Sea Archives | Page 45 of 70

Panama Canal situation may trigger wider supply chain issues

Nov 22, 2023 | 4PL, Sea, Supply Chain

Following the driest year and October on record, the Panama Canal Authority (ACP) has been steadily cutting daily vessel transit numbers and draught levels across the canal, with some restrictions possibly staying in force until 2028, with wider supply chain ramifications.

With each transit of the Panama Canal consuming a large amount of water, drought has forced the ACP to reduce draught limits on its larger locks by six foot as well as cutting daily transits from 40 to just 18 from February next year.

Container ships sailing from Asia to the U.S. East and Gulf Coast ports typically need more than the current limit of 44 feet of draught when fully loaded.

Down from 50 feet at the beginning this year, the loss of six feet of draught is equivalent to 2,100 teus, which means that vessels sail with fewer containers, or unload containers and rail them across the isthmus for reloading to a vessel on the other side.

Maersk warned shippers to prepare for transit issues at the waterway, but said advanced planning was currently enough to mitigate potential delays, while CMA CGM looks set to become the first major carrier to apply a new Panama Canal surcharge, in response to the ongoing capacity reductions.

The French carrier’s latest customer advisory relayed the issues they faced, but gave no indication what level their surcharge would be set at. Expect other carriers to follow suit.

Limits on transits and draughts, will remain in place at least until after June 2024. However, the ACP says it sees no significant relief until 2028, and that’s if the government of Panama addresses years of underinvestment, stimulating some carriers to question the long-term viability of the waterway.

The Panama Canal’s operating restrictions that were first implemented in July, initially had a limited impact on container shipping operations as carriers had yet to get aggressive in blanking capacity to match weak demand.

However, lighter loadings mean empty holds where 2,100 x 20’ containers should be and is pinching the bottom line of carriers, as inflation is pushing their operating costs up.

Unlike the Panama Canal the Suez Canal has no locks or changing water levels which means it can handle the largest ships all year round - subject to effective piloting, as evidenced by the Ever Given grounding in March 2021.

With the Panama Canal’s ongoing restrictions and the growth in trade to the U.S. East Coast from Southeast Asia and the Indian Subcontinent accelerating, we are likely to see more services diverted or restructured to route through the Suez Canal.

If you have concerns or questions about any of the issues raised in this article, we can review your situation and explain your options, including alternative carriers, ports and routes.

Whatever your challenges, we leverage long-term ocean carrier relationships to deliver cost-effective, resilient and reliable ocean solutions.

EMAIL Andrew Smith, Chief Commercial Officer to learn more.

Shipping lines fighting to protect rates

Nov 8, 2023 | Sea

In an attempt to recover operations back into the black and jettison unprofitable cargoes, the container shipping lines have deferred FAK freight rate increases from Asia until December, after their planned November GRIs failed.

The Asia-North Europe rate increases, that were due to be valid from 1st November have been supported by radical capacity management and they did have some impact on the market when they were initially announced, but with some carriers now delaying their imposition, it is unlikely that the market will get much traction with increases in November.

It’s not only on the import routes that carriers need to push up rates, export prices to Asia have also struggled, with container shipping lines imposing FAK base rates - effectively another GRI - to recover revenue.

On the trans-Pacific, carriers have underpinned spot rates with a huge blanking programme around the Chinese Golden Week holiday, which peaked last week with west coast terminals receiving 19 fewer vessels than advertised.

Despite the blanking programme west coast imports bounced back with volumes up 14% and 19% respectively at the ports of Los Angeles and Long Beach, year on year, due to rising consumer demand, the new labour agreement and Panama Canal transit restrictions impacting east coast services.

With the record-breaking post-pandemic rates a distant memory, the container shipping lines are under considerable financial pressure, particularly on the east-west routes, and loss-making voyage results cannot be sustained for much longer.

It’s not practical to expect shipping lines to keep losing money on key routes out of Asia and maintain reliable services, particularly when they are effectively subsidising many routes. It is ultimately in the shipper’s interest for rates to return to sustainable levels, so that shipping lines are incentivised to provide regular, reliable services.

The container shipping market will remain oversupplied in 2024, and while the supply/demand gap is likely to close due to more scrapping and emissions-based slow-steaming, it is by no means certain that rates will recover.

Sea freight markets are extremely dynamic, and particularly so from China and Asia, that means that rate fluctuations and blanked sailings have a profound impact, which is why we work closely with our carrier and network partners, to protect and identify opportunities for our customers.

