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Russia sanctions redraw shipping routes, cleaving East from West

Russia sanctions redraw shipping routes, cleaving East from West

Athens, Greece – Western sanctions punishing Russia for its invasion of Ukraine are reorganising global trade along political lines, defying geography and efficiency.

This new reality is creating a windfall for merchant shipping, but risks creating higher prices for European consumers and hunger for Africa.

The disruption stems from the curbing of Black Sea trade. Ukraine’s ports have been blockaded by Russian sieges from land and sea, impeding shipping. Ukrainian officials told the Reuters news agency that about 100 foreign-flagged ships were trapped in ports on March 11.

“They were in the process of loading or unloading when the war began,” shipowner Yiorgos Gourdomichalis told Al Jazeera. “The system simply shut down. There were no customs officers and harbour masters to process the boats out.”

The United Nations body monitoring shipping, the International Maritime Organization, voted to establish a safe corridor for crew evacuation, but the stranded ships crewed by skeleton crews will simply lose money until they can be dislodged.Active dangers are also driving ship owners away.Several merchant ships were damaged by missiles or mines at sea and one, the Estonian-owned Helt, sank on March 3. Insurance rates are now sky high.“I’ve heard of insurance rates of $400,000 to $600,000 for a week … A normal rate might be closer to $80,000-$120,000,” said Gourdomichalis, whose dry bulkers are steering clear of the region.Last year Ukraine produced almost 40 percent of the world’s sunflower seed oil, widely used in the food industry, 15 percent of its barley and 10 percent of its wheat and maize.The Russian blockade means Ukraine cannot currently export these goods and Europe is forced to look further afield.

Just as war risk is affecting trade with Ukraine, sanctions risks are affecting trade with Russia.

The US embargoed Russian oil on March 10, and Europe is under pressure to follow suit. That is creating both a drop in real demand for Russian oil, and a psychological aversion to it.

“There is a potential stigma associated with Russian trades,” said a financial officer at a Piraeus-based tanker operator on condition of anonymity.

“Despite some of these trades still being legal, owners might not want to associate themselves. They might be asked by American oil companies if their vessels have performed recent Russian trades, and this could create a headache. Owners would rather avoid it.”

Windfall rates show how desperate Russia is to export its oil, according to Eva Tzima, head of Research & Valuations at Seaborne Shipbrokers, who said: “The rate for the Black Sea-Mediterranean Suezmax route was quoted at about $16,000/day on February 24 [when war broke out], and managed to break above $157,000/day by March 1.”

The same adverse psychology and political risk associated with Russian oil is lowering demand for its coal and agricultural exports.

“Several importers steer clear of Russian grains and fertilisers despite the fact that these are not sanctioned trades,” said Tzima. “Replacement cargoes in this case would come from France, East Coast South America, and the US, and … importers will have to turn to the longer-haul supplies.”

Shifting trade routes

Those longer hauls cross the Pacific and Atlantic – known as the backhaul route.

“What’s playing favourably for us is that Australia is making up the shortfall to Europe, and that’s fantastic for us, because Australia to Europe is a big journey,” said Ziad Nahkleh, CEO at TEO Shipping, which operates dry bulkers.

Backhaul shipping rates rose by as much as 26 percent between February 24 and March 23 across a range of bulk carrier types.

“The backhaul never used to be $25,000,” said Nahkleh. “It used to be $5,000 to $6,000 a day. Who in his right mind would buy coal from Australia for Europe?”

Committing ships to this 30 to 40 day journey takes them off the market for long periods, reducing available capacity on other routes and raising hauling prices across the board.

This realignment of trade is advancing by the day. Europe imported about a third of its natural gas from Russia last year, and is keen to find alternative sources.

Germany clinched a political agreement with Qatar on March 20 to buy “long-term LNG supplies”. Separately, European Union leaders reached an agreement with United States President Joe Biden on March 25 to increase deliveries of US Liquefied Natural Gas (LNG) by 15 billion cubic metres this year, and an additional 50bcm within the decade.

