’18 with ELDs [electronic logging devices],” Nick Hobbs, J.B. Hunt’s president of highway services, said at the conference. “Probably the most talked about is non-domiciled drivers ... We’re also seeing driver schools shut down [CDL mills] and we’re seeing a lot of enforcement around chameleon carriers.” The term CDL mills has been coined to describe low-quality truck driving schools that prioritize high-volume, rapid training over safety, which are increasingly getting shut down by the US government. Chameleon carriers refer to trucking companies who operate with multiple company names and registration numbers, swapping one placard for another on their trucks to evade law enforcement. Contact Dan Ronan at <a href="mailto:contactdanronan@gmail.com">contactdanronan@gmail.com</a>. </div>

The US trucking industry may be showing signs of coming out of a nearly four-year-long freight recession as spot rates have remained elevated, especially along the East Coast and in the Midwest, after the disruption caused by snow and ice storms in January and February. And now lending support to rates is the uncertainty tied to the war in the Middle East and the resulting surge in fuel prices. The average price for a gallon of diesel fuel rose 96 cents for the week ending March 9, according to the US Energy Information Administration. That’s the biggest seven-day spike since the agency began releasing data in 1994, topping the previous record of a 75-cent spike in March 2022 after Russia invaded Ukraine. Diesel now sits at nearly $4.90 per gallon nationally and more than $6/gallon in California. For the shipper, it means the average fuel surcharge has risen between 15 and 20 cents per mile, causing rates on long hauls across the US to rise sharply. Shippers will notice when they receive invoices from brokers and carriers in the coming weeks. Trucking executives believe the bullish fundamentals will push contract rates higher as those deals are renegotiated. Indeed, the process has already begun, according to multiple shippers; sources have told the Journal of Commerce that brokers are refusing to handle loads on contracts signed as recently as Jan. 1 unless rates are renegotiated. “Tender rejections are up 13 to 15%,” said ITS Logistics Chief Commercial Officer Josh Allen. “That’s the first rejection. If shippers have done [requests for proposals], maybe as recently as 90 to 180 days ago, some of those contract rates are already underwater.” According to a Journal of Commerce analysis, shipper-paid spot rates nationally increased between 15% and 20% year over year in February. But rates are surging in pockets, rather than nationally. Rates between November and February jumped 52 cents per mile on loads originating in the Midwest, but only rose 10 cents for originations in the Southwest. ‘Signs of disruption’ Tightening capacity is the result of both slower economic conditions causing some carriers to go bankrupt, and by the Trump administration’s crackdown on non-domiciled drivers and push for English language proficiency rules. There is also the proposed Dalilah’s law, which would prohibit states from issuing commercial driver’s licenses (CDLs) to undocumented immigrants and retroactively cancel all existing licenses to those individuals. “For the first time in roughly three years, routing guides are showing signs of disruption,” said Nolan Transportation Group President and Chief Operating Officer Drew Herpich. “Many transportation RFPs that went live this year were priced in Q3 and Q4 of last year when market conditions were significantly more stable.” Herpich added that as tender rejection rates increase, more freight is going to the second, third, or fourth contract carriers in the shipper’s routing guide or directly posted on the spot market. He also said that carriers and brokers are “becoming more disciplined” around capacity commitments, and communication with customers is becoming clearer as the weekly volume approaches or exceeds the total outlined in the contract. “Conversations around contract alignment are occurring across the market,” Herpich said. “The most effective approach has been collaborative discussions with customers to address market shifts and ensure sustainable pricing that supports service reliability and execution.” Allen said the so-called “waterfall” is beginning as rates need to be adjusted. “I think it’s happening everywhere,” he said. “A shipper calls and says ‘you are 12th in line from a rating perspective in the routing guide. The 11 before you have declined, would you like these opportunities at these published rates?’” At the Raymond James Investor Conference last week, truckload carrier J.B. Hunt Transport Services said the tightening capacity shows similarities to the last major regulatory crackdown in 2017. “We’ve really not had a supply market shrinkage since probably ’17 or ’18 with ELDs [electronic logging devices],” Nick Hobbs, J.B. Hunt’s president of highway services, said at the conference. “Probably the most talked about is non-domiciled drivers ... We’re also seeing driver schools shut down [CDL mills] and we’re seeing a lot of enforcement around chameleon carriers.” The term CDL mills has been coined to describe low-quality truck driving schools that prioritize high-volume, rapid training over safety, which are increasingly getting shut down by the US government. Chameleon carriers refer to trucking companies who operate with multiple company names and registration numbers, swapping one placard for another on their trucks to evade law enforcement. Contact Dan Ronan at contactdanronan@gmail.com .

