Container shipping rates still sinking, no sign yet of market floor

Spot shipping rates continue their historic slide, putting even more pressure on container lines’ contract business.

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So much for the theory that container lines are a nefarious cartel that can control freight pricing — spot rates are still falling over a year after they peaked.

“This cliff that rates have fallen from shows there is more competition in the market than a lot of people had feared,” said Patrik Berglund, CEO of rate-tracking company Xeneta, in a recent interview with American Shipper.

The pace of spot-rate declines did slow in some trade lanes in October versus August and September. However, rate losses picked up again in many lanes in November, causing global averages to fall further. There’s no sign yet of a market bottom in most trades.

Lars Jensen, CEO of consultancy Vespucci Maritime, commented on recent spot-rate action in an online post: “We are coming out of the tunnel, only to discover that the bridge we are driving onto has collapsed.”

Declines since the peak

Different spot-rate indexes provide different numbers but show the same downward trend. 

The weekly Drewry World Container Index shows a 78% decline in the global composite rate between Sept. 16, 2021, and Thursday. Drewry’s Shanghai-Los Angeles index fell 84% over that period and its Shanghai-New York index dropped 73%.

The Drewry rate assessments show a gradual decline in the first half of this year, followed by a more precipitous fall starting in August. Despite the huge drop from last year’s record peak, the global index is still 61% higher than the 2019 average, pre-pandemic.

chart of shipping rates
Spot rate in $ per FEU. Blue line: Shanghai-LA, orange line: Shanghai-NY, green line: global (Chart: FreightWaves SONAR)

The Freightos Baltic Daily Index (FBX) China-West Coast assessment plunged 93% between Sept. 5, 2021, and Thursday. The FBX China-East Coast rate is down 84% over that timeframe. The FBX global composite is down 75%.

The FBX indexes show a drop in Q4 2021, a plateau in January-April 2022, then a severe decline since May.

chart of shipping rates
Spot rate in $ per FEU. Blue line: Shanghai-LA, orange line: Shanghai-NY, green line: global (Chart: FreightWaves SONAR)

Weekly rate of change in trans-Pacific

Spot rates have fallen harder on the Asia-West Coast route than in other lanes. Asia-West Coast spot rates look like they might be close to bottoming, simply because they can’t fall much further. Xavier Destriau, CFO of ocean carrier Zim (NYSE: ZIM), said on Nov. 16: “There is not much more room for a reduction.”

Declines in the Drewry Shanghai-Los Angeles index were fastest in the week ended Sept. 8, when average rates plunged 14% or $780 per forty-foot equivalent unit versus the previous week. Weekly declines eased throughout October and November. In the week ended Thursday, the Shanghai-Los Angeles rate fell only $30 per FEU or 1.4% versus the week before, to an average of $2,039 per FEU.

chart of shipping rates
(Chart: American Shipper based on data from Drewry)

The pricing dynamic is completely different in the Asia-East Coast trade, where lingering congestion and strong import volumes have kept spot rates higher for longer, meaning they still have plenty of room to fall. 

The Drewry Shanghai-New York index fell the most in the week ended Sept. 22: 9% or $776 per FEU versus the prior week. Unlike in the Asia-West Coast market, Asia-East Coast rates show no sign of bottoming and continue to suffer sizable drops. In the week ended Thursday, rates fell 9% or $438 per FEU compared to the prior week.

(Chart: American Shipper based on data from Drewry)

Weekly rate of change for global indexes

Because of ongoing declines in the Asia-East Coast lane — as well as weakness in other trades such as Asia-North Europe — global composite indexes are continuing to sink.

The Drewry global composite was falling fastest in percentage and dollar-per-FEU terms in late September. It has continued to experience significant weekly drops over the past month. In the week ended Nov. 10, it fell 9% or $277 per FEU.

(Chart: American Shipper based on data from Drewry)

The most-watched index among shipping analysts is the weekly Shanghai Containerized Freight Index (SCFI), released each Friday. It has displayed the same pattern as Drewry’s global index: falling fastest in September but still showing continued declines in November.

(Chart: American Shipper based on data from SCFI)

Effect on contract rates

The majority of containerized cargo is moved on long-term contracts, not spot deals. 

But spot-rate moves are increasingly important for three reasons: Shippers with contracts are shifting more volume to spot to save money, reducing contract volume; the decline of spot rates to levels below contract rates has compelled shipping lines to lower some existing long-term rates mid-contract; and upcoming negotiations on 2023 annual contracts will hinge on where spot rates end up. Most Asia-Europe annual contracts begin Jan. 1 and most Asia-U.S. annual contracts begin May 1.

Even before those dates, long-term shipping rates are already falling due to new contracts signed at other times of the year as well as existing contracts being renegotiated lower.

The Xeneta Shipping Index (XSI) tracks long-term rates. The global XSI fell 5.7% in November versus October, the largest month-on-month decline since Xeneta launched the index in 2019. The regional index for U.S. import contracts fell 8.9% month on month. The Far East export index sank 8.5%, more than it has in any previous month. 

According to Berglund, “We’ve already seen how spot rates have collapsed since summer. We’re now witnessing a ‘catch-up’ as existing [annual] agreements expire and new contracts come into force.”