Whatever challenges your supply chain may face, our sea freight team leverage long-term ocean carrier relationships and group buying-power to deliver cost-effective, resilient and reliable ocean solutions.

If you have any questions or concerns about your supply chain or the developments outlined here, please EMAIL our Chief Commercial Officer, Andy Smith.

Air cargo delays and ocean carriers announce Israel war risk surcharge

Oct 24, 2023 | Air, International Trade, Sea, Supply Chain

While sea freight traffic is largely operating without significant issues, the conflict in Israel is impacting airfreight to the country and the surrounding region, with many carriers’ services subject to cancellation and delay.

Many airlines have suspended direct flights to and from Israel, with many international aviation authorities avoiding the region’s airspace, and no bookings on the affected routes.

Israel represents a relatively small market for container shipping, and few vessels stop at its primary ports of Ashdod and Haifa, so the threat of disruption to container trade flow through the Mediterranean region remains limited.

Ashdod, one of the country’s largest ports, is continuing to operate normally 24/7, with employees working longer shifts, because the military has recruited 10% and the remaining staff must fill the gap.

While international airlines have temporarily suspended flights to and from Tel Aviv, the airport remains open, with domestic carriers still providing services and alternative cargo options, but these are very limited.

Etihad Airways is currently operating its daily flight schedule to and from Tel Aviv but they are monitoring the situation minute-by-minute. Turkish Airlines services from Istanbul to Tel Aviv appear to be operating normally and some integrators have resumed their flights.

No special measures or guidelines have been handed down to Israeli ports, which remain in contact with shipping companies and for now keep moving cargo and goods through the ports without any significant disruption.

Any expansion of hostilities beyond Israel's borders could introduce risks to the Suez Canal, a critical waterway for container ships, however, the extent of these effects would depend on the conflict's expansion and duration.

We have not seen any rate increases, surcharges or additional fees so far, but there are concerns about possible increased insurance costs, with national Israeli carrier ZIM and other major carriers now announcing a war risk surcharge (WRS) on Israel cargo ranging from US$50-100/teu.

If you have any concerns about the issues raised in this article, we can review your situation and explain your options, including alternative carriers, ports and routes, where appropriate.

Our aim is to consistently provide the most efficient and cost-effective solutions, to ensure that your supply chain remains optimised. EMAIL Andrew Smith, Metro’s Chief Commercial Officer.

eBills have same legal recognition as paper bills of lading

Oct 12, 2023 | International Trade, Sea, Technology

The UK’s Electronic Trade Documents Act (ETDA) came into force on the 20th September, providing an electronic bill of lading (eBill) the same legal status as a paper bill of lading.

This is a major step forward in the modernisation of international trade and is anticipated to boost the UK economy by over £1 billion over the next decade, by removing the barriers of time and cost associated with exchanging paper documents.

The issue of ‘possession’, which has been the main obstacle to the legal recognition of electronic trade documents, has been resolved by the development of distributed ledger technology and blockchain technology, which have established reliable systems for the identification and control of electronic trade documents.

The ETDA permits a person to possess, endorse and part with possession of an eBill, which means that where an eBill has been transferred to a new lawful holder, possession gives that holder the right to demand delivery of the goods.

Using eBills

Starting your electronic trade documents journey is simple!

You, your consignee and Metro register on the secure platform utilised by the carrier and after draft approval, the eBill will be issued and transferred digitally through the platform to the parties you nominate.

Increased efficiency

The move to eBills provides significant cost savings, removes the need to print documents and arrange for them to be couriered to third parties, which means the process is swifter and reduces the likelihood for errors or loss.

Creating eBills can be automated, with the document produced at the touch of a button, and instantly transferred onto the relevant party, which avoids the issues and storage costs associated with paper bills of lading, where the goods cannot be released if there is a delay in receiving the paper document.

Increased security

Electronic Bills of Lading increase the security surrounding a transaction and the protection of confidential information, with electronic bill of lading systems approved for use by the shipping lines’ insurers.

Blockchain technology creates a digital record of transactions and the distributive ledger system allows participants to access information instantaneously, while limiting the risk of fraudulent activity by storing information on multiple servers, meaning that a perpetrator would have to access all versions to alter the document.

If you’re ready to simply your trade document generation, reduce administration, save courier fees, avoid release delays and unnecessary costs, contact your Metro account director, or EMAIL Jade Barrow, Business Process Optimisation Director.