Trucking News

Surface

Elevated US trucking rates get new boost from diesel gains amid Middle East war 

<div class="phx-topic abstract-wrapper">Nineteen MPVs are stuck in the Persian Gulf, while bunker costs have increased by $3 to $7 per ton of cargo as a result of the Middle East war, according to one vessel operator. </div>

Nineteen MPVs are stuck in the Persian Gulf, while bunker costs have increased by $3 to $7 per ton of cargo as a result of the Middle East war, according to one vessel operator.

<div class="phx-topic">There has so far been a muted impact on the multipurpose vessel (MPV) sector from the Middle East war, although vessel operators say there is the potential for higher freight rates if the conflict is prolonged. Arthur English, CEO of Norway-headquartered MPV operator G2 Ocean, said both spot and forward freight rates are “relatively stable.” “The ongoing conflict in the Middle East has so far had limited direct impact on our operations,” he told the Journal of Commerce Wednesday. English said G2 Ocean did have one ship that was partially loaded for discharge in the region, but it decided not to go ahead with the voyage following a risk assessment and discussions with the shipper. The cargo was unloaded outside of the high-risk area that covers the Strait of Hormuz, the Persian Gulf and surrounding waters near Saudi Arabia, Kuwait, Qatar and the United Arab Emirates. “Currently, we are not accepting new bookings into the high-risk area, in line with our risk management practices,” English said. <h3>‘Severe effects’ on bunker prices, supply </h3>His views were echoed by sector analysts, including Germany-based shipbroking house Toepfer Transport and maritime consultant Drewry. Toepfer’s latest monthly MPP index showed rates continue to be rangebound despite the conflict, fluctuating in a band between $12,000 and $13,000 a day over the past year. The March index figure is $12,750, Toepfer said in its most recent report published Monday. “It remains unclear what the current escalation of the situation in the Middle East will bring, with 19 [MPV] ships currently ‘locked in’ in the Arabian Gulf and quite some severe effects on bunker prices and supply,” the report said. Overall, the outlook for 2026 remains optimistic on both the carrier and shipper sides, although some stakeholders have begun to express concerns that the situation could change in 2027,” it added. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9e94cdf4-df57-437c-afda-809c33f45e0c"></dynamic-object></div> The most significant change has been to increase bunker fuel prices, operators and analysts said, who also warned of <a href="https://www.joc.com/article/maersk-forced-to-ship-fuel-from-us-europe-as-asia-bunkers-start-to-run-dry-6184651">possible fuel shortages going forward</a>. “Bunker prices have increased since the conflict escalated, driven by tighter availability and supply risk, particularly in Asia,” English said. “Depending on trade route, this has increased our bunker cost by approximately $3 to $7 per ton of cargo onboard, which is increasing the total cost for freight.” Marine fuel prices in Singapore, the world’s largest ship refueling hub, have more than doubled since the war started, according to a report on the conflict by the UN Council on Trade and Development. The study, published Tuesday, said prices for high and low sulfur fuel oil soared from between $400 and $450 per metric ton last month to $874 to $1,000/metric ton now. S&amp;P Global Energy, a sister company of the Journal of Commerce, on Wednesday assessed the price of 0.5% sulfur marine bunker fuel in Singapore at $1,050 per metric ton, up from $519/metric ton the day before the war began. Rising fuel prices and tighter supply are also expected to change “where we bunker our vessels as we adjust for availability and prices,” English said, adding freight rates could increase over time due to reduced bunker availability and longer voyages around high-risk areas if the war persists. <h3>Breakbulk volumes at risk </h3>Longer term, Drewry said the conflict could have a mixed impact on breakbulk cargo in the region. Breakbulk freight is a staple cargo for the MPV sector in the Middle East, with major export cargoes comprising petrochemicals, aluminum, steel, oil and gas equipment and fertilizers, according to Drewry senior research analyst Anurag Kumar. Imports include project cargo and heavy machinery, construction materials, and agricultural products. “Saudi Arabia, especially at Jubail, and the UAE, particularly at Jebel Ali port are major centers for project cargo and industrial shipments,” Kumar said in a commentary on the impact of the conflict. “When the conflict ends, rebuilding could lead to surge in the demand for project cargo, especially heavy machinery, oil and gas equipment, steel structures, power generation parts, and industrial materials,” he added. In the meantime, Kumar said the impact could be immense if the conflict lasts the four to five weeks predicted by US officials. It could cause “unprecedented freight volatility, taking insurance and fuel costs higher, and reducing the ability of delivering breakbulk cargoes to their destinations in the Gulf.” Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