Ocean carriers could face a particularly painful drop in Asia-U.S. contract rates in 2023 if spot rates do not find a floor soon and continue to decline during the first half of next year. A backdrop of falling spot rates would put ocean carriers in an even worse position when negotiating next year’s agreements. 

Click for more articles by Greg Miller 

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Maritime History Notes: Tankers landed for Apollo program

Three laid-up Mission tankers were enlisted to help get a man on the moon.

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FreightWaves Classics is sponsored by Sutton Transport, an LTL leader in the Midwest for more than 40 years. Sutton Transport proudly services Illinois, Minnesota, Missouri and Wisconsin. Request a quote here.

In May of 1961, President John F. Kennedy committed America to landing an astronaut on the moon by 1970. Preparations to accomplish this amazing feat began soon thereafter. In addition to the actual rocket and space capsule, worldwide communication monitoring and tracking of the space shot were of major concern. This is where three laid-up World War II T-2 tankers supplied the solution.

T-2 Tanker (Photo: Captain James McNamara)

The three were chosen from a class known as Mission tankers of the T2-SE-A2 type. They were the Mission San Juan, Mission DePala and Mission San Fernando. They were completed in 1944 by the Sausalito, California-based Marinship Corp. at a cost of $2.95 million each and delivered to the U.S. Maritime Commission upon completion. The three were then manned by civilian mariners until 1947, when the Navy took the three and converted them to oilers. After their Naval service, they were placed in the reserve fleet in 1957.

In September 1964, the three vessels were reacquired by the Navy for conversion under the direction of the Instrumentation Ship’s Project Office for the use by the National Aeronautics and Space Administration (NASA) and the U.S. Department of Defense. They were renamed Flagstaff, Johnstown and Muscle Shoals, respectively.

The conversion contract was awarded to the General Dynamics Corp. of Quincy, Massachusetts. By June of 1966, the three were renamed Redstone, Vanguard and Mercury. The conversion of the ships costing some $90 million included the construction of a new midbody measuring 380 feet for each ship. Incorporated with these were the bow and stern sections from each of the original tankers. This gave the converted length of 595 feet for each ship.

Kopaa bulker (Photo: Captain James McNamara)

The former midship’s bridge was removed from each vessel and a new enlarged structure was placed well forward. Also enlarged was the afterdeck house, which was heightened. The ships each had a crew of 90 officers and men and 120 technicians from the Air Force and NASA. The Vanguard was accepted for service in the Atlantic Ocean, the Redstone for the Indian Ocean and the Mercury for the Pacific Ocean. Further modifications were made to the communication and telemetry at Bethlehem Steel’s Hoboken Shipyard a year later.

Throughout the Apollo program, the three ships served well and by 1970 were returned to the Maritime Administration Reserve Fleet. The Vanguard and Redstone never sailed again, but in June 1970, Matson Navigation purchased the Mercury. It was towed to the Willamette Iron and Steel Shipyard in Portland, Oregon, and converted into a bulk carrier for $4 million.

Kopaa with hatches open in color (Photo: Captain James McNamara)

The ship was renamed Kopaa (Hawaiian for sugar) and delivered to Matson in March 1971 for its sugar trade. The Kopaa completed 111 voyages to Hawaii at an average speed of 15.5 knots with a crew of 40 until being sold to the California and Hawaiian Sugar Co., a subsidiary of Pacific Gulf Marine in 1981. The ship was upgraded with its fireroom and galley being automated, thus reducing the manning from 40 to 28 crew. The ship sailed in the grain trades until being scrapped in Kaohsiung, Taiwan, in June 1984 at 40 years of age.

FreightWaves Classics articles look at various aspects of the transportation industry’s history. If there are topics that you think would be of interest, please send them to

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Georgia Ports Authority puts customers, drivers first as demand surges

GPA is working hard to meet growing demand. To achieve this goal, it has focused on infrastructure improvement and expansion.

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West Coast ports have been slammed with a slew of headwinds recently, including record-breaking congestion and labor disruptions. As a result, East Coast ports have gained popularity with shippers — and carriers — of all types.

The Port of Los Angeles saw throughput fall 25% year over year in October, and the Port of Long Beach experienced a 24% year-over-year drop. In contrast, the Port of Savannah experienced a 2% year-over-year climb, and the Port of Charleston realized 7% annual growth.

While a portion of the West Coast’s dropping volumes can be attributed to waning consumer demand for durable goods, the growth seen on the East Coast makes it clear that companies are beginning to favor the Eastern Seaboard.

“We’ve seen this time and time again. The West Coast has had challenges in the past, and there has been a shift in cargo to the East Coast,” said Ed McCarthy, Georgia Ports Authority chief operating officer.

Historically, when freight has shifted from west to east due to port challenges, the volume has not shifted back quickly once those issues are resolved. This means that East Coast ports — including Southeastern ports like those GPA operates — should be preparing for recent cargo influxes to stick around.

“When it shifts here, only 1-2% actually shifts back year over year,” according to McCarthy. “Truck drivers, BCOs and customers want ease of business. Georgia Ports Authority is easy to do business with.”

