World Maritime News (30)

Impact on port and maritime industry due to Russian invasion of Ukraine

The conflict in Ukraine and the ensuing sanctions on Russia are likely to have an ongoing impact on global container supply chains despite the relatively limited volumes shipped to and from Russia. The impact of the conflict in Ukraine on container shipping is likely to come more from increased bunker costs rather than any direct disruption to the sector. The sudden increase in fuel-related shipping costs caused by the war in Ukraine is already changing how shippers plan to move goods within the US, forcing them to consolidate shipments and even change modes. Geopolitical turmoil is pushing up bunker prices, significantly adding to carrier costs passed on to shippers through fuel surcharges in long-term contracts. Dockworkers in the US and Canada refuse to load or unload any Russian vessel or handle any incoming or outgoing Russian cargo. The International Longshore and Warehouse Union said 20,000 workers at 29 ports on the US west coast “will refuse to load or unload any Russian vessels or Russian cargo coming into or going out of all west coast ports.”


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The US administration and Congress’s pressure on profitability of the container lines and the reaction of the maritime industry

Container lines are facing further calls to explain their profitability following President Joe Biden’s scathing attack on box shipping in his State of the Union address. In addition, the chairmen of the US Congress’ Select Committee on the Coronavirus Crisis and Sub-committee on Economic and Consumer Policy have written to Maersk, CMA CGM, and Hapag-Lloyd requesting information on freight rate rises and reports of “exorbitant fees and surcharges.” The Justice Department’s probe of the US supply chain comes amid increased pressure from the Biden administration to monitor container line pricing activities more closely in the wake of historic rate levels. Ports, labor unions, container lines, and US-flag interests are moving fast to halt efforts by the Biden administration and Congress to strip antitrust immunity from container lines, warning that the end of shipping alliances would create a seismic — and unintended — shift in how carriers serve US ports and shippers. The upward spiral in freight rates that has allowed carriers to earn record profits was caused by the same fundamentals that held rates and profits down before the pandemic: supply and demand.


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New COVID-19 lockdowns in China disrupt the supply chain

Shippers and carriers are facing increasing disruption to cargo shipments from COVID-19 lockdowns in China and Hong Kong, with some carriers warning the problems could last several weeks, especially in Shanghai. Stricter lockdown measures in China have stoked renewed concerns about significant disruption to container shipping and global supply chains. Shippers in China are canceling cargo bookings while forwarders are diverting freight to other ports amid worsening COVID-19 outbreaks that have led to widespread lockdowns in essential port cities, including Shenzhen and Shanghai. Port of Los Angeles continues to work record levels of containerized throughput, though the outlook remains uncertain due to the increase in coronavirus infections in China which threatens factory production.


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Skipped port calls threaten economic recovery

Carriers are blanking sailings or skipping ports due to lack of capacity. But this can have widespread consequences for developing economies dependent on exports. Canceled voyages and skipped port calls led to ports losing a third of their expected capacity to move containers last year, leading to further headaches for shippers and causing economic harm to some export-dependent economies.


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Carriers take different paths on terminal investments

Container lines are increasingly selective for investing in terminals despite the vast profits in the past year. While some carriers, such as CMA CGM and Mediterranean Shipping Co., have increased their terminal presence, others have reduced theirs.


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Resolving inland congestion seen as key to releasing supply chain capacity

The recovery of port and hinterland logistics capacity from current congestion will depend on landside operators working together, with trucking being one of the critical factors that need resolution. Analysts at McKinsey & Co suggest that while labor availability was an issue, trucking equipment turnover was the main factor driving container supply chain congestion.


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Topics on green fuel

Maritime groups hope progress in establishing a research and development (R&D) fund meant to find the green fuel of the future can accelerate now that they have addressed concerns about the fund raised by some nations. Maersk has signed strategic agreements with six producers to secure enough green methanol globally by 2025 to power the 12 methanol-compliant vessels it currently has on order. The deals come as the carrier plans to offer net-zero supply chains across its business units by 2040.


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The situation on the data sharing for easing ports congestion in the US

The US government has launched an initiative designed to promote the sharing of crucial freight information between different elements of the cargo supply chain as part of an effort to ease choke points and relieve congestion. The Freight Logistics Optimization Works (FLOW) pilot program includes 18 initial participants representing “diverse perspectives” across the supply chain, including container lines, terminals, logistics companies, and beneficial cargo owners. Sharing data among supply chain participants has become a priority amid record volumes of US imports in the past 20 months, resulting in vessel backlogs in ports, terminal congestion, and a stressed inland logistics sector. Longshore union representatives have told the Federal Maritime Commission that better data sharing would create more labor efficiency and provide the ability to handle unexpected situations on the docks better.


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Topics on digital freight forwarders

Digital forwarder Forto has smashed through the $2 billion valuation barrier with a new round of funding that it will use to grow its presence in Europe and Asia. Ovrsea, a digitally oriented forwarder tied to the Bolloré Group, has opened a North American office to tap into burgeoning US demand as the race to attract online-oriented shippers gathers steam.


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