 If this were achieved, the US would be providing about a fifth of European gas consumption. That will further boost LNG carrier rates, which in the first month of the war have almost tripled to over $70,000 a day.Europe also aims to replace Russian oil and coal by the end of the decade, fuelling long-haul trades for years to come.

Global Port Congestion Remains Elevated: New Highs In Bulkcarrier and Car Carrier, Increasing Trend Again in Container

Disruption to global logistics and supply chains remains widespread, with overall port congestion now running above the levels seen last year and specific container fleet congestion trending towards previous highs. Discussing recent trends in the Clarksons Port Congestion Index, Steve Gordon, Managing Director of Clarksons Research, commented:

Disruption to global logistics and supply chains remains widespread, with the Ukraine conflict and new Covid-19 lockdowns in shipping’s biggest market, China, contributing to further elevated levels of delay across the global maritime transportation system. Port congestion remains a major contributor to elevated freight and strong market conditions in many shipping segments, with the ClarkSea Index, a cross-segment charter index for global shipping, reaching $41,377/day on 18th March, just 3% below the 12-year high seen in October 2021.

Congestion trends at containership ports remain acute, with the Clarksons Containership Port Congestion Index (representing the level of fleet capacity globally in port or an associated anchorage each day) rising to 35.2% (7dma) on 16th March from 33.7% (7dma) a month earlier, impacted by operational “knock-on” effects from the Russia-Ukraine conflict (e.g. delays due to customs inspections) at container ports globally and new “lockdowns” in China. This compares to a ‘pre-Covid’ (2016-19) average of 31.3% although remains below the October 2021 peak of 37.5%.

Key congestion “hotspots” across the container network this year include the US, China and Northern Europe. On the US East Coast, capacity at port totalled 0.9m TEU on 16th March (7dma), up by 24% on the start of the year. In China, where new Covid-19 outbreaks have led to fresh local “lockdowns”, capacity at port totalled 2.2m TEU on 16th March (7dma), up 18% since start month. In the UK and Continental Europe, capacity at port totalled 1.2m TEU on 16th March (7dma), up by 18% since the start of the conflict in Ukraine.
The level of Bulkcarrier capacity at or around port globally has increased further this year; our index (covering Cape and Panamax sized vessels that typically move cargoes such as iron ore, coal and grain) reached a new record of 36.3% on 21st February (7dma) and averaging 35.0% in the ytd, up from 32.8% in 2021, and a ‘pre-Covid’ average across 2016-19 of 29.7%.

In particular early 2022 saw a major increase in bulkcarrier port congestion in Indonesia as a result of the country’s ban (now removed) on coal exports introduced at the start of January in order to shore up domestic supply. As of 14th January, 197 bulkcarriers (14.4m dwt, largely Panamaxes and Handymaxes, 7dma) were at major Indonesian coal load ports, up from 122 ships (8.4m dwt, 7dma) at the start of the year.

Port congestion related to Car Carriers has also seen a new record high, with the level of Car Carrier capacity in and around port standing at 28.1% on 16th March (7dma), compared to a 2021 average of 25.0% and a ‘pre-Covid’ average (2016-19) of 22.7%.
Our overall cross-ship type Deep Sea Cargo Vessel* Port Congestion Index (showing the level of fleet capacity globally at port or an associated anchorage each day) has averaged 31.5% in 2022 ytd, compared to 30.7% across 2021 and a ‘pre-Covid’ average across 2016-19 of 29.5%.