There has so far been a muted impact on the multipurpose vessel (MPV) sector from the Middle East war, although vessel operators say there is the potential for higher freight rates if the conflict is prolonged. Arthur English, CEO of Norway-headquartered MPV operator G2 Ocean, said both spot and forward freight rates are “relatively stable.” “The ongoing conflict in the Middle East has so far had limited direct impact on our operations,” he told the Journal of Commerce Wednesday. English said G2 Ocean did have one ship that was partially loaded for discharge in the region, but it decided not to go ahead with the voyage following a risk assessment and discussions with the shipper. The cargo was unloaded outside of the high-risk area that covers the Strait of Hormuz, the Persian Gulf and surrounding waters near Saudi Arabia, Kuwait, Qatar and the United Arab Emirates. “Currently, we are not accepting new bookings into the high-risk area, in line with our risk management practices,” English said. ‘Severe effects’ on bunker prices, supply His views were echoed by sector analysts, including Germany-based shipbroking house Toepfer Transport and maritime consultant Drewry. Toepfer’s latest monthly MPP index showed rates continue to be rangebound despite the conflict, fluctuating in a band between $12,000 and $13,000 a day over the past year. The March index figure is $12,750, Toepfer said in its most recent report published Monday. “It remains unclear what the current escalation of the situation in the Middle East will bring, with 19 [MPV] ships currently ‘locked in’ in the Arabian Gulf and quite some severe effects on bunker prices and supply,” the report said. Overall, the outlook for 2026 remains optimistic on both the carrier and shipper sides, although some stakeholders have begun to express concerns that the situation could change in 2027,” it added.  The most significant change has been to increase bunker fuel prices, operators and analysts said, who also warned of possible fuel shortages going forward . “Bunker prices have increased since the conflict escalated, driven by tighter availability and supply risk, particularly in Asia,” English said. “Depending on trade route, this has increased our bunker cost by approximately $3 to $7 per ton of cargo onboard, which is increasing the total cost for freight.” Marine fuel prices in Singapore, the world’s largest ship refueling hub, have more than doubled since the war started, according to a report on the conflict by the UN Council on Trade and Development. The study, published Tuesday, said prices for high and low sulfur fuel oil soared from between $400 and $450 per metric ton last month to $874 to $1,000/metric ton now. S&P Global Energy, a sister company of the Journal of Commerce, on Wednesday assessed the price of 0.5% sulfur marine bunker fuel in Singapore at $1,050 per metric ton, up from $519/metric ton the day before the war began. Rising fuel prices and tighter supply are also expected to change “where we bunker our vessels as we adjust for availability and prices,” English said, adding freight rates could increase over time due to reduced bunker availability and longer voyages around high-risk areas if the war persists. Breakbulk volumes at risk Longer term, Drewry said the conflict could have a mixed impact on breakbulk cargo in the region. Breakbulk freight is a staple cargo for the MPV sector in the Middle East, with major export cargoes comprising petrochemicals, aluminum, steel, oil and gas equipment and fertilizers, according to Drewry senior research analyst Anurag Kumar. Imports include project cargo and heavy machinery, construction materials, and agricultural products. “Saudi Arabia, especially at Jubail, and the UAE, particularly at Jebel Ali port are major centers for project cargo and industrial shipments,” Kumar said in a commentary on the impact of the conflict. “When the conflict ends, rebuilding could lead to surge in the demand for project cargo, especially heavy machinery, oil and gas equipment, steel structures, power generation parts, and industrial materials,” he added. In the meantime, Kumar said the impact could be immense if the conflict lasts the four to five weeks predicted by US officials. It could cause “unprecedented freight volatility, taking insurance and fuel costs higher, and reducing the ability of delivering breakbulk cargoes to their destinations in the Gulf.” Contact Keith Wallis at keithwallis@hotmail.com .

