Singapore’s leading containership operator, has successfully attained Environmental Ship Index(ESI) certification for its fleet comprising of half a million TEUs.
This is a major milestone for the Singaporean shipowner ahead of the transition towards the Global Sulphur Cap 2020 from 1 January next year.
ESI certification is an on-going initiative by the World Ports Sustainability Program (WPSP) and it is a voluntary program for ship owners to enroll their vessels – attesting that their vessels exceed the basic standard set by the International Maritime Organization (IMO).
To qualify for certification, vessels have to demonstrate that their emission level of Nitrogen Oxide (NOx) and Sulphur Oxide (SOx) and Carbon Oxide (CO2) is well below what is allowed by the IMO. This is a perfect indicator of the environmental performance of the ocean-going vessels and will encourage the adoption of green vessels. Many leading shipping lines have since participated in this program and this effort is well-recognised by many leading ports in the world including US, Europe and Asia.
The International Association for Ports and Harbours (IAPH) set up the WPSP in 2017, with the aim of enhancing and coordinating future sustainability efforts of ports worldwide as well as fostering international cooperation with partners in the supply chain.
Mr Teo Siong Seng, Executive Chairman and MD of PIL said: “Sustainability will remain a key part of how we conduct our business and we take protecting our maritime and port environment very seriously. We are doing this not just for ourselves but for the next generation who will be inheriting this earth from us. PIL is proud to be part of the program and we will continue to engage with business, governmental and societal stakeholders to create sustainable value-add to the local communities and beyond.”
Xeneta forecasts “extremely challenging” 2023 for the ocean freight market
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After over two years of rising rates and overstretched capacity, the rapidly cooling ocean freight market looks set for an “extremely challenging” 2023, according to Oslo-based Xeneta. An in-depth analysis of the latest real-time ocean and air freight rates, combined with expert trend forecasts, suggests that ocean cargo volumes could fall by up to 2.5%, rates will drop “significantly” and weak demand will force increased idling of vessels. The air freight market, analysts predict, will also face a turbulent twelve months.
Out of balance
From climbing to historical highs during the global pandemic, ocean freight rates have fallen away – and in the case of spot rates, dramatically so – since the summer. Xeneta’s market report, built on the foundation of the team’s crowd-sourced data from leading global shippers, suggests there’ll be no change in course for 2023, with challenging macroeconomic and geopolitical outlooks undermining confidence.
Xeneta CEO Patrik Berglund says difficult times await stakeholders right across the ocean and air freight value chain.
He notes: “The cost-of-living crisis is eating into consumer spending power, leaving little appetite for imported, containerized goods. With no sign of a global panacea to remedy that, we’d expect ocean freight volumes to drop, possibly by around 2.5%. That said, if the economic situation deteriorates further, it could be even more.
“Allied to dropping volumes, we have a growing world fleet, with a nominal inflow of 1.65m TEU of capacity. Some demolitions will dent that growth, but we still expect an increase in capacity of 5.9%. Even if demolitions double from our current level of expectations, the industry would still be looking at an almost 5% expansion.”
The upshot of that, Berglund explains, is overcapacity, necessitating an increased idling of assets. From a current position of “next to nothing,” Xeneta forecasts idling of up to 1m TEU – “maybe even more,” says the CEO.
This cocktail of weak demand, dropping volumes, and an increase in capacity will, inevitably, impact negatively on rates, says Berglund. He comments:
“We expect to see significant reductions. Carriers have proved adept at protecting and elevating rates during COVID, but with too much capacity and easing port congestion on most major trade lanes, they’ll be fighting losing battles in 2023. We could see spot rates on some key corridors drop below pre-pandemic levels during the first half of 2023, while long-term rates will fall rapidly as older, expensive contracts expire, and new, far lower contracts are signed. However, long-term rates will not drop below spot rates during the first half of 2023.
“As far as upcoming contract negotiations go, it’s imperative to keep an eye on the very latest market data to obtain optimal value. However, those talks will be difficult for all parties. The carriers will be desperate for volumes, but, at the same time, the shippers won’t have the high volumes that unlock the best prices. What we might see is that Freight Forwarders are the big winners, as they can find a sweet spot, serving the SMEs while playing the short market against carriers. Regardless, there’s both opportunity and challenges ahead, in the short- and long-term.”
Fasten your seat belts
One area where the ocean freight market may benefit is from a potential reduction in air freight. Xeneta says this segment faces a “bumpy ride” as lower ocean costs and better-scheduled reliability (from easing port congestion and available capacity) may tempt some shippers to make a modal shift. In a climate of increasing environmental awareness, shippers focused on sustainability may also be tempted to switch ‘general’ cargoes from the skies to the waves.
“To be fair, a shift in general volumes wouldn’t be too significant for the ocean freight carriers, but it would strongly impact on the air segment, where cargoes are obviously far smaller.”