Our earlier expectation that congestion would take some time to unwind has been amplified by the impacts of the Ukraine conflict and the new Covid-19 disruption in China. We also expect the direct and indirect impacts of the Ukraine conflict (e.g. vessel re-positioning, changing trading patterns, stockpiling, sanctions, chartering policies – see our Russia / Ukraine Shipping Impact Assessment series on Shipping Intelligence Network for more detail) to create further “inefficiencies” across the maritime transport system.
Source: Clarksons Research

Global Port Congestion Remains Elevated: New Highs In Bulkcarrier and Car Carrier, Increasing Trend Again in Container

The war between Russia and Ukraine will have far-reaching effects on world trade, technology and shipping. For shipping lines, it is important to identify and understand the implications of the war, as well as the sanctions on Russia that they will have on the shipping and cargo market. Xeneta Chief Analyst Peter Sand spoke about how Russia’s seaborne trade is falling after the invasion of Ukraine.

“Shippers with freight bound for Russia ask, ‘What can I do?’ As major European carriers stopped calling at Russian ports, importers with cargo bound for St. Petersburg and Novorossiysk are facing a number of problems,” Sand said.

“Their cargoes are now spread across different ports, all in the wrong place, with the main (European) ports shunning Russia-bound container handling altogether,” he added.

Xeneta’s figures also show a drop in rates on trades in the Black Sea and Baltic regions, as trade with Russia and Ukraine came to a halt due to sanctions and decisions by many shipping lines not to accept further bookings. to or from the region. In general, shippers can expect to see higher bunker adjustment factors [BAFs] as fuel costs rise.

Impact on supply and demand

For Sand, “global logistics has become a little more difficult to manage than the critical situation suggests. I guess everyone knows that global supply chains are quite strained at the moment as a result of two years fighting Covid-19. Russia’s exclusion from global shipping and networks, which account for 2% to 3% of global containerized goods, is clearly another disruption on top of what we already see in the market.”

For Russia, the suspensions will be a further blow to its economy and the living standards of its citizens, as imported goods risk becoming scarce. Prices of some electronics have already soared by around 30% as the ruble plunged.

“This means more for Russia than for world trade,” said Sand, who stressed that “it will have an impact on the general public in Russia, as well as on companies,” he stressed.

World trade is already affected by sanctions on Russia

Sanctions against Russia are beginning to wreak havoc on world trade, with potentially devastating consequences for fuel and grain importers, and fueling inflation on a planet trying to overcome the supply disruption stemming from the coronavirus pandemic.

Since the Russian invasion of Ukraine began, hundreds of tankers and cargo ships have changed routes to avoid passing through the Black Sea and dozens of them are stranded in ports or on the high seas, unable to unload their valuable cargo.

Russia is one of the main exporters of grains and oil, metals, wood and plastics, goods used around the world in a number of products and industries, from steel factories to car companies.

Russia has some 2,000 tankers or cargo ships, but only a few have so far been affected by Western sanctions.

The freezing of assets of major Russian banks, however, affects all import and export trade. Compounding the picture, firms like Apple and Nike, and big cargo carriers like Maersk, are leaving Russia, whose extensive trade ties with the West are all but severed.

“This is an earthquake like we have never seen,” said Ami Daniel, co-founder of Windward, a maritime intelligence firm that advises governments. “Companies are going well beyond their legal obligations and taking action based on their own value scales, even before their customers ask for it.”

A possible safety valve for Russian exports is China, whose growing economy needs natural resources. But China, perhaps the main beneficiary of globalization, has so far shown little willingness to support Russian President Vladimir Putin, despite abstaining from a United Nations vote to condemn Russia’s incursion into Ukraine.

The impact of sanctions is felt strongly

Interunity Management Corp SA, a Greek shipping company whose 60 cargo and tankers are operated by 200 Russian and Ukrainian captains.

After the invasion, the Russian half of that staff wondered how they would get back home in view of the European Union’s suspension of flights to Russia. The Ukrainian half, for its part, did not know if they would have a country to return to.

A Ukrainian sailor on a tanker stranded in the Gulf of Mexico was so distraught that he demanded to be allowed to disembark months before his contract was due, according to George Mangos, one of the directors of Interunity.

