Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have prepared the following report using practical efforts to ensure that the commentaries are accurate, generally using source intelligence and publicly available data. 

JUNE 2023 - SNAPSHOT

• Drewry's composite World Container Index decreased by 8.87% in the past month to $1,535.75 per 40ft container as at 22 June 2023.

• Data from Xeneta's freight rate platform index in May suggest the global ocean freight sector experienced an unparalleled decline in long-term contract box rates, with the cost of shipping containers plunging by 27.5%. This drop in the Xeneta Shipping Index (XSI) signifies the ninth consecutive month of decreasing rates, the most substantial monthly decline ever recorded since the inception of the five-year-old XSI.

• OSRA reforms in the US are still instigating major complaints being lodged with the FMC in USA:
• Maersk subsidiary Hamburg Süd were recently hit with a $9.8m penalty in case with furniture importer OJ Commerce (OJC). OJC claimed Maersk failed to honour its contract and when it complained the carrier simply cut the company off leaving them to navigate the hugely expensive spot market. OJC was seeking $100m in damages but the FMC ruled that $9.8m was appropriate given evidence was uncovered during the examination of an email exchange between Hamburg Süd employees, showing the company made the decision to "disengage" from fulfilling its contract agreements. The $9.8m figure is more than three times higher than any other FMC fine issued this year. Interestly, the case has also put blank sailings under the FMC spotlight with the FMC looking into amendments to the OSRA reforms to address concerns that carriers might strategically alter capacity to refuse to deal or negotiate. The FMC are now looking to give a clearer definition of "refusal to deal".

• In a developing story for the US air freight market, the Transportation Security Administration (TSA) has urged forwarders to advise customers of new screening rules which come into force on 31 October. The Impracticable to Screen amendment (to assist industry in meeting the regulatory requirement) ends on that date and will mean that cargo which is hard to screen using normal methods will not be able to travel by air unless shippers are enrolled in one of the TSA's authorised cargo security programmes. The TSA states anyone looking to apply needs to allow 90 days prior to wanting to become operational, leading to concern some may be leaving it too late.

• Shipping Line Q1 results showed EBIT dropped 81% year on year in 2023-Q1 to USD$7bn. Indications of a market weakness emerged in the latter half of 2022, which fully materialised in 2023-Q1 with revenues experiencing a sharp decline of 35% to 70% year-over-year. This trend is evident in the EBIT/TEU figures, as none of the shipping lines sustained their 2022-Q1 EBIT/TEU levels in 2023. On average, the shipping lines recorded an EBIT/TEU of USD$330 in 2023-Q1, 81% down on the 2022-Q1 average of USD$1,829. However it still surpasses the average of USD$53 between 2010 and 2021.

• Taiwanese shipping companies are handing out bumper mid-year bonuses despite a slump in global cargo as the industry continues to benefit from earlier pandemic gains. Yang Ming is awarding workers up to 30 months salary on their next payday after shareholders approved the TWD2.3bn (USD 75m) bonus. That's in addition to a year-end bonus worth 12 months of salary paid at the beginning of this year. Evergreen Marine will give its 3,100 workers another TWD1.9bn, equivalent to around 12 months of pay, after shareholders approved the bonus at a meeting. The latest payments come on top of bonuses of around 50 months' worth of salary in January after the maritime giant reported record profit of TWD334.2bn (USD$10.9 billion) last year. Evergreen's net income is expected to plunge 94 percent this year to TWD18.6bn, according to analyst estimates. Yang Ming is forecast to see profit fall 99% to TWD2.2bn.

• Maersk announce new South East Asia to Australia Ocean network has now been implemented in full, offering improved flexibility and frequency with four weekly departures from South East Asia hub ports to Australia.

• Yang Ming Line finally entered the containership order race, ordering five LNG dual-fuelled 15,000 teu ships from HD Hyundai Heavy Industries for delivery in 2026. Yang Ming had recently been forced to deny local media reports that its choice of LNG fuel for new vessels had caused dissention among its directors, with concerns over greenhouse gas emissions from LNG have pushed other mainline operators such as Maersk and Evergreen towards methanol.

