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Freight rates continue to climb, no decline in congestion at ports

Freight rates continue to climb, no decline in congestion at ports

Has been off to an ominous start for shippers – no let-up in climbing freight rates, port congestion globally at higher levels and demand continuing to increase in key markets like the U.S.

The Drewry’s composite World Container Index (WCI) increased 1.6 percent to $9,698.33/40ft container this week. This is 82 percent higher than a year ago.

The average composite index of the WCI, assessed by Drewry for year-to-date, is $9,551/40ft container, which is $6,656 higher than the five-year average of $2,895 per 40ft container.”

Spot rates on transpacific lanes have steadily been increasing for the seventh consecutive week, Drewry added.”Freight rates from Shanghai–Los Angeles gained five percent to $11,197 Drewry is expecting rates to climb higher in the coming week.

No decline in congestion, K+N highlights 11.6mn TEU waiting days
Congestion across Los Angeles/Long Beach ports continues with 103 container ships backed up as of Thursday, January 20, 2022, according to information from Captain J. Kipling (Kip) Louttit, Executive Director, Marine Exchange of Southern California & Vessel Traffic Service Los Angeles and Long Beach San Pedro, CA.

The 103 total container ships backed up includes eight container ships at anchor or loitering inside 40 miles from the portsplus 95 slow speed steaming or loitering outside the Safety and Air Quality Area.

Kuehne+Nagel recently launched the Seaexplorer disruption indicator, and said the indicator reflects a waiting time and scale of 11.6 million TEU days. “In nine specific ports (Prince Rupert, Vancouver/Seattle, Oakland, Los Angeles/Long Beach, New York, Savannah, Hong Kong, Shanghai/Ningbo as well as Rotterdam/Antwerp), normal would be less than one million TEU waiting days. At present, roughly 80 percent of the disruption is associated with North American ports.”

The Omicron variant of Covid-19 is impacting the number of dockworkers with estimates of 1 in 10 staying home (as of last week), says Flexport in its weekly market update.

“Shippers with urgent cargo or those working to replenish depleted inventories are willing to pay premium rates for scarce space although some softening is expected to be seen post-CNY.”

Demand for space is increasing in the Indian subcontinent (ISC) as we are heading into the region’s traditional peak from January to April. “This time period is the last quarter of India’s financial calendar where we see demand rise as manufacturers look to close their books strongly to end the year.”

A slight increase is seen for the second half of January. Rates are expected to continue to climb into February as is typical during the ISC peak season, Flexport added. “Space to the USWC is and will remain a challenge into 2022. Port omissions on services to the USWC continue to cut capacity out of the ISC.”

Suez Canal expansion due to finish in July 2023

A project to expand parts of the Suez Canal is expected to be completed after two years of work in July 2023, the chairman of the Suez Canal Authority (SCA) said on Sunday.

The SCA announced accelerated plans to extend a second channel of the canal and to enlarge an existing channel after the Ever Given container ship ran aground and blocked the waterway for six days last year.

“The project will be completed in 24 months. We started in July 2021 and God willing we will finish in July 2023,” Chairman Osama Rabie said on the sidelines of an event in Dubai.

Ships pass through the canal in convoys, and the extension of the second lane would increase capacity by six ships, Rabie said, without giving further details.

The southernmost 30 km of the canal, where the Ever Given became grounded, is set to be widened 40 metres eastward and deepened to 72 feet from 66 feet, according to previously announced plans.

“This will improve ship navigation by 28% in this difficult part of the canal,” Rabie said.

The Suez Canal Authority and its companies were developing the entire project, he said.

Asked about shipments of Iranian fuel or oil passing through the Suez Canal despite U.S. sanctions on Iranian oil sales, he said: “There’s no discrimination when it comes to a country flag on ships, and Iranian oil does pass through the canal.”

Lebanese armed group Hezbollah imported Iranian fuel last year, a move it said was aimed at addressing shortages. Shipments were routed via Syria to avoid complications with sanctions.

Suez Canal expansion due to finish in July 2023
The US is spending billions of dollars deepening port harbors to make room for ‘mega’ container ships that are only getting bigger

The US is spending billions of dollars deepening port harbors to make room for ‘mega’ container ships that are only getting bigger

The Ever Ace, the world’s largest cargo ship, is as long as four football fields and can carry over 23,000 containers.