“He told me that he wanted to disembark at the next port to go fight for his country,” Mangos said. “Operating a very sophisticated tanker, with a dangerous cargo, is stressful under normal circumstances. The only thing we can do is ask the staff to focus on work and not think about politics. It’s tough, but they are very stoic people and I’m very impressed with their dedication.” For now, the impact of the war on world trade is being felt most in the Black Sea, where Russian and Ukrainian ports are major stops for shipments of wheat and corn. Traffic has come to a complete standstill, suspending deliveries from the world’s second-largest grain exporter. Unlike oil production, which can be increased quickly, increasing grain supply takes time. Ukraine produces 16% of world corn exports and, together with Russia, they account for 30% of wheat exports. With market disruption, many poor countries that depend on these imports are likely to experience severe shortages. Among those that could be hit the hardest are Turkey, Egypt and India, which rely heavily on Russia for everything from staples used for bread to natural gas and tourism. Approximately 78% of the wheat that Turkey imports comes from Russia. Ukraine contributes 9%. This wheat is used in numerous sectors of the Turkish food industry. India imports 80% of the oil it consumes, much of it from Russia. It also imports Russian metals used in the fifth largest automotive industry in the world. In the United States, the main impact will be felt at gas stations, where rising prices are aggravating inflation that is rising at its highest rate in four decades.

Russia was the third largest source of oil products sold in the United States — behind only Mexico and Canada — and responsible for 8% of imports. It is also the second largest supplier of platinum, used to make automobile exhaust pipes. Overall, however, Russia was only the 20th largest supplier of goods to the United States in 2019, according to government statistics. Wheat prices rose more than 55% after the invasion. Oil prices, which had already been on the rise, reached $110 a barrel for the first time since 2013. And fees charged for hiring tankers have risen as much as 400% as oil traders scramble to secure suddenly scarce transportation. It is not clear what direction the situation will take or what other unexpected consequences there may be. While sanctions are not always enforced, never have so many punishments of a world power been adopted with such speed and coordination. The situation worries Tinglong Dai, an economics professor who studies supply chains at Johns Hopkins University.

World trade is already affected by sanctions on Russia
Maersk halts seaborne shipping to Ukraine until end of Feb

Maersk halts seaborne shipping to Ukraine until end of Feb

Shipping group Maersk said on Thursday it has halted all port calls in Ukraine until the end of February and has shut its main office in Odessa on the Black Sea coast, as a consequence of the conflict with neighbouring Russia.

“Services in Russia remain available while we have decided not to call any ports in Ukraine until 28 February and stop acceptance orders to and from Ukraine up until further notice,” a Maersk spokesperson said.

All of the company’s 60 employees in Ukraine were at home and safe, the spokesperson added.

Maersk has two container shipping routes in Ukraine and they call at the port of Pivdenniy some 30 kilometres (19 miles) east of Odessa. (Reporting by Stine Jacobsen and Jacob Gronholt-Pedersen; Editing by Alison Williams and Susan Fenton)

China’s top 10 ports handled more than 200 million TEUs in 2021

China’s ports at each end of major East-West routes have seen an explosion in throughput numbers during the pandemic, with some like Tianjin posting double-digit growth last year. As a consequence, China’s ten largest ports handled more than 200 million TEUs in 2021, Alphaliner reported.

Overall, China’s top ten ports processed 202.5 million tons, an increase of 7.1% from 2020. This growth was mirrored across the country, as China’s Ministry of Transportation reported that total throughput annual volume of containers was 282.7 Mteu, also an increase of the order of 7%.

There is currently no change in the national ranking of China’s top 10 ports, but growth rates varied widely during the year. At the high end, North China’s largest port, Tianjin, posted a 10.4% increase in 2021, while Qingdao, which had been a strong performer in 2020, posted 7.7% growth. Yingkou was the only one of the top ten to lose traffic throughout the year.

However, sharp declines were seen in many ports at the end of the year with the re-imposition of COVID-19 restrictions. Tianjin, for example, lost 15% of its year-over-year traffic in December.

