Posted on November 21, 2023
Global shipping news

Weekly Global Shipping News Wrap, Week 47

Air Freight Rates Spike, Led by China’s Export Surge

Latest data from TAC Index reveals a significant increase in global air freight rates, with China’s outbound shipments experiencing a sharp rise. The Baltic Air Freight Index (BAI00) marked a 4.6% increase for the week ending November 20, indicating a gradual recovery from the year-on-year decline. This surge is attributed to events like snowfall in Anchorage, affecting TransPacific routes, and other global disruptions like earthquakes, volcanic activities, and ongoing conflicts in Ukraine and Gaza.

Meanwhile, Hong Kong’s outbound rates (BAI30) has jumped by 11.5% and European outbound rates, particularly from Frankfurt and London, have experienced significant declines.

In the US, Chicago’s outbound rates (BAI50) gained slightly, while overall US rates to China and Europe are rising. Simultaneously, Vietnam’s rates to Europe and the US have increased, counterbalanced by a decline in rates from India.

Maritime Industry Faces Emissions Trading System Impact

Taiwanese carrier Evergreen has released its EU emissions trading system (ETS) fuel surcharge estimates, joining other major carriers. These estimates place Evergreen in the upper-middle range, while Hapag-Lloyd’s surcharges appear comparatively lower.

Albrecht Grell of OceanScore highlighted the potential cost implications, with the need for millions of EU Allowances (EUAs) to offset maritime emissions, translating into billions of euros. Hapag-Lloyd’s strategy involves using the Clean Cargo Emission Calculation Methodology for a more accurate surcharge calculation. Meanwhile, ONE’s estimates are also competitively lower, though subject to quarterly adjustments.

Industry rumours suggest that similar emission trading systems may be considered globally, though the International Chamber of Shipping (ICS) emphasizes the importance of a unified approach under the International Maritime Organization (IMO).

Maersk’s Rate Cuts Linked to Q3 Losses

A report by Linerlytica suggests that Maersk Lines’ aggressive rate cuts to regain market share significantly contributed to the decline in container freight rates in Q3. 

Despite criticisms, industry experts like Simon Heaney of Drewry Shipping Consultant and James Hookham of the Global Shippers’ Forum refrain from singling out Maersk, pointing to broader market trends and challenges.

Carbon Tax Debate Intensifies in Maritime Industry

Experts argue that without a substantial carbon tax, the maritime industry’s shift to zero-carbon fuels will be sluggish. Current efforts, including low carbon fuel options, face limited uptake due to high costs. 

A global enforceable tax on carbon is seen as a critical step, though reaching a consensus on an effective rate poses challenges. The International Maritime Organization (IMO) is working towards a revised greenhouse gas policy, aiming for net-zero emissions around 2050.

Industry Insiders Urge Caution Amid Falling Ocean Freight Rates

Forwarders express concerns over the ongoing decline in ocean rates, warning that this trend could harm the industry. Maersk CEO Vincent Clerc anticipates a challenging year ahead if rates don’t improve. 

Rhenus’s Stephanie Loomis criticizes Maersk’s pricing strategies, while other industry insiders call for a more responsible approach to rate setting, emphasizing the need to maintain sustainable margins and customer relations.

House of Shipping Insight

The current landscape in global shipping and freight is marked by a complex interplay of rising costs, environmental regulations, and competitive dynamics. The spike in air freight rates, particularly from China, reflects the acute impact of global disruptions and capacity constraints. In the maritime sector, the impending EU ETS surcharges represent a significant step towards addressing environmental concerns but also pose challenges in terms of cost and implementation. 

Maersk’s rate-cutting strategy, while aimed at regaining market share, underscores the volatility and competitive pressures in the container shipping industry. The debate around implementing an effective carbon tax highlights the urgent need for cohesive and sustainable strategies to drive the industry’s transition to greener practices. As forwarders caution against a detrimental ‘race-to-the-bottom’ in rate competition, the industry faces a critical moment to balance economic viability with environmental responsibility.

Weekly Global Shipping News Wrap, Week 47

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