Freight Shipping News

SHIPPING INDUSTRY NEWS - 13th January 2014


Drewry report Asia-Europe mid-December GRI largely sticking

The latest GRI on headhaul Asia-Europe container shipping routes, appear to be largely sticking, according to freight market intelligence consultant Drewry.

The Shanghai-Rotterdam Container Freight Rate weekly benchmark, published by World Container Index, slid by less than 2% to US$2,978/feu on 2 January on the previous week.

Drewry said this indicated "that the carriers have been able to sustain most of the gains experienced from the mid-December GRI." It expects the GRI scheduled in January to lift rates further "if supported by a pre-Chinese New Year demand rush."

An analysis of the Shanghai-Rotterdam benchmark in 2013 shows that rates stood at $2,397/feu on 3 January and a year later had risen by over 24%.

However, during the intervening 12 months they were subjected to a rollercoaster ride as shipping lines anounced GRIs only to see the resulting gains gradually whittled away in the following weeks and even fall well below pre-hike levels.

On 18 April. rates dipped under $2,000 mark for the first time in 2013. More deterioration followed, rates reaching a low point for the year at $990/feu on 27 June.

A hefty GRI in early July arrested the decline spectacularly, the benchmark leaping by almost 165% in the space of a week to $2,622/feu.

But once again most of the ground gained was lost. A November GRI stopped the slide, around half of the hike sticking and a fresh GRI in December saw rates finish the year just above $3,000/teu.

Montreal shipping operations affected by ice conditions

Inchcape Shipping Services (ISS) is advising that due to the extreme cold weather which has settled over the eastern North American continent, there have been heavy delays in shipping operations since 4th January 2014.

The delays have been caused primarily by ice build-up between Lanoraie and the Three Rivers (St. Lawrence River). Three Canadian Coastguard ice breakers have been working round the clock in the area since then, but no ships have been allowed to depart Montreal outbound due to this.

Five ships were docked at Montreal awaiting favourable ice conditions in order to depart for sea, and Canadian Coast Guard Ice Operations advised that shipping may resume for departures at 0630hrs local time this morning.

In addition, there are currently twelve ships tied up at Three Rivers and Quebec awaiting favourable ice conditions in order to transit to Montreal. Reports confirm that one tanker had broken her moorings and drifted aground in the Sorel area, but that the vessel has now been recovered and is alongside in Sorel, awaiting inspections.

Laurentian Pilotage Authority has advised that three ships have been authorised to transit downbound and four ships have been authorised to transit upbound.

All other ships will have to wait for the arrival of a stronger icebreaker for the Quebec Bridge passage. Ships that experience suction problems or any other mechanical problems due to the weather conditions, and all tankers, will be delayed below Quebec.

Ships waiting between Trois Rivieres and Montreal will probably be authorised to transit today.

How G6 allies plan to square up to their P3 rivals

The strategic goals behind the G6 Alliance of container lines’ expansion plans have moved beyond mere geography, according to detailed documents filed with the US Federal Maritime Commission.

The member lines are now proposing to discuss new vessel orders and increase the maximum size of vessel they operate in a bid to fend off competition from the proposed P3 Alliance between the world’s three largest container lines, Maersk, CMA CGM and Mediterranean Shipping Co.

The revised G6 agreement will become effective on January 16, unless the FMC raises questions with the member shipping lines, as it has raised questions about the P3 Network’s proposal.

Sister publication Containerisation International has seen a copy of the updated agreement, filed with the FMC on December 2.

It details the carriers’ plans to expand their alliance to the Asia-North American west coast and transatlantic trade lanes, but adds other amendments to the original G6 Alliance agreement.

Among its most notable changes is the suggestion that the G6 members will discuss and agree newbuilding orders and acquisitions of ships.

Previously, this level of discussion extended only to chartered tonnage.

The amended agreement reads: “[The parties may] consult and agree upon the chartering, building or acquisition of vessels by one or more parties for use in operations hereunder and the characteristics thereof, eg, size, capacity, speed, configuration and delivery date, nominating one of the parties to charter and/or operate such chartered vessels, or the chartering of vessels among the parties.”

The updated agreement proposes to increase the maximum size of vessel that member lines APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line and OOCL can operate on US trade lanes from 12,500 teu to 14,000 teu.

It proposes to increase the maximum number of vessels that G6 members can use on the US trade lanes from 80 to 220.

Another change is that the carriers will discuss and agree which US terminals to serve.

It also proposes the carriers setting up committees to consider, review, make and implement administrative, operational and policy decisions relating to matters within the scope of the agreement.

“The parties may establish and maintain one or more G6 service centres to maximise the efficiency of the services operated hereunder.

“Any such GSC established and maintained by the parties shall be authorised to perform day-to-day management, administrative, and/or service co-ordination functions such as vessel scheduling, allocating space among the parties in accordance with article 5.5 hereof, forecasting, communicating with providers or suppliers of vessel-related goods and services, monitoring bunker consumption of the vessels operated hereunder, terminal operations, equipment and intermodal activities, cargo acceptance policy, hazardous cargo procedures, and stowage planning.”

The proposed service centres mirror plans for a London base that the P3 Network has proposed.
Other changes suggest the member lines obtain, compile, maintain and exchange information relating to third-party costs, including — but not limited to — vendor, terminal and bunker costs.

However, they will no longer share marketing or market-share information.

Another proposed change is that “the parties are authorised to agree on terminal pricing among themselves and with marine terminal operators in order to achieve desired efficiencies and cost savings and to best ensure optimal terminal utilisation”.

They also want to jointly negotiate and contract transhipment, barge and feeder services and operations.

The updated agreement revealed that initially the G6 Alliance planned to deploy around 180 vessels on its US trade lanes.

Altogether, it will deploy about 240 vessels connecting 66 Asia, US and European ports, if regulators give the expanded alliance the go-ahead.

Some 75 ships will sail on services from Asia to the North American west coast, 40 on the transatlantic, around 60 on Asia-east coast services, 11 on the Asia-Mediterranean service and 55 on Asia-north Europe services.

This compares with the P3 Network’s 2.6m teu of capacity on 252 vessels across 28 loops.
It will provide 13 services on the Asia-Europe trade, five on the transatlantic and 10 on the transpacific trade lane.

Both the expanded G6 and newly formed P3 networks plan to launch in the second quarter of 2014.