Georgia Ports Authority hosts a semiannual driver appreciation day at the ports. During these events, executives go out and speak to the truck drivers who move in and out throughout the day. This provides drivers an opportunity to offer feedback, whether giving compliments or airing grievances.

Recently, McCarthy has heard a lot of positive feedback from drivers who have moved from other areas of the country, especially the Northeast, due in large part to the ease of doing business in Georgia. In fact, GPA has had 5,300 new drivers register to operate at the ports this year alone, according to McCarthy.

This new traffic has, of course, proved somewhat challenging for the ports. Typically, GPA operates with a 20% capacity buffer, according to McCarthy. The surge of attention has overtaken that buffer this year, but the ports are still working hard to provide an efficient and pleasant experience for everyone who passes through.

To meet growing demand, GPA has focused on infrastructure improvement and expansion, including:

  • Reconstructing Berth 1 to provide extra capacity for ships over 14,000 twenty-foot equivalent units.
  • Expanding to create Garden City Terminal West with 90 acres of storage space and a new full-service truck gate.
  • Adding on to the Mason Mega Rail over the past several years.
  • Adding 20,000 new container slots at Garden City Terminal in 2022.

GPA has also expanded port operating hours — from 6 a.m. to 6 p.m., to 4 a.m. to 9 p.m. This decision was based on feedback from local and regional carriers, and it has allowed them to make over 5,000 more container moves per day, according to McCarthy.

Ultimately, he views GPA as a partner to both drivers and the community at large. This attitude has guided the ports through a myriad of challenges, and it has undoubtedly played a role in GPA’s positive reputation in the industry.

Click here to learn more about Georgia Ports Authority.

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Could Russia sanctions work in practice even if they fail on paper?

Even if no oil moves under price caps, Russian exports could face deep discounts and continue to flow via “shadow tankers.”

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The European Union’s ban on seaborne imports of Russian crude goes into effect on Monday. As of Thursday, the G-7 and EU price caps meant to complement that ban had still not been finalized. 

Western sanctions are designed to curb Russian profits while simultaneously keeping global markets supplied with petroleum. 

On paper, what has transpired to date looks like a convoluted, naively designed and messy fiasco. In practice, the plan might work, at least partially — though not the way you’d think if you took it literally.

EU sanctions and G-7 ‘relief valve’

In June, the EU agreed to ban seaborne imports of Russian crude beginning Dec. 5 and imports of Russian refined products beginning Feb. 5. It also banned EU shipping services — including shipping reinsurance — for all Russian exports to non-EU countries as of those dates.

U.K. protection and indemnity (P&I) clubs insure over 90% of the world’s tankers. U.K. P&I clubs heavily rely on EU reinsurance. Thus, the EU sanctions would effectively bar most tankers from Russian export trades.  

This alarmed U.S. officials, who feared EU sanctions went too far. By cutting off too much Russian volume, they feared oil prices would spike and prices for U.S. consumers would rise.

To rectify this, the U.S., through the G-7, came up with the price-cap plan to act as a “relief valve” for EU sanctions. Any Russian crude exported under a price cap set by the G-7 could continue to use G-7 countries’ insurance and finance. Theoretically, Russia would receive less money for its crude, tankers could continue to carry Russian exports and oil markets would not be disrupted.

The complication

But U.S. government officials have acknowledged that the G-7 price cap requires the EU to follow suit with its own price cap. Even if U.K. P&I insurers get the green light under the G-7 price cap, their reinsurers would be unable to participate due to the EU sanctions, unless the EU had its own price cap that put its reinsurers in the clear.

EU countries have been holding contentious negotiations on the cap (which will not apply to EU imports from Russia; they will be banned at any price). On Thursday, the Wall Street Journal reported that the European Commission is asking member states to approve a cap of $60 per barrel. The EU vote must be unanimous.

Even if the G-7 and EU finalize the cap in the coming days, the plan still looks unlikely to work as stated on paper. Western insurance and finance providers may opt not to participate and instead “self-sanction,” as they reportedly already are. Russia may refuse to sell any crude or products under a cap. Russian officials have insisted they will not.

How price curbs could work in practice

This all sounds like a recipe for policy failure. But even if no cargoes move under a price cap, Russia may still earn less from oil exports and a good portion of its exports may still continue to flow.

On the pricing side, uncertainty over EU sanctions, the price cap, and how they will be enforced has affected sentiment among Russian oil buyers. The fewer buyers interested in taking the risk of importing Russian oil, the higher the discount Russia will have to accept from the remaining buyers.

This is already happening. On Monday, Argus Media reported the price of Russia’s Urals crude had fallen to a 22-month low, partially due to “anxiety around sanctions risk.” Citing data from Platts, it said Urals was assessed at $54.94 per barrel, a $29.50 per barrel discount to Brent, the highest spread since Aug. 11.

In a separate report, Argus said that reduced buying from Europe in recent months has “increased availability,” leading to “deep discounts for Russian crude” relative to Brent. “With the EU embargo on seaborne Russian crude from Dec. 5 expected to free up even more supply, Urals values are under pressure.”