Outside the top ten, Dalian had another tough year, with the port slipping from 19th to 29th place globally in 2020 as volumes plummeted from 8.6 to 5.1 Mteu. In 2021 it saw another drop to 3.67 Mteu, a decline of 28%, as the port battled regional competition and severe congestion issues. However, bucking the trend, it rebounded strongly in December, posting gains of almost 40% year-on-year for the month. The port imposed a new congestion charge on December 29.

China’s top 10 ports handled more than 200 million TEUs in 2021
Hapag-Lloyd’s new weekly express China-Europe loop will replace 2M slot charter

Hapag-Lloyd’s new weekly express China-Europe loop will replace 2M slot charter

Hapag-Lloyd has reacted to the 2M’s decision to terminate its slot charter deals with rival carriers by launching a standalone China to North Europe loop.

From April, Hapag-Lloyd will commence the direct service outside its THE Alliance VSA linking the Chinese port of Dachan Bay with North Europe’s third-largest container hub, Hamburg.

Dubbed the China Germany Express (CGX), the two-port loop will deploy eight panamax vessels and offer a 27-day headhaul transit time.

“It will replace our Far East Loop 6, 7 and 8 services, all slot charters on 2M services,” said the carrier.

Hapag-Lloyd surprised the industry in January 2020 by signing the slot-charter deal with 2M partners Maersk and MSC to buy space on the 2M’s AE2/Swan, AE5/Albatross and AE10/Silk loops for its own loops 6, 7 and 8.

At the time Hapag-Lloyd said the agreement would “offer a higher frequency to some destinations” and “a direct service between ports either not served by ships of THE Alliance or not directly paired”.

Analysts suggested that access to direct calls at Scandinavian and Baltic hubs via the 2M loops was the main interest for the German carrier and, at the time, the 2M welcomed the additional guaranteed revenue.

Meanwhile, despite the new CGX service only calling at Hamburg, Hapag-Lloyd will be able to use commercial feeders for onward carriage and still achieve a very respectable total transit time for its Scandinavian and Baltic import customers.

Hapag-Lloyd said the first sailing of the new weekly service was scheduled for the beginning of April. So far, the carrier has not named any vessels that will be deployed on the loop, but due to the lack of open charter tonnage on the market, it will probably need to source ships from other services within its network.

Andreas Buetfering, senior director trade manager Far East at Hapag-Lloyd, claimed the new loop’s “fast connection” would “reduce the complexities” and “increase reliability” for customers.

The Loadstar understands that Hapag-Lloyd has a base of contract cargo for the new CGX service that needed to be protected. Moreover, increased long-term rates, probably agreed subject to reliability and transit times, can support the high cost of the standalone small ship service.

The news from Hapag-Lloyd comes just a day after MSC announced that the 2M was ending its Asia-US west coast slot charter agreement with South Korean niche carrier SM Line from May, and a week after the 2M and Zim said their collaboration on that route, along with the MSC-Zim deal on the Asia-Mediterranean tradelane, would cease in April.

Maersk expects supply chain chaos to buoy 2022 profits

COPENHAGEN: Shipping group Maersk expects 2022 earnings to be around as high as last year, it said on Wednesday, as the supply chain disruption that sent freight rates soaring extends into the first half. 

It expects underlying earnings before interest, tax, depreciation and amortisation (EBITDA) at around $24 billion this year, similar to last year, but slightly below the $24.4 billion expected by analysts in a poll gathered by the company. 

Its shares were down around 2% in early trading and have fallen 11% since reaching an all-time high in mid-January. 

While Maersk’s customers faced “severe challenges”, the record-high rates caused by pandemic-related congestion at ports, container shortages and a surge in consumer demand led to “record-high growth and profitability in Maersk,” Chief Executive Soren Skou said in a statement.
He said the current market situation was expected to persist into the second quarter before easing later in the year.

Maersk, which handles about one in five containers shipped worldwide, increased dividend payout to shareholders to a total of 47 billion Danish crowns ($7.20 billion), or 2,500 crowns per share, compared to 330 crowns per share a year earlier.

