The traditional peak season has started early, before the usual July-October period, as shippers are booking slots now due to low availability of vessels and containers.

Speaking at a press conference after releasing its Q1 24 results, Wan Hai Lines GM Tommy Hsieh said: “The Red Sea crisis and challenges in navigating the Suez Canal, have lengthened sailing distances. This, coupled with higher volumes in the near term, has reduced idle capacity to just 190,000 teu, or 0.7% of the total fleet.”

Mr Hsieh also alluded to what he termed “the war for containers”, as the equipment shortage last seen during Covid-19 is recurring. It was reported previously that major container makers do not have any available slots until after August, but Mr Hsieh said that bookings have picked up since then.

He said: “After the shortage of ships, a war for containers has begun, and orders for new containers have increased significantly. Major container manufacturers are already full until November. This will support freight levels going into Q3.”

In Q1 24, Wan Hai’s revenue went up 8% year-on-year to $863.8m, while the Taiwanese operator achieved a net profit of $144.6m, reversing the net loss of $69.4m in Q1 23.

In Q1 24, seaborne container traffic grew 23% year-on-year, to 4.48m teu, showing that consumer demand is very strong.

Mr Hsieh said: “The supply of ships is thus very tight, and coupled with the Red Sea crisis affecting the supply chain, there is no short-term fix, as ships on the Asia-US East Coast, Asia-North Europe and Asia-Mediterranean are all moving round the Cape of Good Hope. Previously, a single Asia-Europe service required 12 ships to maintain regular sailings; now, 15 ships are needed.

“The situation has extended to other routes. In addition to the surge in freight rates on the four major routes, freight rates ex-Asia to Australia, New Zealand, West Africa, South Africa, South America and Southeast Asia have also been pushed up. Our Asia-South America services account for 15% of our revenue, and it’s so difficult to find a container.”

 

The news from: theloadstar.com

With a 22 May deadline for Canada’s rail strike looming, Maersk has drawn up its contingency plan for North America west coast port calls, but warned of an extended recovery period, significant backlogs and knock-on effects.  

Canadian rail workers union the Teamsters Canada Rail Conference (TCRC) called for industrial action following five months of unsuccessful discussions with employers Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC). 

If a deal cannot be reached between them by 22 May, rail operators and dispatchers across Canada will walk off the job. 

CN said it “maintains a cautious outlook” and CPKC president and CEO Keith Creel said he was a “realist” about the situation – both operators acknowledging that a deal might not be reached in time.

Maersk said today it had been “working closely” with CN, CPKC and terminal operator DP World to minimise congestion on the Canadian west coast ports in the event of a strike.  

It will offer inducement calls to the Seattle-Tacoma Northwest Seaport Alliance on four upcoming sailings of its TP1 service to manage US import and export rail cargo, rather than having it dispatched in Vancouver and transported cross-border to the US. 

The TP1 is a 2M alliance service, and calls at ports in China, South Korea, Japan and Canada.  

Calls at Tacoma will begin with the Maria Y, due to arrive at Prince Rupert on 30 May, and Vancouver on 3 June, and continue with weekly calls for the next month. 

Maersk said it was still reviewing “feasible rail routings and transit times” to US destinations via Tacoma.  

But this has led to concern that cargo diverted to Tacoma will cause significant bottlenecks across US rail networks already struggling with their own staffing and congestion issues.  

And Mr Creel warned that volume influx would be exacerbated if the strike is prolonged. 

“It will occur when we have a harvest coming in, when demands for our services… have never been greater; that is the absolute worst time for it to occur,” he said. 

And Maersk warned: “In the event of a work stoppage, customers can anticipate significant backlogs, with knock-on effects and an extended recovery period should the disruption last for more than a few days.” 

As a further mitigation tactic, the Danish carrier said it would divert cargo from Centerm in Vancouver to the port of Prince Rupert, however given the latter’s reliance on rail for hinterland transport, it was unclear how this might help alleviate a backlog, other than acting as a storage facility 

Maersk is also “reviewing limited truck options for intra-Canada transport”. 