• Maersk has added to its growing orderbook of methanol dual-fuel containerships with a deal for 6 x 9,000 teu vessels. Maersk now has 25 methanol-enabled vessels on order.

• Hapag-Lloyd has sold three elderly ships for demolition, sticking to a plan outlined in last month's earnings call. Boxship demolitions have resumed since late 2022 after freight rates began correcting to pre-Covid levels, although the pace has been slower than expected. Based on Alphaliner, the sale of the three Hapag-Lloyd ships brings to 41 the number sold for demolition this year, for a total of 81,300teu.

• Sailing cancellations (blank sailings) between week 26 through 30, a total of 36 cancelled sailings have been announced out of a total of 680 scheduled sailings, 
• This represents a 5% cancellation rate.
• During this period, 72% of the blank sailings will be occurring in the Transpacific Eastbound, 22% on Asia-North Europe and Med, and 6% on the Transatlantic Westbound trade. The Alliance has announced 14 cancelations, followed by OCEAN Alliance and 2M with 13 and 5 cancellations, respectively. During the same period, 4 blank sailings have been implemented in non-Alliance services.
• Overall it's a significant improvement in carrier service reliability from earlier this year with 95% of ships are expected to sail as scheduled, but slightly higher than the 3% of last period which was the lowest level recorded since pre-pandemic.
• There is an expectation that cancelled sailings may pick up in the coming months as liners battle the worsening economic environment.

• Global average vessel delays continued to decrease, now at 5.03 days, down from 5.29 days from prior month and 2.41 days lower year on year.

• Global sea freight schedule reliability improved again in April 2023, up compared to March by 1.7% to 64.2%, which is also up 29.9% year on year.
• In April 2023, Maersk continued as the most dependable among the top-14 carriers, boasting a schedule reliability of 70.3%. Following closely behind were MSC at 68.0% and Evergreen at 67.1%. Additionally, six other carriers showcased a schedule reliability exceeding 60%. The remaining carriers, within a 5% of each other, all maintained a schedule reliability ranging from 50% to 60%.
• Yang Ming ranked as the least reliable carrier with a schedule reliability of 52.1%.
• Evergreen displayed the most significant improvement, increasing by 4.6%. Remarkably, all top-14 carriers exhibited year-over-year progress, with Wan Hai registering an impressive improvement of 43.5%.

• Major Acquisitions:
• CMA CGM & Bollore still yet to confirm the deal.
• CMA CGM finalised the acquisition of La Méridionale, a mixed-use freight and passenger shipping company in the Mediterranean

• Drought-hit Panama Canal postpones further depth restrictions after some much-needed rain. A series of measures were scheduled to go into effect on June 25 and July 9 requiring ships to float at higher depths, meaning they needed to carry less cargo or otherwise shed weight and impacting trade at one of the world's busiest commercial crossings. The administration said it would continue to monitor water levels and announce future draft adjustments in a timely manner.

• Terminal and Port Update:
• Patrick terminals
• Brisbane: Working with minimal delays approx. 0-0.5 day 
• Fremantle: Working with minimal delays approx. 0-0.5 day
• Sydney: Working with minimal delays approx. 0-0.5 day
• DP World Terminals
• Brisbane: Working with minimal delays approx. 0.5 day - still hampered by equipment and IT outages of late.
• Fremantle: Working with minimal delays approx. 0-0.5 day
• Sydney: Working with minimal delays approx. 0-0.5 day
• Melbourne: Working with minimal delays approx. 0.5-1 day
• VICT
• Melbourne: Working with minimal delays of 0-0.5 day
• AAT
• Brisbane: Severe congestion from May has eased, with PCC vessel delays down from 15 to 7 days. 
• Port Kembla: Still affected by severe congestion with vessels still queued for up to 15 days.
• Melbourne: Congestion at present.

• Port of Melbourne on 31st May announce their Tariffs for Prescribed Services will increase by 7.0 per cent in 2023-24 effective from 1 July 2023.

• Svitzer's National Towage Enterprise Agreement ballot received majority support of eligible employees (63% voted in favour of the agreement). The Agreement requires ratification by the Fair Work Commission (FWC) which may take some weeks. The agreement being for four years from date of FWC approval. The issue almost led to severe disruptions to the national supply chain prior to Christmas due to protected industrial action.

