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Conditions ripe for container shipping rates to spike

Container spot rates are expected to lift soon on the back of headhaul ships running full on the major trade lanes and cargo being rolled.

One unnamed carrier source told UK’s The Loadstar that all but a few of the weaker Asia to Europe carriers were full, eastbound.

Underscoring the situation, a recent sailing from Asia to north Europe by the Mumbai Maersk set a new world record for the most containers loaded onto a ship, with a cargo of 19,038 TEU.

In a move designed to underpin rate levels ahead of the winter slack season, The Alliance has just announced a number of sailings from Asia to north Europe and the Mediterranean will be blanked over China’s Golden Week holiday in October.

Maersk sees fuel bill soaring by $2 billion from 2020 rules

The world’s largest container shipping line says adhering to stricter environmental standards could add at least $2 billion to its annual fuel bill from 2020, one of the clearest examples yet of how vessel owners will be affected by rules to curb sulfur emissions that take effect in 16 months’ time.

High crude prices, tight availability of compliant fuels, and investment in research and development are among issues that will combine to drive up the cost of complying with IMO 2020, said Simon Bergulf, director for regulatory affairs at A.P. Moller-Maersk A/S, the Copenhagen-based operator of hundreds of container ships and smaller craft like tug boats.

While there’s a growing consensus that the new rules to limit sulfur emissions will have far-reaching consequences for oil refiners, shippers and even trade, few large companies have attempted to quantify that impact publicly. Maersk, which spent $3.37 billion on fuel last year, says the increase could even exceed $2 billion — and that’s before taking into account further spending on things like research and development.

Uncertainty persists in container industry

Peak season to date has not been as bullish as some market participants expected. There have been box rate increases throughout August and this is expected to continue into September. However, there are some fundamental issues causing uncertainty within the container industry. The first one is the new larger TEU vessels deliveries continue to create surplus capacity for carriers, especially within the North Europe market. The knock-on effect is that this has put the carriers in a weaker negotiating position for spot box rates.

Hamburg’s H1 traffic drops to 4.3m TEU

The German port of Hamburg handled 4.3 million TEU in the first half of the year, representing a year-on-year decrease of 2.7 percent. The drop in volumes was attributed to both a decline in empty boxes and transshipment traffic.

The number of empty boxes at the port dived by 15.6 percent to 525,000 TEU. Transshipment traffic fell significantly, especially in feeder services to the Baltic, with trade down 4.4 per cent to 1.6 million TEU.

However, the volume of full containers handled remained stable with throughput down just 0.6 percent year on year to 3.8 million TEU, reported Container Management.

First-half volumes on the port’s principal route with east Asia were up one per cent to 1.6 million TEU, while trade with Brazil soared by 37.6 percent to 127,000 TEU to become the port’s fifth largest trading partner.

Trade with the east and west coasts of North America performed well, as did trade with Africa. Trade with continental Europe was down 1.6 percent to 2.7 million TEU, while containerized rail freight volumes rose by 5.4 percent to 1.2 million TEU.

After summer of discontent, China’s teapot refineries ramp up oil imports

China’s independent refiners have ramped up their foreign oil buying after returning from prolonged summer maintenance to gear up for rising winter fuel demand, a sign that the financial pain from taxes and higher crude prices have ebbed for now.

The pick-up in imports by private refiners, often called “teapots”, has boosted the physical prices of Middle Eastern and Russian oil to their highest in months.

Their return to the market also comes as margins have improved after their extended shutdowns helped drain a glut of diesel and gasoline, boosting domestic fuel prices.

The independents imported 6 million tonnes, or 1.4 million barrels per day (bpd) of crude in August, up 40 percent from July and 10 percent higher from the same period last year.

Their July purchases were the second-lowest on record for data going back to October 2016, as refiners shut or suspended operations due to a toxic mix of sinking diesel demand, higher crude prices and new tax rules.

The calculation does not include purchases from large private refiners Hengli Petrochemical and Rongsheng Group. The teapots account for about one-fifth of the nearly 9 million barrels per day (bpd) of crude oil imported into China, the world’s biggest oil importer.

Japan’s minister says up to refiners to decide on Iran oil imports

Japanese refiners need to make their own decisions regarding their imports of Iranian oil, Minister of Economy, Trade and Industry Hiroshige Seko quoted as saying on Tuesday when asked at a news conference if the government had provided any guidance to refiners.

Seko’s comments came at a time when local refiners have urged the government to seek a US waiver on Iran sanctions as they are keen to continue importing the usual volumes instead of reducing inflows.

Japan is seeking an early exemption to US sanctions on Iran as among its highest priorities for national energy security, as well as for local refiners that need Iranian oil, according to METI’s director-general of oil, gas and mineral resources Ryo Minami.

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