What’s happening in and around our oceans?
This is our weekly ocean freight update, highlighting interesting news and background articles we came across this week. We focus on general ocean freight news, innovation, and sustainability.
Let’s first go to the big shipping lines. The past two years have been good. With prices skyrocketing to 20,000 dollars per container, up from 2000, shipping companies made a lot of money. Since then, prices have come down again to pre-COVID levels, but it still shows in the figures. Take, for example, the latest results published by Yang Ming.
Yang Ming Marine Transport Corporation marked new records in its annual revenues and profits in 2022 with the Taiwanese ocean carrier reporting consolidated revenues of US$12.61 billion and after-tax profits of US$6.06 billion.
Strong demand and high freight rates were the main factors that led Yang Ming to record financial results, but since the last quarter of 2022, purchasing power has been diminished by inflation and high inventory levels.Yang Ming achieves record annual revenues and profits
Another shipping company with good results is ZIM:
Israel-based container line ZIM Integrated Shipping Services has published its operating and financial results for the full year ending 31 December 2022.
ZIM reported a year-on-year decline of 3% in its container volumes, handling 3.38 million TEUs in 2022.
Furthermore, ZIM reported a relatively steady total net income of US$4.6 billion in 2022…ZIM increases annual revenues amid slight container decline
While freight volumes and prices are still decreasing, shipping companies keep adding ships to their fleets. Orders for new builds are still going up, and some of these are being delivered. A very impressive one, which we hope to welcome in one of our Northern Colombian ports, is MSC’s latest record-breaking arrival.
Shanghai-based Hudong-Zhonghua Shipbuilding (Group) built and delivered the largest container vessel in the world to Mediterranean Shipping Company (MSC).
MSC Tessa has a container capacity of 24,116 TEUs and is the first of four same-size container ships purchased by the largest container line in the world.
According to Hudong-Zhonghua, a unit of China State Shipbuilding Corp (CSSC), the vessel is currently the world’s largest boxship in terms of TEU capacity.
The mega container vessel measures 399.99 metres in length and 61.5 metres in width.MSC receives largest container ship in the world
In other shipping line news. NYK, the main shareholder of ONE, has revealed their plans for the next three years.
Among the more intriguing parts of the detailed business plan, NYK, the lead shareholder in containerline Ocean Network Express (ONE), said that for its container holdings it would aim to “promote a bold growth strategy while also actively pursuing M&As”.
Container shipping has been through a decade of massive mergers with many suggesting that room for further consolidation would now focus on niche, regional carriers. However, following the news earlier this year of the splintering of the 2M alliance between Maersk and MSC, some experts believe a renewed period of consolidation will be required as the old alliance structure breaks down.ONE ‘actively pursuing M&As’
As we wrote earlier. Rates are still in decline, and the latest Freight Rate Tracker report by Transport Intelligence indicates that the bottom has not yet been reached. At the same time shipping lines are refusing to cut capacity.
“Further erosion of ocean freight rates is to be expected in H1 23,” says the report. “In addition to dwindling demand, the additional capacity coming into the market in the second half of 2023 and [in] 2024 will be another factor putting downward pressure on rates.”
Notwithstanding some slippage on vessel delivery dates, due to labour issues and push-backs from carriers and NOOs, according to Alphaliner data there is a wave of 2.48m teu of newbuild tonnage to be received this year, followed by 2.95m teu in 2024.
Ocean carriers will want to put their fuel-efficient and more eco-friendly newbuilds into service as quickly as possible, thus the incumbent vessels on network loops will either be cascaded to secondary trades or be put into hot or cold lay-up.More bad news for carriers hoping rates decline has bottomed-out
Container freight rates are still falling, while charter rates are holding up, suggesting that liner operators are chasing market share, even if it means a price war.
Linerlytica observed, “OCEAN Alliance carriers have the smallest number of ships idled, compared to 2M and THE Alliance, in a clear sign that carriers are pursuing very different strategies in dealing with the capacity surplus. Freight rates are still falling while charter rates are holding their ground, in a further sign that carriers are intent on chasing market share despite the softening freight market.”Shipping lines refusing to cut capacity in price war
The final news item we want to highlight here is the Suez Canal.
The Suez Canal Authority (SCA) is targeting to increase its revenues to $9 billion in 2023, SCA’s Chairman Osama Rabie told Asharq Business on March 7th.
Target revenues signal an annual growth of 12.5% as compared to the robust revenues of $8 billion reported in 2022.Suez Canal Authority targets $9bln revenues in 2023
The shipping industry has a big impact on climate change. The industry is responsible for around 3% of carbon emissions worldwide. In the same way consumers are putting pressure on retailers to be more sustainable, shippers are putting pressure on shipping companies to become more sustainable.
A new alliance of major shippers is pushing ocean carriers to step up their efforts to cut back on CO2 emissions.
Zero Emission Maritime Buyers Alliance (Zemba) is a partnership of shippers Amazon, Patagonia and Tchibo with the Aspen Institute, an international non-profit organisation.
“Our goal is to enable any companyinterested in showing leadership to be able to access affordable zero-emission solutions as quickly as possible,” said Ingrid Irigoyen, president and CEO of the new interest group and director of the Aspen Shipping Decarbonization Initiative.
By leveraging their collective buying power, the partners are looking to speed up the shift to green fuel in ocean shipping. They plan to issue requests for proposals for zero-emission shipping to carriers this year to move products this way no later than 2025-2026.Shippers put more pressure on ocean carriers for carbon-free services
There are already different ways for shipping companies to lower their carbon footprint, but most mean higher cost. ZIM is offering its customers sustainable options, but they come at a price…
Eli Glickman, president and CEO of Israeli carrier Zim, believes with pressure coming from customers to decarbonise supply chains, those in the US will pay a premium for low-carbon fuels.
The line expects to see the first deliveries of 28 LNG-powered vessels, ten of 15,000 teu and 18 of 7,700 teu, in the spring, with arrivals completed next year. The vessels, ordered by non-vessel operator Seaspan, will be on long-term charter to Zim.
Brushing aside the question of carbon charges, which are expected to include a significant hike for fuels emitting methane, like LNG, Mr Glickman said: “LNG is a better solution right now, but it is not the ultimate solution, that could be green LNG.”Zim expects customers to pay a premium for greener fuel
That’s it for this week!
Header image credit: ZIM