Container ships like this one have more than doubled in size over the past decade. While the massive vessels can hold more Amazon orders than you can imagine, the rapid growth presents a problem for US ports — the ships can’t fit into most harbors.

In response, the Army Corp of Engineers has allocated billions of dollars to deepen ports across the US.

From Massachusetts to Alabama, officials say ports must accommodate supersized ship dimensions in order to remain competitive in global trade.

At The Port of New York and New Jersey, a $2.1 billion harbor-deepening project freed up access to “post-panamax” ships, the name for mega ships too large to travel through the Panama Canal.

The vessels’ larger-than-life size may be contributing to the supply-chain crisis that’s caused record-breaking backlogs at US ports, one expert told Insider.

“Part of the problem is the ships are double or triple the size of the ships we were seeing 10 or 15 years ago,” Kip Louttit, executive director of the Marine Exchange of Southern California, said. “They take longer to unload. You need more trucks, more trains, more warehouses to put the cargo.”

Proponents of harbor-deepening projects like New York’s point to the benefits port economies have on local job markets. Other dredging proposals like North Carolina’s $834 million Wilmington Harbor Navigation Improvement Project face pushback over environmental concerns.

Global port congestion is getting worse+

According to data from Sea-Intelligence, overall, 11.5% of the global capacity has been taken out of the market due to vessel delays in November 2021, a slight improvement from 12.3% in October 2021.

“However, it seems that there is no sign of imminent improvement, while the normal state of affairs in the market is that 2% of global capacity is ‘trapped’ in delays somewhere in the world,” noted Sea-Intelligence. reports that 2021 was a year where demand grew 7% year-on-year, partly due to the downfall in early 2020, and at the same time capacity effectively was reduced by 11%. Sea-Intelligence used the bi-weekly customer advisories from the major South Korean container carrier, HMM, to calculate a terminal congestion index.

Maersk warns congestion is continuing to impact supply chains
The Maersk shipping company has also warned that port and terminal congestion will continue to cause delays to customers’ supply chains, with several major ports proving to be “particularly challenging”.

“Unfortunately, 2022 has not started off as we had hoped,” the company said in a customer advisory. “The pandemic is still going strong and unfortunately, we are seeing new outbreaks impacting our ability to move your cargo. General sickness remains high as key ports in key regions are seeing new coronavirus peaks.”

Global port congestion is getting worse+

La china Cosco comprará la hongkonesa Orient Overseas por 5.524 millones de euros

La china Cosco compra el 51% del mayor operador portuario de España tras la reforma de la estiba

Barco de mercancías de la china Cosco. Fuente: Cosco


Esta adquisición transformaría a la compañía pública china de transporte marítimo de mercancías en la tercera mayor empresa del sector a nivel mundial.

Cosco Shipping Holdings, junto a Shanghai International Port, han presentado una oferta para la adquisición de Orient Overseas International (OOIL) por 49.231,2 millones de dólares de Hong Kong (5.524 millones de euros), lo que transformaría a la compañía pública china de transporte marítimo de mercancías en la tercera mayor empresa del sector a nivel mundial.

La propuesta contempla el pago de 78,67 dólares hongkoneses en efectivo por cada acción de OOIL, una cantidad que representa una prima del 37,8%respecto al último día de negociación de las acciones de la compañía de Hong Kong.

Cosco Shipping Holdings y Shanghai International Port han llegado a un acuerdo con el principal accionista de la hongkonesa, con una participación del 68,7% en la compañía. Una vez completada la transacción, asumiendo que todas las acciones de OOIL se adhieren a la misma, Cosco Shipping Holdings controlará el 90,1% de la compañía, mientras Shanghai International Port ostentará un 9,9%.

Los ofertantes han acordado mantener la cotización de las acciones de OOIL una vez cerrada la compra de la compañía y han pactado el pago a OOIL de una indemnización de 253 millones de dólares (222 millones de euros) en caso de no completar la transacción.

De este modo, Cosco Shipping Lines, filial de Cosco Shipping Holdings, y OOIL operarán una flota de más de 400 barcos con una capacidad superior a los 2,9 millones de TEUs.

Las acciones de Cosco Shipping Holdings han registrado una revalorización del 4,9% en la Bolsa de Hong Kong, mientras los títulos de OOIL han despedido la sesión con una escalada del 19,6%.