CN announced yesterday it had reached a tentative agreement with its first- and last-mile trucking subsidiary, CNTL. The four-year agreement covers some 750 owner-operators under contract with CNTL in Canada until 31 December 2027. 

The global production of energy has taken a new twist: It has to be cleaner. Reducing carbon emissions and reaching “net zero” targets are terms becoming commonplace in the energy industry’s vocabulary.

Several U.S. ports that handle petroleum products or lease land to energy-producing companies are becoming more involved in the emissions reduction scenario, not only as depots for cleaner energy production but also as cleaner users. “Electric” seems to be the way to go – from drayage vehicles on docks moving containers to cranes and trucks and shore power for ships.

But not every port is following the conventional path in support of clean energy development.

Diverse Energy Needs

“As a bulk and breakbulk port, the Port of Beaumont is tied to energy in unexpected ways,” says Beaumont’s Port Director, Chris Fisher. “While aggregate, crude oil, wind turbine components and project cargo don’t seem related, they all support the diverse energy needs of the United States.”

Beaumont moves over one million tons of aggregate annually, most of which supports multi-billion-dollar refinery and petrochemical facility expansion efforts by laying the groundwork for upgrades. Aggregate also supports the maritime transportation network by supplying the base material needed to construct critical highway and road infrastructure that leads directly to ports and other industrial facilities.

As wind projects have been all the rage, Beaumont’s heavy-lift capabilities moved wind turbine components that supported 30 wind projects in the U.S. Fisher adds that with more than $85 billion in announced industrial projects along the Sabine-Neches Waterway, including Port Arthur LNG and Golden Pass LNG, Beaumont is a top choice for moving project cargo in support of exports and global energy needs. And as an energy exporter, Beaumont’s Jefferson Energy liquid bulk terminal, a net exporter of crude oil, gasoline and yellow wax, realized a 331 percent increase in volume over the last five years.

Port Tampa Bay, which handles 18 million tons of petroleum products per year or over 45 percent of Florida’s total, recently received an economic shot in the arm when Overseas Shipholding Group (OSG), a leading provider of energy transportation services, announced plans to study the development of a proposed Tampa Regional Intermodal Carbon Hub.

According to a release, the study is intended to evaluate the commercial feasibility of developing an intermediate storage hub at Port Tampa Bay for CO2 captured from industrial emitters across Florida. The hub would initially receive, store and process two million metric tons of CO2 per year, which would ultimately be transported by OSG vessels across the Gulf of Mexico for permanent underground storage.

It would be the first of its kind in the nation, and captured CO2 can actually be used in the production of synthetic fuels such as gasoline and diesel.

 

Petrochemical port operations in the Gulf of Mexico

 

Methanol and Wind

Port Lake Charles on the Gulf Coast of Louisiana has been chosen as the site of a planned major methanol plant to be built by Lake Charles Methanol II. The company plans to invest $3.24 billion to produce low-carbon intensity methanol and other chemicals.

“The proposed facility would reform natural gas and renewable gas feedstocks into hydrogen while capturing carbon dioxide, which would then be used to produce about 3.6 million tons per year of methanol,” it said in a statement.

Port Lake Charles’ Executive Director Richert Self adds, “This represents a significant capital investment for Southwest Louisiana. We’ll be involved in the export of three-to-four million tons of methanol per year. For the Port of Lake Charles, it’s yet another diversification of cargo. For years, we’ve handled petroleum coke and other fossil fuel-related energy cargoes, and methanol will complement that. It’s another area that displays that we’re truly an energy port.”

Port Lake Charles says another potential area of development may be offshore wind.

“Sites at the port’s industrial canal could become available to support the offshore wind industry as a marshaling and staging facility, an offshore wind component factory or both,” notes Director of Cargo & Trade Development Therrance Chretien.

