World Maritime News(28)

Global trade surges past pre-pandemic level

Despite a severe blow at the start of the pandemic, the value of goods and services traded internationally is now at record highs. Trade figures reached a new record of $28.5trn in 2021, up 13% on pre-pandemic levels, according to the latest World Trade Outlook from UNCTAD. But while figures remained strong and even accelerated during the fourth quarter, the outlook for the first quarter is not as strong, with trade expected to slow in the first quarter. Economic growth forecasts for 2022 are being revised downwards due to concerns over inflation and China’s overheated real estate sector. “It is likely that global trade trends will reflect these macroeconomic trends, with lower than expected trade growth,” UNCTAD said.


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Outlook for container shipping market

The pandemic’s supply chain crisis has led to extraordinary situations in container shipping. When normal service resumes, overcapacity could rear its head again.

The expected long-term growth rate in east-west trade lane volumes may not be realized as near-shoring evolves. Also, the high rates of the pandemic have encouraged renewed ordering of ships, reported to be in the range of 20% of existing capacity.

The capacity ordered during the pandemic will come into service from late 2022 to 2024. It poses a threat to market stability as a long-term response to a short-term market aberration.

Hapag-Lloyd chief executive Rolf Habben Jansen told in a press briefing that he was still cautiously optimistic that we would see an easing in the market in 2022. According to him, the main logic is that once we get beyond the current omicron wave of Covid, most people should be able to get back to work. Once labor is available in terminals and inland locations again, we will start seeing an easing of congestion.


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A trend of using shipper owned containers

Freight forwarders are showing an increasing willingness to transport shipper-owned containers (SOC) as shippers continue to struggle with equipment availability and steep detention and demurrage costs.

In a report on a “mystery shopper” exercise, equipment positioning platform Container xChange found that the number of freight forwarders willing to accept SOCs had increased throughout the pandemic, as supply chain tightness had got increasingly worse.

SOCs are containers provided by a shipper, forwarder, or NVO and not by the container line with which one of those parties has booked capacity. The ownership of the container can take a few different forms, from being outright owned to leased long-term or short-term. SOCs are used primarily in situations where it can be difficult to guarantee access to containers — such as export-focused remote inland destinations but lack a corresponding flow of import containers — or for shipments being moved to project cargo sites where storage doesn’t exist and containers can be used instead. The growing use of SOCs is also part of a shipper trend toward locking in greater control of capacity, equipment, and inventory in a disrupted market.

On the other hand, container line efforts to build some resilience to their equipment fleets are likely to spur the production of new containers for the next few years.


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The situation on LA/LB ports

Containerships loitering off San Pedro Bay, home to the two largest ports in the US — Los Angeles and Long Beach — have fallen to zero for the first time since August of the past year. However, vessel delays because of port congestion remain a crucial concern, despite the fall in the headline number of ships waiting for berths off the US west coast. The number of ships queuing for berths at Los Angeles and Long Beach has fallen since it peaked at 109 vessels on January 9. Still, it remains elevated, with the Marine Exchange of Southern California reporting 75 vessels either at anchor, loitering, or slow steaming towards San Pedro Bay.

The peak in container volumes at LA/LB ports, and the US west coast, may have subsided and been showing signs of a slow reset. Analysis by Sea-Intelligence shows that volume growth since last August has been within a range of 12%-15%, considerably lower than the peak growth of 40.9%.

Terminal operators in LA/LB ports believe they have turned the corner on unprecedented congestion issues that have plagued the port complex for the past two years. Still, they say cargo flow will not improve significantly in the first half of 2022.

Eliminating congestion necessitates ensuring adequate container flow through terminals. When that core issue is prioritized, the performance of the US port system — and the global supply chain — will improve.

Terms in ocean carrier service contracts that favor the shipper are one reason containers pile up on terminals. During the decade leading up to the pandemic, overcapacity left carriers in a weak negotiating position, and shippers took advantage by negotiating free time on terminals that in some instances exceeded 20 days. With the pendulum having swung in carriers’ favor, lines are slashing free time allowances in new contracts, often to just three to five days.


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No rates relief from Chinese New Year break

The closure of factories in China usually brings some relief at this time of year. However, only Asia-Europe has seen the slightest easings this year, and the first-half outlook remains grim. The traditional easing of freight rates during Chinese New Year has failed to materialize this year, with only the Asia-Europe trade showing a minor dip, according to figures from Xeneta.


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Who should pay for the EU ETS?

The European Union is grappling with assigning responsibility for buying carbon credits under the emissions trading system. Getting it wrong risks operators’ compliance headaches and undermines the scheme’s ability to cut emissions.

Proposed changes to shipping’s inclusion in the European Union’s carbon market could create compliance headaches for operators and split the industry’s incentive to cut carbon dioxide emissions.


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EU’s dirtiest ports ‘comparable to the biggest coal plants’

According to a study by Transport & Environment, supply chain emissions from Europe’s biggest ports are comparable with coal-fired power plants. The green group analyzed carbon dioxide emissions of European Union ports by calculating emissions by ship type and allocating them to ports by how much cargo related to that ship type was handled. In addition, it sought to include emissions from port activities such as loading, unloading, and refueling.


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The UK touts shore power plans despite funding gap

Britain wants to implement shore power to reduce ships’ emissions in port. But industry officials and an extensive body of research have concluded that such projects remain economically unviable without state support — particularly in the UK, where high electricity prices have added another layer of complexity and cost.


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Hydrogen and ammonia are shipping’s cheaper and greener fuel option

Pursuing hydrogen and ammonia fuels would be directly cheaper than gas and biofuels, according to a study of different pathways for halving emissions by 2050. It would be cheaper for shipping to embrace hydrogen and ammonia rather than gas or biofuels as a pathway to decarbonization.

Research by Ricardo, a consultancy for oil industry groups OGCI and Concawe, modeled a pathway that opted for the early pursuit of green ammonia and hydrogen to meet the IMO’s target of halving emissions from 2008 levels by 2050. It compared this with a second pathway that replaced fossil fuels with liquid and gas biofuels. A third opted for maximum uptake of energy efficiency technologies, onboard carbon capture, and a gradual increase of green ammonia and methanol.


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Organizations join up for a major push on electronic bills of lading

The Digital Container Shipping Association (DCSA) is seeking to boost the adoption and interoperability of electronic bills of lading through a new organization committed to collaborating to standardize the digitalization of international trade.

The container shipping sector set up the DCSA to establish digital standards shared among its members. The DCSA is teaming up with BIMCO, the International Federation of Freight Forwarders Associations (Fiata), the International Chamber of Commerce, and SWIFT to form the Future International Trade (FIT) Alliance.

The FIT Alliance will work together to generate awareness about the importance of shared and interoperable data standards and common legislative conditions across international jurisdictions and platforms.


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