If Russia must give a higher discount to buyers due to unease over sanctions combined with the effect of the EU import ban, it’s the same outcome price-wise — less cash to Russia — as if the oil was delivered under a cap.  

How Russia could maintain volumes

The second part of the Western plan is to keep enough Russian crude flowing to avert a global price spike. The stated policy is for Russian oil to continue moving aboard mainstream tankers using Western insurance under a cap protocol.

“There could be a scenario where oil will actually be sold according to the cap and sanctions wouldn’t apply, so the Western insurance market would actually be able to service it,” Lars Barstad, CEO of tanker owner Frontline (NYSE: FRO), said on a quarterly call Thursday.

Alternatively, the desired outcome — continued flows — could occur if Russian oil was instead carried by a fleet of tankers that didn’t use U.K. P&I insurance and Western finance.

U.S. Treasury Secretary Janet Yellen openly acknowledged this option. Asked about India’s potential to continue buying Russian exports, she told Reuters: “India can purchase oil at any price they want as long as they don’t use these Western services and they find other services. Either way is fine.”

‘Shadow fleet’ expands

This scenario is already playing out. The EU sanctions deadline and talk of price caps led to a flurry of buying activity in recent months as private shipowners acquired tankers to assumedly operate without Western shipping services. Market forces — i.e., the potential to earn huge spot-rate upside by moving Russian oil — incentivized shipowners to act.

“We have seen high activity in the S&P [sale and purchase] market for more vintage tonnage that we expect to enter this [Russian] market,” said Barstad. These vessels would “be potentially insured in other markets.”

According to brokerage BRS, there are now 1,027 tankers in the so-called “shadow fleet,” which it defines as those involved in oil transport for Venezuela, Iran or Russia, or linked to those countries’ governments. Of those, 503 are over 34,000 deadweight tons (DWT) in size.

BRS reported that 111 tankers of 34,000 DWT or larger have been sold since Russia’s invasion of Ukraine. “These tankers have generally been elderly with an average age of 18 years,” BRS said. “The majority of these tankers have been sold to ‘niche’ private shipping companies, which we believe have viewed the ongoing situation with Russia as an opportunity.

“In our view, there is now enough dirty [crude and fuel oil] shadow tonnage to permit Russia to support its exports at close to today’s levels. We believe that if anything will hinder Russia’s crude exports post-Dec. 5, it will be [Russia’s inability to find] sufficient non-OECD buyers to replace the 1.4 million barrels per day currently purchased by European refiners.”

The counterargument is that there will not be enough shadow tankers, particularly given winter weather restrictions in northern Russian ports requiring the use of ice-class vessels, meaning that Russian crude exports will be reduced.

Longer lifespans for tankers

The EU ban on Russian imports is expected to be highly positive for crude-tanker demand due to the longer voyage distances required for the EU’s replacement imports. But the expansion of the shadow fleet is a negative for tanker supply, as well as for shipping safety.

Vintage tankers that would ordinarily be scrapped will now remain in service. Data provider VesselsValue reported Tuesday that the value of 20-year-old very large crude carriers (VLCCs; tankers that carry 2 million barrels of crude) has increased 51% since January. The value of 20-year old Aframaxes (750,000-barrel capacity) has surged by 86% since the beginning of this year.

One of the top talking points of tanker executives is that the number of new tankers on order is much lower than tankers 20 years or older. Employment of vessels of this age “is not only limited but almost impossible in the compliant tanker market,” said Barstad. Frontline estimated that there are around twice as many 20-year-old tankers in the segments it operates in as there are tankers on order.

However, this calculation is much less bullish for future rates than it was in previous cycles because of the enhanced ability of older ships to extend their lifespans in the shadow fleet.

Safety, environmental risks of divided fleet

The side effect of Russian sanctions is the further bifurcation of the tanker business. On one side, there is the mainstream tanker fleet. On the other, tankers carrying Russian crude after Dec. 5, along with those in sanctioned Iranian and Venezuelan trades.

This increased bifurcation runs counter to the industry’s goal of a global regime with all vessels under the same safety and environmental regulatory framework.

Shadow tankers frequently turn off Automatic Identification System vessel-position equipment. Questions have also been raised about shadow-tanker insurance in the event of a spill, as well shadow-tanker classification societies (the organizations that maintain technical standards).

“We consider that the increased use of vintage tonnage poses a risk in itself,” said BRS. “There is uncertainty surrounding the upkeep of vintage shadow tonnage, with many of these vessels having moved to niche classification societies.”

The Turkish government recently stated that all tankers loading at Black Sea ports will have their insurance vetted prior to transiting the Bosporus Strait.

The Russian trade will also increase ship-to-ship transfer (STS) operations on the high seas, as smaller tankers capable of entering the country’s ports must transfer cargoes to larger vessels for long-haul runs. “The increased use of ship-to ship transfers has highlighted the risk posed by undertaking such complex maneuvers on the high seas, rather than more sheltered locations,” said BRS.

According to Barstad, “We are already seeing these STS operations happening, not inside EU territory, but in other areas. The very, very concerning part of that is that not all of these areas are suited to do STS operations, so the safety and pollution risk increases.”