The Port of Virginia, which is determined to become a net-zero operation by 2040, is transforming its Portsmouth Marine Terminal (PMT) into an offshore wind energy hub to support Dominion Energy’s Coastal Virginia Offshore Wind (CVOW) project and many other projects expected to be built along the U.S. East Coast.

Port spokesman Joe Harris says the improvements there, in support of Dominion’s project, are on-time and on-budget. Virginia wants to establish itself as a Mid-Atlantic logistics hub for the offshore wind energy industry: “We’re supporting this industry by providing a modern platform from which private industry (Dominion) can safely and efficiently operate.”

The first few loads of monopiles, which are base units that attach to the seafloor, have arrived and are on-site. The monopiles are over 250 feet in length and weigh nearly 1,500 tons on average.

Dominion has leased 72 acres of PMT, which is being used for the staging and pre-assembly of the CVOW components. Harris says the overall construction project will last 2.5 years and consist of 176 offshore wind turbines situated on a lease site 27 miles off the coast of Virginia Beach. Port investment in the project is $220 million.

L.A. and Long Beach

Upgrading facilities that currently handle petroleum products is under way at the Port of Los Angeles, says Michael Galvin, Director of Waterfront and Commercial Real Estate. The port has seven marine oil terminals that provide local fuel outlets with crude and products like diesel.

Galvin notes, “There’s a transition going on to renewable fuels,” with less carbon intense production. However, “Those fuels are being imported into our facilities now to meet specific energy producers’ needs in relation to regulations here in the State of California.”

While the port is focused on upgrading its present marine petroleum facilities, storing and supplying components for the various offshore wind projects developing along the California coast has been on its radar. “There have been discussions with various developers to utilize existing water space or land to do that,” Galvin says. But, he adds, the nearby Port of Long Beach “has a much larger proposal to develop” as a logistics base to supply wind energy components.

“On our side, we’ve looked at different developers to see what can be done on land or water but nothing is solid at this point,” Galvin says. The port would be happy to play a role in offshore wind where it can but “these companies need large pieces of land, like 100+ acres for long-term lease, and we just don’t have 100 acres to be used for that. So that’s an issue we have.”

The Port of Long Beach’s Pier Wind project is a proposed 400-acre terminal designed to facilitate the assembly of offshore wind turbines, which would be towed to wind farms in the ocean off central and northern California. If approved, it would be the largest facility of its kind in the nation and would help California meet its goals for sustainability and renewable energy sources.

Galvin concludes by saying, “The big goal here between the ports of L.A. and Long Beach is to get to zero emissions on our terminals by 2030 and off-terminal with our drayage truck fleet by 2035.” – MarEx

 

The Maritime Executives’ ports columnist Tom Peters writes from Halifax, Nova Scotia. 

 

Congestion and delays faced by truck drivers in the Black Sea Economic Cooperation (BSEC) region are being exacerbated by increased traffic from geopolitical diversions, according to the International Road Transport Union (IRU).

According to the organisation, freight volumes along the middle corridor from China to Europe surpassed 1.6m tonnes between January and August last year. This was an 84% increase on the same period in 2022.

Since then, east-west trade has further been affected by the Red Sea crisis and required transport companies to yet again seek alternative routes.

“New routes have emerged. But they need our support,” urged the IRU.

Its president, Radu Dinescu, explained: “The drastic re-direction of cargo flows has put a lot of pressure on borders in the BSEC region. In 2024, corridors crossing the region became even more important for international goods transport.”

He highlighted that border crossing issues experienced by hauliers in the BSEC region had become particularly prevalent, adding: “Congestion and long waiting times cause economic losses to the road transport industry.”

At the 43rd meeting of the BSEC Union of Road Transport Associations (URTA) general assembly in Albania, Mr Dinescu outlined key steps to combat border issues and optimise trade in the region.

“Investment in both hard infrastructure and soft procedures, services and tools are needed to keep up with increasing transit traffic. To ease border delays and reduce costs, we need to accelerate digitalisation – especially with eTIR, but also e-CMR, ePermits and eVisas,” he said.