Breakbulk carriers

Heavy-haul transport

Project cargo

Breakbulk News

Maritime

Muted short-term impact on MPVs from Iran conflict, but longer-term risks rising

<div class="phx-topic abstract-wrapper">With the flow of waterborne oil suspended in the Strait of Hormuz, reports out of China say suppliers are rationing fuel in anticipation of growing shortages, while bunkering centers such as Salalah in Oman are no longer able to fulfil orders. </div>

With the flow of waterborne oil suspended in the Strait of Hormuz, reports out of China say suppliers are rationing fuel in anticipation of growing shortages, while bunkering centers such as Salalah in Oman are no longer able to fulfil orders.

<div class="phx-topic">The disruption to oil exports through the Strait of Hormuz is forcing Maersk to take the unprecedented step of filling ships with fuel in the US and Europe and transferring the bunkers to vessels in Asia, the carrier’s chief commercial officer said Wednesday. Karsten Kildahl told the Journal of Commerce in an interview that in the past two days, several of Maersk’s bunker suppliers in key areas in the Middle East and Asia have been unable to refuel the carrier’s vessels. “We’ve had to start moving oil around ourselves because we don’t have enough supplies where we need them,” Kildahl said. “In Asia, nearly half of their supplies come from the Gulf area, so some of the vessels leaving the US and Europe are filled with as much oil as we possibly can, and then we transport the fuel to other vessels we connect with in Asia.” About one-fifth of the world’s crude oil and refined products — 20 million barrels per day — is exported via the Strait of Hormuz, but that slowed to a trickle after the US and Israel began air strikes on Iran on Feb. 28. More than 10 ships have been attacked since the war started, and soaring war risk insurance is keeping most commercial shipping out of the region, including oil tankers. With the flow of waterborne oil suspended, reports out of China say suppliers are rationing fuel in anticipation of growing shortages, while bunkering centers such as Salalah in Oman are no longer able to fulfil fuel orders, Kildahl said. “Salalah is one of our main bunker ports in the Gulf, but we’ve not been able to bunker there for the past two days, so we need to transfer bunkers from one place to another,” he said. “The main concern right now is how do we safeguard the supply of oil?” <h3>Tanker chartering not an option </h3>Chartering a tanker to transport oil to where it is needed was not an option, Kildahl said, with available vessels in short supply. “In the short term, we have started bunkering in less efficient locations with a higher cost and more difficult logistics behind it, and over time we will have to significantly beef this up if [the war drags on],” he warned. “That is where you will have the risk of a larger impact, much more than the 7% of world cargo flow that goes in and out of the Gulf.” Oil prices, meanwhile, have rocketed higher. S&amp;P Global Energy, a sister company of the Journal of Commerce, on Wednesday assessed the price of 0.5% sulfur marine bunker fuel in Singapore at $1,050 per metric ton, up from $519/metric ton the day before the war began. Carriers have responded by rolling out “emergency” surcharges. Maersk on Tuesday announced a global emergency bunker surcharge of $400 per FEU, joining Hapag-Lloyd, CMA CGM and Mediterranean Shipping Co. in implementing similar fuel surcharges. Kildahl said the ship-to-ship transfers, moving oil from the US and Europe to Asia, and changing fuel supply patterns was creating additional expenses for the carrier, on