World Maritime News
Container carriers learning from past
Withdrawing capacity on east-west trades has been successful for carriers to prevent rate collapse. According to Sea-Intelligence, the carriers have been able to sustain spot market rates despite weakening demand as countries closed most of retail outlets and manufacturing. A.P. Møller-Maersk CEO Søren Skou said “The low industry order book is geared to a low-growth scenario, which was not the case in 2008-2009”. The consolidation of carriers into three alliances has also improved their ability to respond jointly to shifting market dynamics, he added. Slots on routes to the US west coast have become tight recently and some carriers consider restoring some of the blanked services.
Container carriers in talks over state-aid access
Evergreen and Yang Ming have held talks with government officials about accessing U$ 1 billion state-aid package to benefit from favorable borrowing costs and liquidity support. Under the plan, the government has pledged to provide guarantees of no less than 80% of the approved loans plus subsidies for interests. That will allow Evergreen and Yang Ming to gain access to extra financing on top of their existing borrowing limits from banks in Taiwan, a ministry official told. CMA CGM will receive €1.05 billion (U$ 1.1 billion) state-backed loan to help its cash position. The loan is part of a state-guaranteed loans scheme. The South Korean government said it would make U$ 382 million available to HMM as part of a U$ 1 billion emergency package for the Korean maritime sector, in addition to U$ 600 million convertible bond issued by HMM to policy lenders.
Global port throughput forecast to drop 8% in 2020
As global demand continues to be significantly affected, we expect volumes in the second quarter to decrease across all businesses, possibly as much as 20%-25%, said A.P. Møller-Maersk CEO Søren Skou. We see a steep decline in the course of the second quarter and expect it will run into the third quarter, then improve through the fourth quarter with a solid recovery in 2021, Hapag-Lloyd CEO Rolf Habben Jansen said. Global container throughput is projected to fall by 8% in 2020 according to Drewry. Its senior manager container research Simon Heaney said “our assumption is that activity will improve through second half of the year as lockdowns are lifted, and stimulus packages kick in.”
In the worst-case scenario, which the International Monetary Fund said, would see global GDP fall by as much as 6% in 2020, which would be translated to a 12% fall in port liftings for the year.
Japanese shipping consortium to launch zero-emission electric tanker in 2022
Seven major Japanese companies have come together to develop and commercialize zero-emission electric vessels and expect to launch an electric tanker by March 2022.
The collaborative group, named”e5 Consortium” aims to establish a platform that brings together each member’s expertise in designing electric vessels. The overcoming challenges of a depleting local marine manpower will be supported by improving onboard communications systems and utilizing elements of autonomous sailing technologies and big data to provide onshore support for crews and improve the safety and efficiency of operations.
Supply chain risk mitigation shows shipping’s future direction
The Chinese economy has been so influential that its share in global trade in some industries exceeds 50%. Multi-nationals benefited from a single source of supply, which also became a significant source of demand. The coronavirus crisis has shown that it would be better to store inventory in strategic locations from where it can be easily accessed and delivered to customers. In recent years, the US-China trade war and rising wages in China has been enough for some multi-nationals to replace their supply chains to other parts of Asia and near-shoring countries. Companies that have already diversified production and warehousing have been able to maintain their supply chains as the coronavirus unfolded. Investment in regionalized supply chains will have implications not only for container ship design but also for terminals, storage and in-country distribution. There should be a change in philosophy from the just-in-time nature of the supply chain to risk mitigation.
DCSA targets electronic bill of lading standard
The Digital Container Shipping Association (DCSA) said on 19 May it plans to push an initiative to enable “the open collaboration necessary for achieving full electronic bill of lading adoption”. DCSA, a non-profit consortium of nine container lines working to develop interoperable standards, estimates that electronic bills of lading could save the shipping industry a collective U$ 4 billion by 2030 in processing costs if it were to reach 50% adoption by shipping volume.
Fixed-payment leases help ports weather COVID-19 crisis
Most US ports have sufficient liquidity and cash on hand to weather what is expected to be a 20% decline in cargo volumes during the COVID-19 pandemic, according to an analysis of the ports’ financial health by Moody’s Investors Service. However, the ports’ financial resilience-derived from fixed payment requirements from terminal operators, stevedores, shipping and cruise lines-could pressure the investors that back those private-sector interests to ramp up their support if the trade disruptions from COVID-19 are prolonged.
Read more: JOC