The IRU and the UN Economic Commission for Europe (UNECE) said they were working together to find the fastest way to implement eTIR along key corridors this year.

Some BSEC countries, such as Georgia and Azerbaijan, have completed their eTIR integration procedures.Turkey is in the latter stages and expected to complete integration this year.

“I invite all BSEC-URTA countries to start integrating eTIR as soon as possible to start benefiting from it,” said Mr Dinescu.

“Azerbaijan, Bulgaria and Greece are still not part of the BSEC permit system. They should join as quickly as possible. Uzbekistan and Turkey have successfully tested electronic road permits. IRU supports the digitalisation of the BSEC permit and all other permit quota systems,” he added.

The Albanian deputy minister of foreign affairs, Beşar Kadia, added: “We should further strengthen our work aimed at facilitating border crossings in the region in view of the serious problems truck drivers are facing at borders, such as long queues and the absence of secure truck parking areas with even the most elementary facilities along key transit routes.”

Albania is one of the countries that has implemented the Single Window Project (SWP) to streamline and accelerate border crossings by simplifying transit procedures.

SWP allows an international trader to submit information to a single agency, rather than having to deal with multiple agencies in multiple locations, to obtain the necessary papers, permits and clearances to complete import or export processes.

Iran’s seizure of the 15,000 teu MSC Aries over the weekend is a cause for grave concern for pretty much anyone involved in global supply chains.

Footage of Houthi rebels storming a car-carrier in the Red Sea is one thing, it is quite another to witness Iranian national forces seizing an MSC-chartered vessel in the Straits of Hormuz on the basis of its links to Israel – the vessel’s owner is Zodiac Maritime, which although UK-based is controlled by Israel’s Ofer family.

It means carriers of all types – container, tanker and bulker – will have to rethink their Arabian Gulf networks and which vessels they deploy to the region. According to vesselsvalue.com, Zodiac Maritime’s fleet is 140 vessels: 36 bulkers, 50 containerships, 40 tankers, five LPG carriers and eight ro-ro car-carriers.

More worrying for the wider trade is the terrifying prospect that Iran could decide to effectively cut-off Dubai, as well as Arabian/Persian Gulf gateway ports such as Dammam in Saudi, Qatar’s Hamad and Iraq’s Umm Qasr, all of which had recent calls from the MSC Aries before it was seized.

Since the onset of the Red Sea crisis, Dubai has played a hugely important role as a pressure release valve for Asia-Europe and Middle East/India-Europe supply chains, particularly the latter, with Indian exporters to Europe hit especially hard by the increased freight rates due to Cape of Good Hope diversions, and shutting that off could have wide-ranging implications.

In this context, it also takes on a multimodal dimension, as Xeneta chief analyst Peter Sand explains: “Any widening of the conflict which has already resulted in huge disruption to ocean freight services in the Red Sea region would be extremely concerning.

“For example, Dubai is a regional hub for imports as well as sea-air corridors, with containers arriving by ocean via the Strait of Hormuz for onward travel by air to Europe and North America.

“If ships are impacted from sailing into the Arabian Gulf then the disruption would be considerable,” he adds.

There are few other regional transhipment options for carriers – If Dubai was cut off, so too would Abu Dhabi; APM Terminals-operated Salalah; Oman, is outside Hormuz but close to Yemen and Houthi forces; and Sri Lanka’s Colombo is currently struggling with congestion issues of its own.

However, many regional sources are adamant it will not come to this, arguing that a full-scale closure of Hormuz would be too detrimental to Iran’s economy; not to mention the profound shock it would put on global fuel prices, given that it is the chief export route for Middle East oil exports and the subsequent threat to Saudi and UAE economies.

Meanwhile, and the presence of US naval bases at several locations in the Gulf would suggest that there are only a few, small steps from closing Hormuz to dangerously escalating the conflict.

In the immediate future, however, it is almost a certainty that insurance costs will rise with war-risk premiums implemented, and most likely accompanied by rising freight rates.