top of rising bunker prices. With the Persian Gulf out of bounds, congestion is growing at other ports in the region with carriers looking to discharge cargo that had already departed Asia when booking suspensions were announced on March 1. Most of the carriers are prioritizing urgent cargo, such as food and pharmaceuticals, but Kildahl said at some point “other cargo will become urgent,” such as aluminum and petrochemicals and polyethylene that are raw materials for plastics production. “Those products can’t float out right now realistically, and so is that a problem tomorrow? No, it’s not,” he said. “It’s not a problem next week either, but at some point, it will be.” <h3>‘End-of-voyage’ disruptions </h3>For general and non-urgent cargo, MSC, CMA CGM and Yang Ming are among the carriers that have declared “end-of-voyage” for Persian Gulf-bound containers already onboard vessels. That cargo status means the carriers are unable to fulfill obligations on a bill of lading, and when the containers are offloaded at a port, they become the responsibility of the cargo owner. Kildahl said Maersk has about 40,000 TEUs that are shipped in and out of the Persian Gulf every week, and that bookings have been suspended to avoid diverted volume collapsing terminals in the region. But instead of declaring end-of-voyage, Maersk has taken a different approach, offering shippers three options: Keeping the cargo in temporary storage, having it returned to the port of departure, or delivering it to another destination for onward transport by another mode. “We are using Salalah and Khor Fakkan for cargo that comes from the east and are securing trucking capacity to take it into the Gulf,” Kildahl said. “For cargo that comes from Europe, we focus mainly on Jeddah and are deploying trucks to take the cargo across the Arabian Peninsula through the desert. “We don’t think it is a fantastic solution for any customer to get an end-of-voyage declaration,” he added. “If the customer doesn’t want any of the options, we may be forced into an end-of-voyage declaration, but I doubt we will come to that.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The disruption to oil exports through the Strait of Hormuz is forcing Maersk to take the unprecedented step of filling ships with fuel in the US and Europe and transferring the bunkers to vessels in Asia, the carrier’s chief commercial officer said Wednesday. Karsten Kildahl told the Journal of Commerce in an interview that in the past two days, several of Maersk’s bunker suppliers in key areas in the Middle East and Asia have been unable to refuel the carrier’s vessels. “We’ve had to start moving oil around ourselves because we don’t have enough supplies where we need them,” Kildahl said. “In Asia, nearly half of their supplies come from the Gulf area, so some of the vessels leaving the US and Europe are filled with as much oil as we possibly can, and then we transport the fuel to other vessels we connect with in Asia.” About one-fifth of the world’s crude oil and refined products — 20 million barrels per day — is exported via the Strait of Hormuz, but that slowed to a trickle after the US and Israel began air strikes on Iran on Feb. 28. More than 10 ships have been attacked since the war started, and soaring war risk insurance is keeping most commercial shipping out of the region, including oil tankers. With the flow of waterborne oil suspended, reports out of China say suppliers are rationing fuel in anticipation of growing shortages, while bunkering centers such as Salalah in Oman are no longer able to fulfil fuel orders, Kildahl said. “Salalah is one of our main bunker