The company reiterated preliminary fourth-quarter results published on Jan. 14, when the company said a fall in ocean-going container volumes by 4% was more than offset by freight rates improving 80% compared with a year earlier.

Maersk said last month that it had been overtaken by Swiss-based container group MSC as the world’s biggest shipper.

Also on Wednesday, Danish logistics company DSV predicted the cont

Maersk expects supply chain chaos to buoy 2022 profits
Klochubar and Thune introduce Ocean Shipping Reform Act in the Senate

Klochubar and Thune introduce Ocean Shipping Reform Act in the Senate

Following the passing of the Ocean Shipping Reform Act (OSRA) in December 2021 by the United States House of Representatives by a convincing 364-40 vote, the bill was introduced yesterday in the Senate by Senator Amy Klochubar (D-Minn.) and Senator John Thune (R-S.D.).

The main objectives of the bill, according to Klochubar and Thune, is to update federal regulations for the global shipping industry, adding that the bill “would level the playing field for American exporters by making it harder for ocean carriers to unreasonably refuse goods ready to export at ports, and it would give the Federal Maritime Commission (FMC) greater rulemaking authority to regulate harmful practices by carriers.”

Key components of the Ocean Shipping Reform Act of 2021 include:

  • requiring ocean carriers to certify that late fees —“detention and demurrage” charges—comply with federal regulations or face penalties;
  • shifting burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier;
  • prohibiting ocean carriers from unreasonably declining shipping opportunities for U.S. exports, as determined by the FMC in new required rulemaking;
  • requiring ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and 20-foot equivalent units (loaded/empty) per vessel that makes port in the United States;
  • authorizing the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate;
  • establishing new authority for the FMC to register shipping exchanges;
  • allowing for third parties to participate in legal cases brought by the FMC against ocean carriers for anticompetitive harm; and
  • letting successful third parties in those legal cases receive money damages, with additional financial penalties designed to deter anticompetitive conduct

“Congestion at ports and increased shipping costs pose unique challenges for U.S. exporters, who have seen the price of shipping containers increase four-fold in just two years. Meanwhile, ocean carriers have reported record profits,” said Klobuchar in a statement. “This legislation will help level the playing field for American exporters so they can get their goods to market in a timely manner for a fair price. As we work to improve our supply chains, I’ll keep fighting to establish trade opportunities for the U.S.”

And Thune said in a statement that South Dakota producers expect that ocean carriers operate under fair and transparent rules, but unfortunately, that is not always the case, and producers across America are paying the price.

“The improvements made by this bill would provide the FMC with the tools necessary to address unreasonable practices by ocean carriers, holding them accountable for their bad-faith efforts that disenfranchise American producers, including those throughout South Dakota, who feed the world,” he said. “Especially with record inflation in prices of goods, this legislation would also benefit consumers by promoting the fluidity and efficiency of the supply chain.”

The House’s passing of the OSRA and this week’s introduction of the legislation in the Senate follow a November endorsement issued by the White House, amid various federal efforts to help curtail the ongoing port congestion and global supply challenges, stemming from the pandemic. At the time, the White House noted that Congress needs to provide the FMC with an updated toolbox needed to protect exporters, importers, and consumers from what it called unfair practices, adding that this bill serves as a good first step on the path to the “longer-term reform to shipping laws that would strengthen America’ global competitiveness.

This legislation represents the first type of its kind going back to the Ocean Shipping Reform Act of 1998.

Since then, China was granted permanent normal trade relations, or “most-favored nation” status with the U.S. in December 2001 after it was admitted to the World Trade Organization. In 2001, the U.S. trade imbalance with China stood at around $83 billion, based on U.S. Census Bureau data, with the trade imbalance at $310 billion in 2020.

This bill was strongly endorsed by Steve Lamar, president and CEO of the American Apparel & Footwear Association.