Click for more articles by Greg Miller 

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TradeLens global data-sharing platform shuttering

The blockchain-enabled global platform TradeLens will go offline by the end of the first quarter of 2023.

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A.P. Moller – Maersk and IBM announced Tuesday the dissolution of the blockchain-enabled TradeLens platform. 

“TradeLens was founded on the bold vision to make a leap in global supply chain digitization as an open and neutral industry platform. Unfortunately, while we successfully developed a viable platform, the need for full global industry collaboration has not been achieved. As a result, TradeLens has not reached the level of commercial viability necessary to continue work and meet the financial expectations of an independent business,” Rotem Hershko, head of business platforms for Maersk, said in the announcement. 

The platform will go offline by the end of the first quarter of 2023, according to the news release.

TradeLens was launched by IBM and GTD Solution, a division of Maersk, in August 2018 as an open and neutral platform underpinned by blockchain technology for the transparent and secure exchange of global trade information. 

Zim Integrated Shipping Services joined TradeLens in April 2019, followed by CMA CGM and MSC in May and Hapag-Lloyd and Ocean Network Express in July of that year. By December 2019, TradeLens was publishing 2 million events per day and its ecosystem included more than 175 organizations. 

Marc Bourdon, senior vice president of CMA CGM’s commercial agencies network, acknowledged in October 2020 that it was highly unusual for competitors to cooperate, particularly when it came to sharing information. 

“Digitization is a cornerstone of the CMA CGM Group’s strategy aimed at providing an end-to-end solution tailored to our customers’ needs. An industrywide collaboration like this is truly unprecedented. Only by working together and agreeing to a shared set of standards and goals are we able to enact the digital transformation that is now touching nearly every part of the global shipping industry,” Bourdon said. 

At the time of Bourdon’s statement, TradeLens was gathering daily data from more than 600 ports and terminals around the world.

Andre Simha, MSC’s global chief digital and information officer, called the TradeLens collaboration “an important initiative in the digitalization of global shipping and logistics with the potential to help carriers and their customers to increase transparency and reduce errors and delays, all at a crucial time when the industry is rethinking and improving the resiliency of supply chains.”

Tuesday’s announcement said Maersk is still committed to digitizing the supply chain “through other solutions to reduce trade friction and promote more global trade.” 

Hershko said TradeLens’ progress will be used as a steppingstone to advance Maersk’s digitization efforts and that the company looks forward to “harnessing the energy and ability of our technology talent in new ways.” 

The announcement did not say what roles, if any, TradeLens employees or its CEO will have at Maersk going forward. 

Kim Spalding, who was hired to lead TradeLens earlier this year, recently told FreightWaves her priorities for the platform.

“First, we want to help the industry scale digitization. One of those areas I’m focused on is partnerships. The second thing is just to focus on really great customer experiences, which means we want to continue to rapidly launch features that make our products better, and we want to expand the breadth, coverage and quality of the data that we have on the platform to help customers,” she said. 

Asked Tuesday what would become of Spalding and other TradeLens employees, a Maersk spokesman told FreightWaves, “At this point, we have no further comments.”

CMA CGM, Hapag-Lloyd announce leadership changes in North America

MSC acquiring international harbor towage provider

Hapag-Lloyd acquiring SAAM terminal operations in $1B deal

Click here for more American Shipper/FreightWaves stories by Senior Editor Kim Link-Wills.

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Shipping stocks in the crosshairs as China fears mount

Hopes that China will relax its zero-COVID policy are fading, raising concerns about shipping volume fallout.

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What’s bad for China is bad for ocean shipping stocks. China is pivotal to tanker and dry bulk demand, as well as to containerized cargo flows.

Analysts have been touting the reopening of China’s economy following COVID lockdowns as a positive catalyst for shipping stocks. Not only has that not happened but COVID cases in China have spiked — with 40,000 cases reported Sunday — and Chinese citizens have taken to the streets to protest lockdowns.

As concerns about Chinese demand and a global recession mount, the price of oil is falling, and with it, the price of tanker stocks. “Hopes earlier this month that China would eventually relax its zero-tolerance approach to COVID seem unfounded,” warned tanker brokerage BRS on Monday.

Meanwhile, container shipping shares continue to fall and dry bulk shares remain in limbo.

Tanker stocks just off highs

According to Clarksons Securities analyst Frode Mørkedal, rates for very large crude carriers fell 16% last week compared to the week before. “Crude tanker equities generally fell along with oil prices,” he added in a research note Monday.

Shares of crude-tanker owners Nordic American Tankers (NYSE: NAT) and Euronav (NYSE: EURN) fell 4% and 6%, respectively, on Monday. Share prices of crude- and product-tanker owners International Seaways (NYSE: INSW) and Frontline (NYSE: FRO) dropped 4% and 6%, respectively. Shares of product-tanker owners Scorpio Tankers (NYSE: STNG) and Ardmore Shipping (NYSE: ASC) both fell 4%.

However, the recent pullback needs to be put in context. Most tanker shares are up triple digits year to date (YTD) and were at or near 52-week highs only a week ago.

