New Megaships Being Deployed in 2023

THE Alliance members Hapag-Lloyd, Ocean Network Express, HMM, and Yang Ming have finalized their network plans to deploy larger vessels on the Asia-Europe and trans-Atlantic trades in April 2023.

Hapag-Lloyd said a series of new fuel-efficient vessels of 23,500 TEU will begin to replace smaller vessels on the Asia-North Europe trade lane and will be integrated with megaships from ONE and HMM. Vessels of 14,000 to 15,000 TEU will be deployed on the Asia-Mediterranean trade and from Asia to the U.S. East Coast on services via the Suez and Panama canals.

In addition to offering more sustainable services, the move is also intended to deploy bigger vessels that make fewer port calls while cutting down on transshipment, Hapag-Lloyd CEO, Rolf Habben Jansen outlined in a media briefing.

“We have done a lot to simplify our network and will do more as we move forward, and that means less services with bigger ships. It is also important to simplify transshipment. We used to do transshipment in quite a few locations, but we want to consolidate that to 10 to 12 hubs around the world because we believe it makes our network more resilient,” he added.

The global orderbook currently stands at 6.6 million TEU, or almost 30% of the total fleet in service, according to data from S&P Global, parent company of the Journal of Commerce.

Source: Journal of Commerce

Intra-Asia Connectivity Gets Boost from Ocean Carriers

Ocean carriers are enhancing their intra-Asia service connections as U.S. and European importers turn toward alternative sourcing markets within Southeast Asia instead of China. The new markets are also providing growth opportunities following a drastic drop in demand for long-haul services leading to extra capacity.

ONE’s CEO, Jeremy Nixon, speaking as a guest during the Port of Los Angeles monthly media briefing, said the line’s U.S. customers were “trying to decouple their reliance on China”. He noted that Chinese exports accounted for 70% to 80% of ONE’s Trans-Pacific Eastbound liftings. “We have to adjust our loops and services, so we are not just covering China. We have to cover these other markets from where U.S. shippers will increasingly source,” said Nixon.

MSC and Maersk are among carriers that recently announced new intra-Asia services. MSC said the first of its two services would connect Thailand with China, Singapore and Malaysia, while the second would link Thailand and Indonesia.

Singapore-based Pacific International Lines’ (PIL) also introduced a new hub and spoke link connecting the South China ports of Xiamen, Nansha and Shekou to Manila and Cebu in the Philippines. The company said the development was “timely”, citing a strong Philippine economy and the implementation of the Regional Comprehensive Economic Partnership (RCEP) agreement which is “expected to benefit China-Philippines trade”.

Source: The Loadstar

Capacity Surplus in Air Cargo Market as 2023 Approaches

The air freight market will continue to be saturated with excess supply going into the new year. Capacity has continued to increase with rebounding passenger travel on long-haul routes adding more belly capacity to the market. As congestion continues to ease for ocean shipping and inland supply chains, U.S. and European importers are also switching back to containerized transport.

Despite the expansion of passenger networks and flight frequencies, it is unlikely that long-haul import trade lanes out of Asia will return to pre-pandemic levels in the coming year. Headwinds in the air cargo market continue to persist, including a possible global recession, high fuel prices, rising inflation, the war in Ukraine and the ongoing U.S.-China trade war. These factors serve to weaken both purchasing power as well as freight demand.

The shift of China’s policy toward COVID containment and management will be tested by any widespread outbreak. A shortage of ground handlers and air crew will be another problem faced in 2023, possibly causing delays. The air cargo market outlook remains subdued as demand continues to remain soft.

In an uncertain market and eroding spot rates, airlines will likely shift away from longer-term contracts to shorter-term deals or withdraw them entirely on some trade lanes. Demand for chartered capacity will also weaken as belly cargo space floods back into the market, with only the larger global forwarders wanting to control their own volume via chartered freighters.

Source: Journal of Commerce

EU Moves to Include Shipping in ETS

The European Union (EU) and European Parliament reached an agreement on December 17, 2022, to reform the EU Emissions Trading System (ETS) which now includes the maritime sector under the scheme. Going forward, shipping companies will have to pay for carbon emissions in Europe.

The new regulation will take effect by 2024, with a phase-in period spanning several years. According to analyst firm Siglar Carbon, the new agreement follows that 40% of 2024 emissions will have to be paid in 2025, 70% of 2025 emissions will have to be paid in 2026 and 100% of 2026 emissions will have to be paid in 2027.

Failure to comply with regulations could result in a fine or denial of ocean access to carriers. The rules incorporate all large vessels over 5,000 tonnes. General cargo vessels and off-shore vessels between 400-5,000 gross tons will be included in the regulation from 2025 and their inclusion in EU ETS will be reviewed in 2026. From 2026, payment will be required for the emission of methane and nitrous oxide.

The regulation will be consistently evaluated and could be expanded if the EU sees lack of progress in the UN’s International Maritime Organization (IMO). All that remains is for the EU Parliament and Council to pass the new ETS, but that is only a formality, Siglar Carbon noted.

Many leading carriers have warned the adoption of the regulations will add to the cost of shipping.

Source: Shipping Watch

Ports of Los Angeles and Long Beach to end Container Dwell Fee

The ports of Los Angeles and Long Beach have announced plans to phase out the program created to ease severe congestion on the West Coast. The container dwell fee policy will end on January 24, 2023. Neither port had ever issued the fee since it was announced on 25 October, 2021. The two ports combined have seen a decline of 92% in long-dwelling cargo on their docks over the last 14 months.

“This fee was conceived as an incentive to ease congestion, keeping imported goods flowing to stores across America. Measured by this standard, we can all appreciate the policy’s success, and best of all, the fee was never implemented,” said Port of Long Beach Executive Director Mario Cordero.

“I said when we launched this program that I hoped we would never collect a dime because that would mean that containers were moving off our docks. And that’s exactly what occurred,” said Port of Los Angeles Executive Director Gene Seroka.

Cargo volumes have softened in recent months at the ports of Los Angeles and Long Beach, registering a 21% decline in November compared to the same period last year. Shippers are avoiding the West Coast due to uncertainty over labor negotiation and shifting cargo flows to East and Gulf Coast ports. Consequently, these ports including New York and Houston are considering their own dwell fees as they handle record volumes and experience congestion.

Meanwhile, on the West Coast, Seroka and other officials are focused on rebalancing cargo flows and bringing more containers back to Los Angeles.

Source: Supply Chain Dive

November U.S. Truck Tonnage Decreased 2.5%

The ATA’s For-Hire Truck Tonnage Index decreased a further 2.5% in November following a drop of 1.2% in October. The Tonnage Index is largely calculated on contract freight, rather than the spot market freight.

“For-hire truck tonnage saw the largest single monthly decrease in November since the start of the pandemic and a total drop of 3.7% in October and November,” said ATA chief economist Bob Costello. However, the ATA’s for-hire tonnage index still recorded a 0.8% uptick year-over-year in November.

Costello said the decline in freight volumes “match anecdotal reports of a soft fall freight season as well as a slowing goods-economy generally”. He noted that housing-related freight was especially weak. With trucking accounting for 72% of freight tonnage in the U.S., it functions as a barometer of the overall economy.

According to the ATA, the year-over-year increase was the 15th consecutive gain but also was the smallest increase over that period. In October, the index was up 4% from a year earlier. Year-to-date through November, tonnage is up 3.7% compared with the same period in 2021.

Source: American Trucking Association

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