“The shipping crisis has seen excessive costs passed onto American companies by international carriers looking to take advantage of the situation,” said Lamar. “The Ocean Shipping Reform Act meets a dire need for increased enforcement by the Federal Maritime Commission, and the apparel and footwear industry strongly encourages the Senate to pass this bill quickly so that President Biden can sign it into law and end these predatory practices.”

Paul Bingham, Director, IHS Markit Economics and Country Risk / Transportation Consulting, said that there were not any big surprises in the House version of the OSRA.

“However, this legislation will bear watching as it evolves, as it could force helpful changes in some of the practices under current law that have so upset BCOs, especially exporters during the pandemic,” he said. “Carriers may not be happy with this legislation, but they can’t be shocked by the reaction to the consequences of the situation they’ve benefitted from financially so strongly this past year.”

And he added that the final language of what would pass the Senate, go through reconciliation and then be signed by the President in to law is what really matters to the industry.

“If the language from the House bill survives in the final law passed, it will change how the FMC approaches their role with the added responsibility to promote exports and consider carriers services standards from a public interest perspective,” he said.  “The annoying detention and demurrage charges having the burden of proof shifted to the ocean carriers would help shippers.  The required quarterly reporting by the carriers to the FMC sounds useful but in reality likely to do little since that information is already available through commercial data vendors such as PIERS and Panjiva.”

Brian Whitlock, Senior Director Analyst with Gartner’s Supply Chain practice, explained that the most positive impacts will come from the bill’s provisions directing the FMC to establish rules prohibiting unjust and unreasonable detention and demurrage fees, as well as rules requiring carriers to meet minimum service standards.

“The bill also shifts the burden of proof for reasonableness of detention and demurrage to carriers, meaning many more cases will likely be brought to the FMC,” he said. “The requirement to meet minimum service standards will finally bring relief to U.S. exporters who have seen a decline in exports of 22% (according to MarketWatch). No longer will carriers be able to take advantage of the U.S.’s highly profitable eastbound trade while ignoring westbound exports.”

As for how OSRA could make the FMC a more effective regulator, Whitlock explained that that the FMC has had a more passive role in ensuring fair trade given the limitations of its directives.

“Going forward, it will be much more active in defining how carriers must behave and holding them accountable through their rules making process and remedies, including refunding overcharges and issuing penalties,” he said. “It’s likely that, once this bill passes in the Senate, we will see an immediate change in how carriers treat detention and demurrage charges, as well as how they support exports, even without knowing the rules the FMC may set.”

With the expectation that the impact of the OSRA on supply chain delays and port congestion is likely to be limited, Whitlock pointed out that global ocean markets are highly disrupted due to significant increases in demand combined with major disruptions that have had the result of reducing supply of ships and containers. And he added that disruptions have also caused a precision network to no longer be reliable, having to operate with surges in volumes between ports globally.

“This has been the main cause of U.S. port congestion, combined with increased volume and port inefficiencies,” he said. “This bill will not impact the variables of demand and supply nor will it change how disruption impacts the market.”

On a longer-term basis, Whitlock said the FMC should consider how ocean carriers and terminal operators at U.S. ports combine to deliver minimum service standards.

“For example, in Los Angeles and Long Beach ports, five of the 13 terminals are owned or operated by carriers,” he said. “This combination should be looked at closely to ensure they are operating efficiently and in ways that reduce or avoid detention and support timely exports.”

American Associations of Port Authorities (AAPA) President & CEO Chris Connor told LM late last year that when the original drafting of this bill was being done, the AAPA could not support the bill as written.

“It is addressing a lot of issues that have come to light through the pandemic and supply chain crisis in this one bill,” he said. “There are provisions insight the bill that undermine freight mobility, meaning it is putting requirements on ports and marine terminal operators, as well as carriers, to pre-certify the legitimacy of charges for demurrage and detention. In this environment, where the freight system is already congested and there are bottlenecks across the entire freight mobility network, we are just uncomfortable and reluctant to endorse something, which may undercut the very issue that is plaguing us already by putting more requirements on the operators to pre-certify these charges in advance.”

