Ocean Freight Update: Low Rates, Blankings, Panama Canal Congestion Continues, Autonomous Rail Vehicles, and more…

What’s happening on 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. With the current challenges around the Panama Canal, we are also adding a section on the Panama Canal situation.

The Panama Canal

Climate change is now, without a doubt, impacting global shipping. The current long drought period in Panama is forcing the Panama Canal Authority to reduce the number of transits further. This time it is impacting super vessels. Super vessels can’t book any transits through September 30. The measures are taken to alleviate the growing backlog of ships waiting to transit the canal.

There may be further limitations to the number of transits in the near future if the drought continues.

The Panama Canal Authority (ACP) has suspended bookings for super vessels through Sept. 30 in its latest measure to remove a drought-related backlog waiting to traverse the canal.  

The largest backlog is in the super category, vessels that carry 4,000-5,000 twenty-foot equivalent units, because they do not qualify for the authority’s reservation system. Suspending these bookings enables the super vessels without reservations and the longest wait times to travel through the canal on a first-come, first-served basis.

Panama Canal Authority: Vessel transits may be reduced if drought persists

“This phenomenon has been very severe this year, and it is expected because it’s so unusual when we have hot temperatures in the Pacific and the Atlantic simultaneously, that this will be a pervasive situation that is going to extend probably well into next year calendar year,” Morales told reporters yesterday, warning that if the situation does not improve reducing the number of transits again is a possibility. 

“Due to El Niño, the drought situation will be an extended one,” Morales stressed. 

Panama Canal administrator will not rule out further transit cuts

The canal will need to maintain draft levels — the distance between the canal floor and the bottom of a ship’s hull — at 44 feet. That’s enough for about 70% of the canal’s traffic. Officials may need to reduce the number of ships moving through the system to maintain those levels, Vásquez Morales said.

Panama Canal Says Shipping Congestion Will Last Into 2024

General Ocean Freight News

The current state of the global economy is impacting the ocean freight industry. With demand going down and capacity at an all-time high, many shipping companies see no other option than to blank sailings to counter the fall in shipping rates. With the Golden Week holiday in Asia, container demand will decline further.

In other news, bunker fuel prices are increasing, and demand for traditional containers is decreasing.

A perfect storm of newbuild containership deliveries, weakening demand, and a dearth of scrapping candidates is throwing the supply/demand balance hugely out of kilter.

Container lines add blank sailings to match supply with lower demand in Golden Week

Record blanking as supply races ahead of demand in container shipping

With the upcoming Golden Week holiday in Asia in early October, as factories close, and container demand to and from Asia declines, shipping lines respond by blanking sailings to match supply with the lower demand, according to latest Sea-Intelligence report.

Container lines add blank sailings to match supply with lower demand in Golden Week

Container spot indices are showing a sea of red ink this week, with short-term freight rates down on all the major tradelanes.

Ocean carriers are being forced to cancel sailings with little or no notice from Asia, as demand weakens dramatically ahead of China’s Golden Week holiday in the first week of October.

Elsewhere, on the troubled transatlantic route, carriers are sliding advertised sailings from North Europe to the US east coast into the following week, in order to improve vessel load.

Carriers struggle as they pull capacity to boost floundering spot rates

Shippers and forwarders on the transatlantic trades have been warned to expect more blanked sailings – and possibly even cancelled services – unless there is an urgent reversal in the recent freight rate declines.

Expect more blankings on the ‘difficult’ and ‘sensitive’ transatlantic trades

Sustainability and Innovation

According to a recent report commissioned by Lloyd’s Register, some of the world’s largest ports will be unusable if more climate action isn’t taken immediately. While this is not up to the shipping industry alone, the industry is responsible for over 3% of emissions.

A recently issued report card by the United Nations shows that global warming is slowing down, but there is still much work to be done if we want to reach the Paris Agreement. The planet has gotten 1.2 degrees Celsius / 2.16 degrees Fahrenheit warmer, and the goal is to limit the warming to 1.5 degrees Celsius / 2.7 degrees Fahrenheit.

An increasing number of shipping companies are working on greening their services. They have to, as more clients are demanding greener solutions.

“Of the world’s 3,800 ports, a third are located in a tropical band vulnerable to the most powerful effects of climate change,” a Lloyd’s Register (LR) spokesperson said.

“The ports of Shanghai, Houston and Lazaro Cardenas (in Mexico), some of the world’s largest, could potentially be inoperable by 2050 with a rise in sea levels of only 40 cm.”

Other key ports including Rotterdam are already under pressure, the report said.

Top global ports may be unusable by 2050 without more climate action – report

The long-term goal is to reach net-zero greenhouse gas pollution globally by the middle of the century. That’s only possible if countries make steady progress, cutting emissions by more than 40 percent by the end of the decade and by 60 percent by 2035 compared to 2019 levels.

The world’s first climate change report card is in

…the Zero Emission Maritime Buyers’ Alliance (Zemba) issued a request for proposals to ship 600,000 teu over three years “using 90% lifecycle emission-reduction means”.

Its carefully chosen language gives a clue as to the challenge the transport sector faces, demanding transparent fuel lifecycle emissions to validate emission reduction claims.

Shipping faces two fronts in the war on emissions

More on sustainability:

Looking at innovation, there were several interesting stories in the news this week. Topics range from container tracking to drones and an autonomous rail vehicle transporting containers!

Last year, Hapag-Lloyd partnered with Orbcomm and Nexxiot to equip its dry containers with tracking devices. Each Orbcomm tracker, costing around $100, features GPS and accelerometers to check the whereabouts of each container. And, although Hapag-Lloyd did not opt for this level of functionality, the system could also be used to measure the internal temperature of each box, potentially saving seafarers’ lives, “for a few dollars more”, according to EVP Christian Allred.

Box tracking takes off – but who owns the data?

The Harbour Master Division of the Port of Rotterdam Authority has been experimenting with a fast long-distance drone, which may help with a variety of activities, including inspections and supervision.

The Dutch port has now gained authorisation for the first time to test the drone, which is managed from the Command & Control Centre in the Harbour Coordination Centre of the Harbour Master Division. The actual drone will take off at Pistoolhaven, 40 kilometres distant.

Port of Rotterdam launches remote-controlled drone project

Parallel Systems unveiled Tuesday another second-generation, battery-powered autonomous rail vehicle, which is slated for use in pilot projects both in the U.S. and abroad.

Parallel Systems has produced three second-generation vehicles so far, with another three more in production. Additional vehicles are expected to follow. The company said it is producing technology that would allow a standard-sized intermodal container to fit onto the autonomous rail vehicle. 

Parallel Systems readies 2nd-gen autonomous rail vehicle for test runs

And check out the latest article we published on the Zergratran Insights page about how the Port of Rotterdam expanded by reclaiming land from the sea!

That’s all for this week.

About the author:

Martijn Graat

Martijn is Zergratran’s Head of Content. He writes about the latest trends and innovations in logistics and anything related to Zergratran