container ship and naval escort

Red Sea update

Apr 3, 2024 | , , , , , ,

The last three months of 2023 were some of the worst for liner shipping’s finances in recent years, while early volume indications for this year suggest the coming months could bring stronger trading conditions for shipping lines, especially with the Red Sea diversions and capacity management techniques learned during the early phase of the pandemic.

Amidst the Red Sea crisis, global schedule reliability continued to decrease, dropping over 5% in January, but it does seem that schedule reliability may have improved slightly in February and the delays experienced for vessels arriving late were also reduced.

Performance overall is still very poor, but this does indicate that the new round-Africa services are beginning to slowly normalise, making supply chains slightly more predictable, albeit obviously with longer transit times. We would expect to see further improvements once we get the March data.

After eight consecutive days without incident, in the Red Sea on Monday the master of a vessel reported being hailed on the radio by an entity claiming to be the Yemeni Navy, while a crew member reported having heard gunshots and US naval forces destroyed a drone boat.

Despite the ongoing attacks, the US said it would consider revoking its recent designation of Yemen’s Houthis as terrorists if the Iran-backed militants cease their shipping attacks in and around the Red Sea.

Joe Biden’s special envoy for Yemen, Tim Lenderking, said the Houthis’ could “show good faith” and an “intent to de-escalate” if they released the 25-member crew of the Galaxy Leader, the RoRo car carrier that they hijacked in November.

Russia has sent several naval vessels from the Pacific Fleet into the Red Sea, though the purpose of the Russian vessels in the Red Sea area is unclear.

Air freight volumes jump

As a result air freight volumes have jumped up. February was the third consecutive month of double-digit year-on-year demand growth for air cargo, according to data released by IATA, with air cargo demand up 12% compared to 2023.

The rise comes as the market stabilises amid improved economic performance worldwide, with capacity up over 13% due to the continued return of belly capacity.

The strong start for 2024 could see demand surpass the exceptionally high levels of early 2022, with booming eCommerce and increased demand for sea/air services linked to Red Sea concerns.

If you have any questions or concerns about the impact of the Red Sea crisis on your Asia supply chain, or would like to discuss its wider implications, please EMAIL our Chief Commercial Officer, Andy Smith.

For questions about air freight, sea/air and our suite of time-sensitive solutions EMAIL Elliot Carlile, Operations Director, for insights, prices and advice.

Ellerman boxes

Baltimore supply chain contingencies

Apr 3, 2024 | , , ,

In Baltimore work to remove the 9,662 TEU vessel Dali and damaged bridge has begun, with seven floating cranes and 30 vessels on scene, but with 4,000 tons of steel pinning the ship to the riverbed port officials suggest vessel diversions could last three months.

The bridge collapse will mean that for the time being it will not be possible for vessels to depart or berth at container terminals in Baltimore, so inbound vessels will need to re-route through other ports in the region.

It remains to be seen what the primary alternative ports will be for the most popular services and carriers, but from a sheer size perspective Norfolk and New York are the obvious choices to handle diverted vessels.

Moving Baltimore’s container traffic to Norfolk and New York would mean an increase of around 10% in volume handling in those two ports, but both had a volume drop in 2023, that could mean they have sufficient capacity. However, there may still be some disruptive effects and some bottlenecks meaning delays should be anticipated in the short term.

And while Maersk, MSC and Hapag-Lloyd have advised the discharge and load are happening in either Norfolk or New York, some of the smaller ports in the region such as Philadelphia, Charleston, Jacksonville and Delaware river ports may also be worth consideration.

Automotive adjusts to Baltimore Port closure
Baltimore is the busiest US port for vehicle imports and exports, with 850K cars and light trucks processed in 2023. Car makers that use Baltimore for shipping vehicle and parts shipments include GM, Toyota, Jaguar Land Rover, Mazda, Mercedes and Volvo.

Wilmington, Delaware and Brunswick ports in Georgia are handling the first wave of diverted vehicle carriers from Baltimore. However, one of the four roll-on/roll-off (Ro/Ro) terminals at Baltimore port continues to receive shipments, due to its upstream location, on the seaward side of the collapsed bridge.

The privately-owned terminal handles imports of Volkswagen and BMW vehicles and its location on the seaward side of the Francis Scott Key bridge, means it will remain open despite the closure of the rest of the port.

The specialist automotive RoRo carriers are pursuing alternative solutions in nearby ports, while Wallenius Wilhelmsen’s 8,000-CEU Carmen completed its call at Baltimore prior to the bridge collapse but is now unable to leave the port.

While Baltimore is an important RoRo call virtually all services linking North America with key vehicle exports markets in Asia and Europe call at Brunswick, which makes it a viable option for manufacturers and automotive shippers.

While most displaced cargo will be bound for the Northeast US, the Port of Jacksonville, Florida, has spare berth and terminal capacity to handle additional cargo volumes, should contingency plans consider a southern-based solution.

Metro have alternative solutions to Baltimore gateway and we can provide containerised services for vehicles into other US gateways.

Our weekly transatlantic Ellerman US Express (USX) service serves New York, Philadelphia, Norfolk and Jacksonville, with direct port calls in the UK, Europe, Scandinavia and Baltics.