ports in the Gulf, but we’ve not been able to bunker there for the past two days, so we need to transfer bunkers from one place to another,” he said. “The main concern right now is how do we safeguard the supply of oil?” Tanker chartering not an option Chartering a tanker to transport oil to where it is needed was not an option, Kildahl said, with available vessels in short supply. “In the short term, we have started bunkering in less efficient locations with a higher cost and more difficult logistics behind it, and over time we will have to significantly beef this up if [the war drags on],” he warned. “That is where you will have the risk of a larger impact, much more than the 7% of world cargo flow that goes in and out of the Gulf.” Oil prices, meanwhile, have rocketed higher. S&P Global Energy, a sister company of the Journal of Commerce, on Wednesday assessed the price of 0.5% sulfur marine bunker fuel in Singapore at $1,050 per metric ton, up from $519/metric ton the day before the war began. Carriers have responded by rolling out “emergency” surcharges. Maersk on Tuesday announced a global emergency bunker surcharge of $400 per FEU, joining Hapag-Lloyd, CMA CGM and Mediterranean Shipping Co. in implementing similar fuel surcharges. Kildahl said the ship-to-ship transfers, moving oil from the US and Europe to Asia, and changing fuel supply patterns was creating additional expenses for the carrier, on top of rising bunker prices. With the Persian Gulf out of bounds, congestion is growing at other ports in the region with carriers looking to discharge cargo that had already departed Asia when booking suspensions were announced on March 1. Most of the carriers are prioritizing urgent cargo, such as food and pharmaceuticals, but Kildahl said at some point “other cargo will become urgent,” such as aluminum and petrochemicals and polyethylene that are raw materials for plastics production. “Those products can’t float out right now realistically, and so is that a problem tomorrow? No, it’s not,” he said. “It’s not a problem next week either, but at some point, it will be.” ‘End-of-voyage’ disruptions For general and non-urgent cargo, MSC, CMA CGM and Yang Ming are among the carriers that have declared “end-of-voyage” for Persian Gulf-bound containers already onboard vessels. That cargo status means the carriers are unable to fulfill obligations on a bill of lading, and when the containers are offloaded at a port, they become the responsibility of the cargo owner. Kildahl said Maersk has about 40,000 TEUs that are shipped in and out of the Persian Gulf every week, and that bookings have been suspended to avoid diverted volume collapsing terminals in the region. But instead of declaring end-of-voyage, Maersk has taken a different approach, offering shippers three options: Keeping the cargo in temporary storage, having it returned to the port of departure, or delivering it to another destination for onward transport by another mode. “We are using Salalah and Khor Fakkan for cargo that comes from the east and are securing trucking capacity to take it into the Gulf,” Kildahl said. “For cargo that comes from Europe, we focus mainly on Jeddah and are deploying trucks to take the cargo across the Arabian Peninsula through the desert. “We don’t think it is a fantastic solution for any customer to get an end-of-voyage declaration,” he added. “If the customer doesn’t want any of the options, we may be forced into an end-of-voyage declaration, but I doubt we will come to that.” Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Maersk forced to ship fuel from US, Europe as Asia bunkers start to run dry

