Carriers Adapt to Lower Freight Rates, Balancing Efforts to Maintain Profitability According to the latest assessment by Drewry, global container freight rates are showing a mixed picture. On one hand, they are still slightly higher than pre-pandemic levels, but on the other hand, costs have risen. The World Container Index (WCI) indicates a small 0.9% increase in the past week, reaching $1,488 per 40ft container. However, compared to the same time last year, prices have plummeted by a staggering 78.7%, and they are now 86% below their peak in September 2021. Despite the challenging market, rates are still 5% above the averages of 2019, thanks to an influx of newbuildings that has led to overcapacity. Specific trade routes are experiencing fluctuations, with some witnessing rate declines and others seeing modest increases. The Asia-Europe trade route is particularly affected by the retail slowdown and geopolitical instability, impacting carriers' revenues. Moreover, the container charter market is weakening as overall demand recedes. Carriers Adapt to Slowing Demand: Blank Voyages and Seek Port Call Inducements Asia-North Europe carriers are adapting to the current soft and unpredictable demand in the shipping industry by adjusting their schedules. They are canceling more sailings and making some port calls optional based on demand, aiming to remain flexible and capture niche opportunities. One prominent carrier, MSC, has already announced that some of its vessels will not sail due to slowing demand on the route. The market is currently oversupplied, leading to a 4% weekly decline in freight rates from China to North Europe, significantly lower than last year. Carriers have abandoned hope for a traditional peak season, resulting in downward revisions to their full-year earnings forecasts. Despite this challenging situation, freight forwarders remain optimistic and hopeful for improvements in the third quarter, even though the lack of a peak season will dampen expectations. Maersk's Optimism for Asia-Med Trade: Unveils FAK Price Hikes Maersk, one of the major shipping companies, is increasing rates for shipments from Asia to the Mediterranean due to falling spot rates. Shippers will now have to pay higher rates, ranging from $2,300 to $3,600 per 40ft container, starting in July. Although demand on this route has been strong, the increased capacity has caused a 20% decline in spot rates since June, putting pressure on carriers. It remains uncertain how other shipping companies will respond to these changes in the market. The industry is closely watching the situation as carriers navigate through the challenges brought on by fluctuating demand and capacity adjustments. Mundra Port's Ongoing Struggle to Clear Container Logjam Caused by Cyclone Mundra Port, India's top container handler, is facing cargo backlogs caused by supply chain disruptions during a cyclone last month. Many import containers have not been retrieved for last-mile delivery, leaving cargo owners at risk of additional charges, including port ground rent and demurrage/detention fees. Some containers, facing hefty penalties, are at risk of being abandoned by cargo interests. The port authority provided five days of extra free time initially, but stakeholders are urging for extended free times and faster clearance of stranded boxes. Mundra is vital to India's containerized trade and has seen mega-containership visits recently, dealing with significant container traffic. Container Shipping Giants Spark Shipbuilding Boom Worldwide A containership building boom is underway as container shipping giants Maersk, Evergreen and CMA CGM place orders for up to 44 newbuilds valued at US$5 billion, reports Rotterdam's Offshore Energy. Evergreen has emerged as the biggest spender with a reported order of twenty-four 16,000 TEUers. According to Intermodal, the order has been spread between Samsung Heavy Industries, South Korea, and Japan's Nihon Shipyard, with deliveries spread between 2026 and 2027. The Taiwanese shipping firm is said to be paying $4 billion for the newbuilds. Maersk announced that it has ordered six mid-sized container vessels from Yangzijiang Shipbuilding, and that the 9,000-TEUer will have dual-fuel engines able to operate on green methanol and bunker fuel oil with delivery set for in 2026 and 2027. Maersk also has options for four additional vessels of the same size under the terms of the contract. The order is valued at around $1.4 billion. Notably, while Evergreen and Maersk have committed to methanol as fuel, French shipping giant CMA CGM favours liquefied natural gas (LNG). CMA CGM has been linked to an order for ten 24,000-TEUers, Shipbroker reports indicate that Jiangsu Yangzijiang, China, has been assigned the job and that the vessels will be delivered in 2026. Unleashing Billions: The Potential Allocation of Savings from Decarbonizing Shipping International shipping plays a crucial role in the global economy, transporting over 80% of internationally traded goods by volume. However, it also contributes significantly to climate change, accounting for 2 to 3% of global greenhouse gas emissions. To address this, the International Maritime Organisation (IMO) has adopted a revised strategy aiming for net-zero emissions "by or around 2050," with interim targets for 2030 and 2040. The strategy ensures equity by placing a lesser burden on countries with fewer emissions or less capacity to address them. Carbon pricing is proposed as a solution to make zero-carbon fuels more competitive and generate revenue to support decarbonization efforts and climate change adaptation in developing countries
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