Valenciaport improves pre-pandemic activity: More than 5.6 million TEUs in 2021 and 85 million tonnes mobilised

Valenciaport has closed the 2021 financial year with over 5.6 million TEUs (standard 20-foot container) and 85 million tonnes, numbers that improve activity with respect to 2020 and 2019, the latter being a pre-pandemic year. The import/export pull of Spanish companies operating through Valenciaport’s docks has been key to these records and reaffirms the Port of Valencia as a strategic ally of the economy. Moreover, these figures, which confirm the forecasts of the Port Authority of Valencia (PAV), place the Valencian port as the fourth port in Europe in terms of containers, surpassing the Greek port of Piraeus, and behind Rotterdam, Antwerp and Hamburg.

On the verge of maximum capacity

According to the APV Statistical Bulletin, a total of 5,604,478 TEUs were moved through Valenciaport last year, an increase of 3.25% over 2020 and 3% over 2019. The president of the PAV, Aurelio Martínez, analysed the figures for the end of the year 2021 which has been characterised by “having two parts, in the first we grew at a very strong rate while in the second this increase slowed down a little. These figures show that the Port of Valencia has the beginning of saturation. We are close to our maximum capacity of 7.5 million TEUs and, when there is a lot of operational cargo, these limitations are already noticeable. That is why the new northern container terminal is essential if we want to continue to be a port of reference in world traffic”.

In 2021, the dynamism of the business fabric operating through Valenciaport must be highlighted, both in sales abroad and in the acquisition of products. Thus, full containers of cargo reached the figure of 1,081,103, 13.89% more than in 2020, while those of unloading were 837,584 with an increase of 17.38%. “These figures are very positive and reflect the activity of Valencian and Spanish companies over the last year. We have handled between import/export almost two million TEUs and this is where the service provided by the port to the companies in our hinterland, which represents 41% of the full export and import containers moved by the Spanish port system, is evident”, explains Aurelio Martínez.

On the other hand, the figures for 2021 reflect a decrease of 3.45% of full transhipment containers (those which for strategic reasons are transported to main ports such as Valencia and from here are transferred to the ports of destination). For their part, empty containers have grown by 0.74% in 2021.

5% more freight traffic

In total, Valenciaport handled 85,269,726 tonnes of goods in 2021, representing 5.42% and 5.18% more than in 2020 and 2019, respectively. Compared to 2020, liquid bulk (44.69%), solid bulk (16.11%), non-containerised cargo (16.15%) and cargo arriving by container (1.2%) have increased.

In this period, ro-ro traffic (system by which a vessel transports cargo on wheels) has exceeded 12.86 million tonnes, 14.61% more than in 2020. The transport of automobiles as freight in 2021 amounted to 493,697 units, representing a decrease of 7.4%.

In terms of passenger traffic, 635,689 people travelled during these 12 months, 51.67% more than in 2020. Of these, 130,869 have been cruise passengers who have arrived in Valencia since this activity began at the end of June.

China, the main trading partner

In full container traffic, China continues to be Valenciaport’s main trading partner with 612,497 TEUs handled in 2021 and an increase of 14.37%. In terms of dynamism, the growth of Morocco (26.96%), Italy (26.78%) and Israel (22.74%) stands out. It should also be noted that the United States is the most important country in the movement of export containers, with a total figure of 145,953.

In terms of sectors, all of them have grown in 2021. The most important sector is vehicles and transport elements with 11.5 million tonnes, followed by the agri-food industry with 8.96 million, construction materials with 8.19 million and other goods with 7.91 million tonnes. The most dynamic in foreign sales were energy products with an increase of 73%, construction materials with a rise of 24.61%, iron and steel with a growth of 18.41%, and agri-foodstuffs and livestock with an increase in exports of 17.53%.

Valenciaport improves pre-pandemic activity: More than 5.6 million TEUs in 2021 and 85 million tonnes mobilised