<div class="phx-topic abstract-wrapper">CEO Jeremy Nixon said the investment, which could be valued at close to $1 billion, is part of ONE’s plan to reach 3 million TEUs in capacity by 2030. </div>

CEO Jeremy Nixon said the investment, which could be valued at close to $1 billion, is part of ONE’s plan to reach 3 million TEUs in capacity by 2030.

<div class="phx-topic">Ocean Network Express (ONE) has increased its ownership stake in its largest provider of chartered tonnage, becoming the largest external shareholder of Poseidon Corp. in a transaction potentially valued at close to $1 billion. ONE said in a statement Tuesday it signed an agreement to acquire an additional stake in Poseidon, the parent company of Singapore-based container shipowner Seaspan, from existing shareholders. ONE said the purchase brings its stake in Poseidon to 48.9%. ONE did not say how much it paid for the additional stake. But Canadian insurance company Fairfax Financial said separately Tuesday that it sold about half of its stake in Poseidon for $1.91 billion, with half of that stake going to an existing Poseidon shareholder who will increase their ownership stake. The other half of Fairfax’s stake was sold to unidentified strategic investors. ONE CEO Jeremy Nixon said in the statement that the investment in Poseidon is part of the carrier’s growth strategy through 2030. ONE currently has a fleet of 281 ships amounting to 2.2 million TEUs. Of that, Seaspan has chartered some 43 container ships to ONE, amounting to about 417,000 TEUs in capacity. “Since our initial investment in 2023, Seaspan has achieved remarkable growth as the world’s leading tonnage platform,” Nixon said. “We are pleased to acquire this additional stake in Poseidon, which fully aligns with our ONE 2030 strategic growth plan.” <a href="https://www.joc.com/article/strategic-investment-underpins-ones-sustainable-profitability-target-nixon-5241768">Poseidon took a nearly one-third ownership stake in Seaspan in 2023 for $1.4 billion</a>. The group included Fairfax, investor David Sokol, and the Washington family, which originally owned Seaspan. Sokol and the Washington family pooled their existing shares to take Seaspan private that year. <h3>Tight supply-demand balance </h3>Speaking at the Journal of Commerce’s TPM26 conference in Long Beach last week, Nixon said it’s important for ONE to continue investing in new vessels because the global supply and demand balance remains tight. ONE’s 2030 strategy includes reaching 3 million TEU in carrier capacity. The trans-Pacific market is only expected to see slight growth this year, Nixon said. But north-south trade and intra-regional trades are growing at double-digit rates, keeping further pressure on ship supply. “The charter market is so tight. There are really no ships available,” Nixon said at TPM26. “Carriers have to be thinking all the time four, five, six years ahead.” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Ocean Network Express (ONE) has increased its ownership stake in its largest provider of chartered tonnage, becoming the largest external shareholder of Poseidon Corp. in a transaction potentially valued at close to $1 billion. ONE said in a statement Tuesday it signed an agreement to acquire an additional stake in Poseidon, the parent company of Singapore-based container shipowner Seaspan, from existing shareholders. ONE said the purchase brings its stake in Poseidon to 48.9%. ONE did not say how much it paid for the additional stake. But Canadian insurance company Fairfax Financial said separately Tuesday that it sold about half of its stake in Poseidon for $1.91 billion, with half of that stake going to an existing Poseidon shareholder who will increase their ownership stake. The other half of Fairfax’s stake was sold to unidentified strategic investors. ONE CEO Jeremy Nixon said in the statement that the investment in Poseidon is part of the carrier’s growth strategy through 2030. ONE currently has a fleet of 281 ships amounting to 2.2 million TEUs. Of that, Seaspan has chartered some 43 container ships to ONE, amounting to about 417,000 TEUs in capacity. “Since our initial investment in 2023, Seaspan has achieved remarkable growth as the world’s leading tonnage platform,” Nixon said. “We are pleased to acquire this additional stake in Poseidon, which fully aligns with our ONE 2030 strategic growth plan.” Poseidon took a nearly one-third ownership stake in Seaspan in 2023 for $1.4 billion . The group included Fairfax, investor David Sokol, and the Washington family, which originally owned Seaspan. Sokol and the Washington family pooled their existing shares to take Seaspan private that year. Tight supply-demand balance Speaking at the Journal of Commerce’s TPM26 conference in Long Beach last week, Nixon said it’s important for ONE to continue investing in new vessels because the global supply and demand balance remains tight. ONE’s 2030 strategy includes reaching 3 million TEU in carrier capacity. The trans-Pacific market is only expected to see slight growth this year, Nixon said. But north-south trade and intra-regional trades are growing at double-digit rates, keeping further pressure on ship supply. “The charter market is so tight. There are really no ships available,” Nixon said at TPM26. “Carriers have to be thinking all the time four, five, six years ahead.” Contact Michael Angell at michael.angell@spglobal.com .

Trans-Pacific

ONE boosts ownership stake in Seaspan parent Poseidon

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