Berglund adds that increasing ‘belly’ capacity, with easing travel restrictions, will be supplemented by the arrival of conversion and freighter orders placed during the air cargo peak. This will lead the air segment to join its ocean freight sibling in the overcapacity corner, with, he notes, “a negative impact on load factors and rates.”
In conclusion, the Xeneta CEO underlines the complexity of challenges facing the industry, with economic uncertainty, geopolitical concern, ongoing industrial action on logistics chains, China’s continued zero-COVID policy and the combination of weak demand, easing congestion and increased freight capacity.
“I’d like to wish everyone a Happy New Year in advance, but there’s not that much for the industry to look forward to at present,” he states. “However, as we’ve seen over the past couple of years, predictions are almost impossible to make in a world that moves ever-faster, so there may be unknown factors waiting in the wings to influence markets.”
He continues: “For example, what happens if the Ukraine-Russia war comes to an end sooner rather than later? This could drive down certain costs again, giving consumers a positive boost. However, on the flip side, it’s important to always stay ‘on your toes,’ as we could experience a second economic downturn at the drop of a hat. These ‘what ifs’ can, yet again, throw a curveball for the industry, just as we saw when COVID hit. If we’ve learned anything in the past couple of years, it’s that planning for the unthinkable ‘what ifs’ must be top of mind.”
The new Arctic Container Line connects Hamburg with Norway
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The newly established shipping line “Arctic Container Line”, based in Fonnes, Norway will start its new feeder service connecting Hamburg and Bremerhaven to the Norwegian West Coast this week. The service will be covered by the 712 TEU geared vessel “RS Mistral” and comes in addition to the Rotterdam service started already in June.
Arctic Container Line was established in March 2022 and is part of the Myklebusthaug Group, who owns 6 container vessels, as well as offshore and general cargo vessels.
Line manager Eivind Bergland states in a comment that the young company has been welcomed very well by the market, and that they have positive expectations to the new service.
“The last few months has shown us that the market has confidence in us, and that our customers believe that we can add extra value through operating our own vessels in a liner service. We are now exploring possibilities of adding even more ports to our services.” said Eivind Bergland.
The Norwegian ports covered by Arctic Container Line are Egersund, Tananger, Haugesund, Bergen, Florø, Ålesund and Orkanger.
Portchain partners with Hapag-Lloyd to deploy Portchain Connect
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Portchain announced a 5-year global partnership with Hapag-Lloyd to deploy Portchain Connect across their global operations. Portchain Connect digitizes the berth alignment process between carriers and terminals, empowering them to make earlier and more frequent planning decisions for the benefit of schedule reliability and terminal asset utilization. This digital transformation will further position Hapag-Lloyd to accelerate other initiatives that rely on timely and accurate schedule information to serve their customers better.
Using Portchain Connect, Hapag-Lloyd will transform their traditional email and phone communication to a digital flow of information for aligning berth arrival information with terminals, offering their terminal network direct access to schedule updates and essential vessel call information on the platform. By taking this step, Hapag-Lloyd empowers terminals with the data to optimize their berth planning, leading to improved customer service and improved asset utilization.
“We are delighted to be working with Portchain on digitizing and streamlining our berth alignment processes and look forward to creating value for our important Terminal partners throughout our network. We believe in the power of leveraging automated data flows to optimize our Port Calls and create transparency and efficiency for our valued Marine and Port Operations teams globally’’ said Andrew Allen, Director – Terminal Partnering, Hapag-Lloyd.
Hapag-Lloyd chose to partner with Portchain because of its experience with solving berth alignment inefficiencies in container shipping, and its position as a neutral software vendor focused on creating value for both carriers and terminals. Portchain provides a platform that enables carriers and terminals to securely share their schedule and berthing data with each other through their systems and an easy-to-use web application. The unique combination of system and user-generated data ensures that any container terminal or ocean carrier can join the network – no matter how large, small or digitally mature their operation is.
Portchain Connect facilitates digital handshakes and alignment between the terminal, carrier and connected stakeholders. This alignment process enables the opportunity to capture the benefits of Just-In-Time arrivals, which the IMO estimate can reduce CO2 emissions and bunker consumption by 5.9% in the 24 hours leading up to arrival.
Portchain Connect has been adopted by 33 terminals in the past 10 months, and the growth of the network is accelerating. Network growth will be further reinforced by 3 ocean carriers trialing the platform in the coming months.
“We are excited to partner with Hapag-Lloyd to digitalize the berth alignment process with terminals across the world. Hapag-Lloyd is an ambitious ocean carrier that is taking big steps to digitalize its operations and enable Just-In-Time Arrivals with its terminal network. We are excited to help them unlock the value of their data, providing terminals with more accurate and timely information to improve terminal efficiency.” commented Niels Kristiansen, CEO & Co-Founder, Portchain.
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