If you would like any further information on this, or our other contingency solutions please do not hesitate to EMAIL our Automotive Account Director, Ian Tubbs.

Lloyds

Avoiding the bill that Dali shippers will face

Apr 3, 2024 | , ,

The Francis Scott Key Bridge in Baltimore collapsed after the container ship, Dali, collided with it last Tuesday. The eventual cost of the disaster is expected to be hundreds of millions of dollars and shippers with cargo aboard the Dali could ultimately be responsible for the ship’s damages and associated costs.

An established maritime law known as General Average (GA) where all parties involved in a sea voyage share any losses incurred, ensures that all parties have a vested interest in the vessel, because they share the risk and cost of protecting it.

General average situations can occur when a ship is lost, suffers damage or becomes stranded, or when cargo needs to be damaged or thrown overboard to save the vessel.

It’s too soon to know whether costs incurred to free the Dali will qualify as a case of General Average, or whether General Average will be called by the owners, though the latter is extremely likely due to the sheer scale of the disaster.

General Average is one of the most complex procedures in insurance, because insurers will need to calculate the total value of all the goods onboard the vessel to work out the amount owed by each shipper.

With about 4,700 full containers (just under 50% of capacity) aboard the Dali at the time of the collision, establishing the value of each container is complex and using historical data, the process can often take several years.

Adding another level of complexity and probably cost is the fact that a large proportion of the cargo aboard will inevitably be uninsured, as too many shippers either assume it’s already in place, or covered by their freight forwarders or the shipping line.

Despite several high-profile casualties in recent years, General Average remains rare in shipping and something many shippers aren’t aware of, or think of insuring against.

While there might be some coverage by a freight forwarder or carrier under their standard trading conditions, these are typically limited, as opposed to the actual value of the goods.

When General Average is called, the consignee will need to provide security for the cargo’s proportion of the General Average, typically a percentage-based deposit, or an Underwriter’s Guarantee.

Metro’s All Risk marine insurance covers the full value of your goods and protects you against all loss of cargo and the risk of General Average.

For further information on our marine insurance cover and to ensure that you have full liability, please EMAIL Laurence Burford, CFO at our Birmingham HQ.

Francis Scott Key Bridge 1 1440x810 1

Maersk vessel collapses Baltimore bridge

Mar 26, 2024 | , , , , , , ,

The Dali, a time chartered Maersk container vessel with two pilots onboard, crashed into a support pylon of the Francis Scott Key Bridge in Baltimore, Maryland, in the early hours of Tuesday 26th February, collapsing a large section of the 1.6 mile bridge into the Patapsco River.

The Francis Scott Key bridge was the main thoroughfare for drivers between New York and Washington who sought to avoid downtown Baltimore. It was one of three ways to cross the Baltimore Harbour, with a traffic volume of 31,000 cars per day or 11.3 million vehicles a year.

The collapse of the bridge has cut off access in and out of the port for vessels. Around the world, about 40 ships, including 34 cargo vessels, have Baltimore listed as a destination, including 10 commercial ships with anchors dropped in nearby waters, according to MarineTraffic.

Baltimore port’s private and public terminals handled 847,158 autos and light trucks in 2023, the most of any U.S. port.

On top of the RORO operations Baltimore port handles around 21,000 TEU a week, which will have to be re-routed via other ports in the region until access is restored.

It is still unknown how long the port will be cut off due to the incident, but any length of downtime will greatly impact RORO capacity into the US East Coast, as well as cause additional congestion at alternative ports that will need to take on the overflow of ocean containers that would naturally route through Baltimore.

This also comes at a time when there is an element of uncertainty regarding the future situation at the US East and Gulf Coast ports due to the International Longshoremen’s Association and the United States Maritime Alliance current contract set to expire on 31st September 2024. Whether this incident will have any impact on the negotiations remains to be seen but Metro will be monitoring the situation closely and will be keeping our customers informed.

Automotive logistics contingency

The impact on RoRo, container and conventional freight moving into Baltimore is going to be significant. Baltimore is one of the largest RoRo ports for global vehicle movements into and out of the US East Coast. Carriers have already began to advise of diversions and avoidance of the port for the foreseeable future across all ocean freight modes.

We anticipate that there will be a consequential effect on vessel rotations and schedules ongoing to and from Europe and that vehicle compounds at alternative ports will become congested adding further to the impact, especially on the automotive sector.

RoRo carriers are already seeing a surge in bookings, adding further pressure on the high demand routes to the US. We will continue to update on the situation and market intelligence as it unravels. The impact will be ongoing for many weeks, and as experienced from the pandemic and Red Sea situations it is likely that indirect issues will arise as an outcome of the initial tragedy.

Metro have alternative solutions to Baltimore gateway and we can provide containerised services for vehicles and also other gateways into the US.

We are currently compiling the alternative options that we have and can share these with you in conjunction with our partner shipping lines and local offices in the US.

Please contact us for further information and speak with your account manager who will be delighted to arrange a meeting or Teams call to discuss the options available and your own specific needs and forecasts during the period of closure.

If you would like any further information on this solution and how it can work for you please do not hesitate to EMAIL our Automotive Account Director, Ian Tubbs.

SEE ALSO THIS BBC ARTICLE: Fears of disruption to global supply chains after Baltimore bridge crash

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