U.S.-listed tanker stocks have segregated into three levels of performance. The pure product-tanker players are at the top, with Scorpio Tankers up 293% YTD and Ardmore Shipping up 331%, according to data from Koyfin.

In the middle bracket are mixed-fleet owners International Seaways and Teekay Tankers, both up close to 200% YTD.

The other large tanker names, including Euronav, Frontline, Nordic American Tankers and DHT (NYSE: DHT), are up in the range of 83-105% YTD.

chart showing tanker shipping stock performance
(Chart: Koyfin)

Furthermore, the recent mini-pullback for tanker shares comes before a potentially large positive catalyst for demand measured in ton-miles (volume multiplied by distance): The EU will ban imports of Russian crude on Dec. 5 and Russian petroleum products on Feb. 5, requiring replacement imports to travel much longer distances.

No relief for container shipping stocks

Container spot freight rates continue to decline. The Drewry global composite index shed another 7% last week, dropping to $2,404 per forty-foot equivalent unit.

That’s down 77% from the peak in September 2021 albeit still 82% higher than the 2019 average, pre-pandemic.

chart showing container freight spot index; container shipping shares are declining
Global average spot-rate assessment in $ per FEU (Chart: FreightWaves SONAR)

According to Stifel analyst Ben Nolan, there has been “no holiday relief for container shipping. Every quarter from here is likely to decline for all liner companies until sometime into the undefined future.”

Among the U.S.-listed container shipping stocks, vessel-leasing companies Euroseas (NASDAQ: ESEA), Danaos (NYSE: DAC) and Global Ship Lease (NYSE: GSL) are down 21-26% YTD. These companies have leases in place to protect against market downside until those contracts expire.

Liner stocks have fared worse. Matson (NYSE: MATX) is down 30% and Zim (NYSE: ZIM) — by far the worst performer among larger shipping names in 2022 — is down 64% YTD. Zim shares dropped 7% on Monday, hitting a new 52-week low.

chart showing container shipping stock performance
(ChartL Koyfin)

Dry bulk shares leveraged to China outcome

According to Mørkedal, “If China reverses its COVID policy and removes restrictions … we expect dry bulk shipping to be the primary beneficiary when considering all shipping sectors.”

The implied flipside is that dry bulk companies have the most to lose if China’s woes deepen.

Rates for larger Capesizes bulkers averaged $13,800 per day as of Monday, according to Clarksons. That’s up 48% week on week, but still below the average breakeven for Capesizes 10 years or younger and well below the 2022 high of $38,200 per day in late May.

Dry bulk shares rose during the first five months of the year, hitting highs in late May and early June. As spot rates retreated, dry bulk shares gave back their gains over the following four months, hitting lows in late September. After holding fairly steady in October, they rose moderately in the early November but have fallen back in recent trading sessions.

As of Monday, Eagle Bulk (NASDAQ: EGLE) was still up 11% YTD and Golden Ocean (NASDAQ: GOGL) was up 1.5%. Diana Shipping (NYSE: DSX) was down 6% YTD. Star Bulk (NASDAQ: SBLK) and Geno Shipping & Trading (NYSE: GNK) were down 9%. Safe Bulkers (NYSE: SB) was down 25% YTD.

(Chart: Koyfin)

Dry bulk stocks, like tanker and container stocks, were under pressure on Monday. Safe Bulkers and Star Bulk dropped 4%, Eagle Bulk and Golden Ocean 5%, and Diana 8%.

Click for more articles by Greg Miller 

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Oil Prices Plunge On China Unrest

By Yongchang Chin (Bloomberg) Oil tumbled to the lowest level since December as a wave of unrest in China punished risk assets and clouded the outlook for energy demand, adding to the stresses…

By Yongchang Chin (Bloomberg) Oil tumbled to the lowest level since December as a wave of unrest in China punished risk assets and clouded the outlook for energy demand, adding to the stresses...

Enhanced ship routing key to US-Singapore low-carbon corridor

Shippers and carriers are increasing the pressure on ports and other supply chain participants to roll out “green corridors” using digital technology.

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A trans-Pacific trade lane between Singapore and Southern California will use enhanced routing technology to help convert it into a corridor aimed at speeding deployment of low- and zero-carbon container ships.

The “green and digital shipping corridor,” a partnership between the Maritime and Port Authority of Singapore (MPA) and the ports of Los Angeles and Long Beach, is part of a wider Green Shipping Challenge initiative unveiled at the 27th United Nations Climate Change Conference (COP27) in Sharm El-Sheikh, Egypt, earlier this month.

Included in the green corridor partnership is C40 Cities Climate Leadership Group, a network of international mayors committed to limiting rising average global temperatures.

“Reducing greenhouse gas emissions in the maritime supply chain is essential, and this trans-Pacific partnership will help us build a network of ports and key stakeholders to help decarbonize goods movement throughout the Pacific region,” commented Port of Los Angeles Executive Director Gene Seroka.

The green corridor connecting Los Angeles and Singapore builds on a similar low-carbon corridor partnership announced in January by the ports of Los Angeles and Shanghai, major hubs on one of the world’s busiest container shipping routes. Similarly, Singapore, Los Angeles and Long Beach are hub ports and considered “vital nodes on the trans-Pacific shipping lanes and key stakeholders in the maritime sector’s green transition,” according to the corridor partners.