• Enterprise Agreements will also take more of a focus later this year with both DP World (Australia) and Hutchison Ports approaching the end of their current enterprise agreements.

• US West Coast Ports were severly affected by terminal closures due to action taken by workers negotiating new agreements. WIth the White House required to intervene, a new six year agreement was finally agreed to mid June, bringing to an end protracted negotiations and severe disruption to US imports which led to major importers moving shipments into the Gulf Coast and East Coast.

• UK port of Felixstowe is to roll out a 100-strong fleet of autonomous battery-powered trucks in September, with hauliers declaring the AI revolution is truly upon us. The Hutchison-owned port struck a deal with manufacturer Westwell, via which it has had 15 AI-controlled trucks operating at its Terminal D in Thailand's Laem Chabang Port since 2020.

• Container depots at major ports are filling up with empty containers with Container xChange reporting the Container Availability Index (CAx) has risen to 0.64. Value above 0.55 means there is less demand for export containers than import creating potential container pileups and eventual port congestion and delays.

• US unveils new shipping bills to clean up pollution and emissions. Ships with 10,000 gross tonnage or more would face a levy of $150 per ton on the carbon emissions of the fuel burned on the inbound trip, plus fees for the nitrogen oxides ($6.30/lb), sulphur dioxide ($18/lb) and particle pollution (PM2.5) ($38.90/lb) the vessels emit.
• The fees will raise approximately $250bn over 10 years, providing critical funding for decarbonisation. They would end if the IMO implemented its own similar fees.

• Support for a global carbon tax is gaining momentum. 
• France is rallying support for a global carbon tax on the shipping industry ahead of the MEPC summit hosted by President Emmanuel Macron later this month. Macron is understood to be searching for allies to issue a joint demand on members of the International Maritime Organisation (IMO) to agree on such a charge at the organisation's upcoming summit in July.
• The World Bank is also making a case for a carbon tax ahead of the MEPC gathering, suggesting in a 58 page report that a carbon tax in shipping alone could raise $40bn to $60bn each year between 2025 and 2050, money which could be used to speed the decarbonisation of the shipping industry as well as boosting port infrastructure especially in developing countries.

• Air Export:
• Global airfreight pricing fell slightly (-1%) compared to last month, down to an average of US$2.58 per kilo. A reduction of 36% year on year.
• Tonnages also decreased by -1% with capacity up +2%. Overall capacity has increased by +15% compared with the previous year, with double-digit percentage increases from all regions – except from North America (+8%), and Central & South America (+7%). The most-notable increases were ex-Asia Pacific (+36%), ex-Africa (+14%) and ex-Europe (+14%)

GLOBAL SHIPPERS FORUM (GSF) WORKING GROUPS

As members will recall, the Australian Peak Shippers Association (APSA) has a board presence on the Global Shippers Forum (GSF) performing an important role of representing shippers' (importers and exporters) interests and that of their national associations in Asia, Europe, North and South America, Africa and Australasia.

GSF's policy positions are determined by its Policy Council. At its most recent meeting in February 2023 the Council decided to establish new working groups to guide its work in three specific areas:

1. Container Cleanliness Working Group
2. Surcharge Suppression Working Group
3. Container Shipping Performance Working Group

Please contact Paul Zalai at pzalai@FTAlliance.com.au if you have an interest in participation in any of the above working groups 

INTERNATIONAL SHIPPING LINE UPDATES

• Week 23 (as at 5 June 2023)
• Week 24 (as at 12 June 2023)
• Week 25 (as at 19 June 2023) 
• Week 26 (as at 26 June 2023)

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AUSTRALIAN PART X SHIPPING NOTICES

APSA is the designated peak shipper body granted status by the Federal Minister for Infrastructure and Transport under Part X of the Consumer & Competition Act to represent the interests of Australian shippers generally in relation to liner cargo shipping services. Notices have been received and are available to members' reference HERE (FTA / APSA LOGIN REQUIRED)

FTA / APSA IN THE MEDIA

5 JUNE 2023 :    DCN - The race is on

Tom Jensen - Head of International Freight & Logistics - FTA / APSA

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