“While we don’t have as much container volume moving between our port complex and Singapore, it’s probably the biggest fuel bunkering hub in the Pacific,” Chris Cannon, chief sustainability officer at the Port of Los Angeles, told FreightWaves. “So we really wanted to begin to work with them because of the critical importance they play in fuels and bunkering for the entire trans-Pacific trade.”

Cannon said that up until the green corridor partnerships with Shanghai and Singapore, cutting air pollution centered around cargo-handling equipment, drayage trucks serving the container terminals, zero-emission locomotives moving in and out of the port, and low-sulfur fuel emission control areas that extend 200 nautical miles from the coastline.

“That’s where our focus had ended,” Cannon said. “But with the green shipping corridors, our focus is starting to be on what we can do to reduce carbon emissions along a ship’s entire journey.”

Untangling supply chains

To make that happen, the partners in the initiative will use digital technology, Internet of Things (IoT), and cloud-based computing to improve how cargo is transferred, Cannon emphasized.

“The plan is to identify the most direct and efficient routing for the ships and the most efficient way to track and provide advance notice of where cargo’s going, so that when it’s picked up, it can be picked up quickly, with advanced staging in place so that you can plan for things like customs clearance, freight forwarding and [drayage] appointments,” he said. “If we can reduce the number of times a container is touched, that reduces the amount of overall activity associated with the movement of that container, which means less fuel used which generates less carbon emissions.”

While carriers presumably always seek the most efficient routing to reduce fuel costs, electronic data interchange within various sectors of the supply chain has been lacking, according to Peter Zimmerman, North American software sales manager for Vormittag Associates, Inc., an enterprise resource planning company.

“If we know when a ship is due in at port, the port can be more efficient — whether that’s storing cargo or notifying the trucking or rail company,” Zimmerman told FreightWaves. “So it’s not just the green aspect of it. There hopefully will be an opportunity for cost reduction in the supply chain as well.”

Initiative has shipper, carrier buy-in despite costs

The strongest backers of the initiative are the cargo owners, according to Cannon. He noted that Amazon, Ikea and other retailers last year committed to purchasing ocean freight services powered only by zero-carbon fuels by 2040 because consumers increasingly are asking that the goods they buy are transported in a way that reduces their carbon footprint.

“They’re telling the shipping lines, if you want my business, you better get yourself a low-carbon ship because, if you don’t, someone else will,” he said.

Container ship operators A.P. Moller – Maersk, CMA CGM, COSCO Shipping Lines and Ocean Network Express have signed on to the Shanghai corridor and are expected to commit to the Singapore corridor as well.

Cannon also acknowledged the low-carbon ships on order by some of the shipping lines are more expensive to operate.

“Cargo owners are willing to pay more if their cargo is moved in the manner they want,” he said. “And shipping lines are going to build the cost into their business plans because that’s what their customers want.”

No regulatory oversight — yet

The Federal Maritime Commission, which regulates international container shipping in the U.S., has been extracting information from carriers, shippers, ports and terminal operators to figure out how to improve data flow in an effort to speed cargo through the supply chain.

Cannon points out, however, that the green and digital initiatives are so far voluntary with no mandates planned from regulatory agencies.

“The best way to get progress in reducing emissions in shipping is to start voluntarily and use incentives to encourage the use of these types of fuels and participate in these corridors,” he said.

At the same time, he said, regulators are interested and supportive.

“The IMO [International Maritime Organization, the U.N. agency responsible for regulating maritime shipping] is excited and wants to help us, and would like to help us with tracking our progress,” Cannon said. “FMC is interested as well, along with the [Environmental Protection Agency] and the [California Air Resources Board].”

The World Shipping Council (WSC), which represents container line shipping and which Cannon said also supports the Singapore initiative, wants to ensure that any regulations involving the adoption of low-carbon fuels takes into consideration “the total climate footprint from production to combustion.”

In a Nov. 21 letter to the European Union, which has proposed using an emissions trading system as a way to lower emissions from global shipping, WSC and its coalition members emphasized that when a price is set for fuel emission, “it is important that a fuel is not considered green if it has left a significant climate footprint during extraction and production,” stated Jim Corbett, WSC’s environmental director for Europe.

“Liner carriers are already investing in alternative fuels and technologies, and urge the EU to ensure policies are geared to accelerate investments in the necessary renewably derived fuels by adopting a full life-cycle perspective.”  

Click for more FreightWaves articles by John Gallagher.

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Price Cap Halted As Poland Demands Harsher Penalty On Russian Oil

By Ewa Krukowska (Bloomberg) European Union diplomats suspended talks on capping Russian oil prices, as Poland and the Baltic states objected to a proposal they consider too generous to Moscow. Diplomats…

By Ewa Krukowska (Bloomberg) European Union diplomats suspended talks on capping Russian oil prices, as Poland and the Baltic states objected to a proposal they consider too generous to Moscow. Diplomats...

Gulf Coast ports continued to see rising volumes in October

Gulf Coast ports got a boost in October from imports of steel, plywood and bagged goods, as well as exports of crude oil.

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Gulf Coast ports got a boost in October from imports of steel, plywood and bagged goods, as well as exports of petroleum and crude oil.

Port Houston sees strong gains in imports

Port Houston saw a 13% increase in container volume during October, led by increased demand for bagged goods, plywood and auto imports, officials said.

Port Chairman Ric Campo said 2022 hasn’t shown any signs of “softening” demand at the port.

“Our volumes continue to be strong — we continue to hear about volume across the country softening, but that still hasn’t happened here,” Campo said during the port’s November meeting. “Three of our best months ever were over the last three months with more volume at Port Houston.”

Port Houston handled a total of 371,994 twenty-foot equivalent units for the month, a 13% year-over-year increase compared to 2021.

Overall, container volume is up 18% year to date at Port Houston’s terminals, totaling 3.3 million TEUs.

Goods seeing significant increases during October included bagged goods, up 239%, and

plywood, up 73%, according to a news release. Auto imports were up 61% year over year during October and 9% year to date. 

Steel imports were down in October, the first time the commodity has seen a year-over-year decline since June 2021.

Steel import volume decreased 20% year over year in October to 295,334 tons. Steel import volumes year to date are up 63% compared to the same period in 2021 at 4.4 million tons.

Loaded container exports during October were up 25% year over year at 118,781 TEUs. Full import container volume was up 20% year over year at 181,292 TEUs.

Port Houston totaled 696 ship calls in October, a 2% decline compared to the same month last year. The port also handled 245 barges in October, a 29% decline compared to October 2021.

Port of New Orleans sees gains in breakbulk and container volumes 

Port of New Orleans saw increased breakbulk and container cargo volumes during October, bolstered by shipments of steel, rubber and coffee, officials said.

The port recorded total breakbulk tonnage of 150,313 short tons in October. Year to date, the port has seen a 38% increase in breakbulk cargo compared to the same period in 2021.

“Commodity-wise, steel continues to be our number one breakbulk import and rubber is our second highest,” Port of New Orleans spokeswoman Kimberly Curth told FreightWaves. “In October, we had a unique shipment of a 40-meter-long steel pipe that was discharged to the dock and reloaded to a barge, and we received a third breakbulk coffee vessel.” 

The port reported 18 breakbulk vessel calls in October, the same as September.

Container cargo totaled 41,934 TEUs for the month, up 19% compared to September and 8% year to date over the same period last year.

“We had 32 container vessel calls in October, the highest yet of this fiscal year,” Curth said. “This is an indication that market dynamics — including ocean freight pricing and demand — have shifted to a more favorable environment for exporters. We’re hopeful this trend continues during the coming months.”

The port handled 29,384 Class I railcar switches in October. The port handles switching operations for the six Class I railroads that operate in New Orleans: BNSF Railway, CN, CSX, Kansas City Southern, Norfolk Southern and Union Pacific.

Port of Corpus Christi sets tonnage record 

The Port of Corpus Christi in South Texas moved a record 48.3 million tons of commodities during the third quarter, a 4% increase over the previous record set in the second quarter of 2022.

The growth was primarily a result of strong exports of U.S. crude oil to Western European buyers that have moved away from Russian imports, port officials said.

“In these times of uncertainty, moving America’s energy to other U.S. demand centers and our overseas allies and trading partners has never been more critical for our economic and national security,” Port of Corpus Christi CEO Sean Strawbridge said in a news release.

Crude oil shipments during the third quarter totaled 28.7 million tons, for a gain of 5% over the prior record set in the second quarter.

Total tonnage for refined products for the third quarter amounted to 8.3 million tons, liquefied natural gas shipments were 4.2 million tons and dry bulk cargo came in at 2.1 million tons.

For October, the Port of Corpus Christi moved 16.8 million tons of cargo, a 15% year-over-year increase from the same month in 2021.

Shipments of crude oil totaled 10.3 million tons during October, a 24% year-over-year increase. Exports of crude oil totaled 9.4 million tons for the month, a 25% increase from the same month last year.

The port also handled 5.5 million tons of petroleum during October, a 10% increase compared to the same year-ago period. Exports of petroleum for the month topped 4.3 million tons, a 4% increase from the same period last year.

The Port of Corpus Christi had 733 ship calls in October, a 32% year-over-year increase from 2021.

Port of Mobile container cargo posts 5% increase

Despite a modest slowdown following the holiday shipping rush, October delivered the second-highest monthly container volume total month in the Port of Mobile’s history.

The Alabama port handled 45,990 TEUs in October, a 5% increase compared to the same year-ago period. 

“With 467,222 TEUs moved year to date, 2022 volumes are 12.8% higher than volumes at this point in 2021, keeping the port on track to post a record year, anticipated to break 550,000 TEUs,” Port of Mobile spokeswoman Maggie Oliver told FreightWaves.  

During September, the port recorded 52,911 total TEUs, the highest monthly container volume total for the year so far.

Oliver said intermodal rail freight volumes are up 143% year to date compared to the same period in 2021, while refrigerated cargo shipments are up 11.3% year to date compared to last year.

Click for more FreightWaves articles by Noi Mahoney.

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