Lars Jensen’s Post

Day 133 of the Red Sea crisis - and other news The incident in the Gulf of Aden which I mentioned in yesterday’s update from UKMTO turned out to be an attack on the “MSC Darwin VI” – or at least the Houthies claimed this vessel to be the target. According to MSC’s schedules the vessel is an extraloader enroute from Djibouti to Sri Lanka. Of all the container shipping lines it is clear that MSC has been targeted more than any other container carrier in the region. The Houthies also claimed to have fired several missiles directly at Israel. The SCFI spot rate index issued today showed a marked increase from Shanghai to North Europe as rates increased from 1971 USD/TEU to 2300 USD/TEU. PSS – Peak Season Surcharge – has been apparently become fashionable. Maersk has issued 30 different announcements of PSS during April. Clearly carriers can announce, and label, surcharges any which way they want – just as customers can then choose who they want to book with. But it appears to me that that “PSS” is becoming a de-facto replacement for GRI, furthermore undermining the credibility of the labels carriers are using to name their various surcharges. In the same period, Hapag-Lloyd has issued just 2 PSS announcements and CMA CGM has issued 3 new PSS announcements.

This week’s WCI spot rate index from Drewry saw the Asia to Europe rates decline ever so marginally. On Asia to North Europe there was a tiny increase of 67 USD/FFE but this is the first increase seen after 12 consecutive weeks of declines. Asia-Med has fluctuated slightly in recent weeks and is essentially “stuck” on the same level as when we entered April 2024. Transpacifirc spotrates to both east and west coast continued to decline for the 11th consecutive week. The Atlantic rates essentially continue to hold the same level as we have seen since mid-February.

Day 132 of the Red Sea crisis New attacks in the Gulf of Aden and the Indian Ocean have ended a 2-week streak with no reported attacks on merchant shipping from the Houthies. Yesterday US forces shot down an anti-ship ballistic missile assessed to be targeted at the 2500 TEU container vessel “Maersk Yorktown”. The vessel is US flagged, owned by Maersk Line Limited in the US and operated by Maersk. It is only two weeks ago that there was also a report that Houthies might have targeted a missile at the “Maersk Yorktown”. At that time Maersk denied those reports. This was at a point in time where the Houthies claimed attacks on several vessels, but said vessels reported they had no been under attack. This could be a case of the Houthies not telling the truth, it could be the vessel operators not telling the truth or it could be the Houthies' targeting being so poor that the vessels never discovered they were under attack in which case both parties are telling the truth. There are also reports of a Houthi attack on the “MSC Veracruz” in the Indian Ocean, although for now I have only seen this reported by the Houthies themselves. Note, as per above comment, they are not always a credible source as to their own attacks. If this is confirmed it is problematic as this would be a case of the conflict now extending into the Indian Ocean – the vessel is enroute from Houston to Jebel Ali on a round-Africa journey. The Houthies are (as usual I would almost add) labelling this as an Israeli vessel. We did hear from the Houthies a few weeks ago that they claimed the ability to attack in the Indian Ocean, and if (I stress the _if_ ) this is confirmed it is a problem as it would now compromise the routes to and from the key transhipment hubs in the Middle East as well as approach routes to western India. We can think what we want about the approach taken towards attacks on merchant shipping from the Houthies as well as Iran, however since the beginning of the conflict it appears that neither of those parties have been bluffing when they were warning about their intended targets and target regions. And in this context note that the Houthies had indeed recently warned to expand to attacks in the Arabian Sea and the Indian Ocean. And also that Iran have during the ongoing conflict threatened attacks on shipping not only in the Strait of Hormuz but also in the Mediterranean. Additionally, UKMTO reported an “incident” 15nm soutwest of Aden here Thursday morning but did not specific the nature of the incident.

Day 131 of the Red Sea crisis – and other news Yet another day of no new attacks from the Houthies. But also yet another day with no change in the status for the seized vessels “Galaxy Leader” (in Yemen) and “MSC Aries” (in Iran) The Loadstar has an overview of how MSC appears to be shifting potential Israel-linked vessels away from the persian Gulf: https://lnkd.in/dhikAmeP A third channel has been opened in the port of Baltimore. Maersk issued an advisory stating:” This channel, with a controlling depth of 20 feet, could potentially allow Maersk and other carriers to operate limited barge services into and out of the Port of Baltimore. We will contact customers directly should we be able to offer a barge service” DSV has presented their Q1 2024 financial results. EBIT was 3.6 Billion DKK (roughly 0.5 Billion USD) and the outlook for full year 2024 was maintained unchanged at 15-17 Billion DKK. As I mainly look at container shipping, I noticed that the volume development in the Sea division was a growth of 8.2% year-on-year in Q1 2024. For comparison Container Trade Statistics has shown a year-on-year growth of 10.7% in January+February year-on-year (they have not yet released data for March). DSV themselves states in the report that they estimate the market grow in the mid-single digits in Q1 2024. And in other news, MSC has made a bid to buy the world’s 3rd largest car carrier. See more here: https://lnkd.in/d3yySAuF

It is day 130 of the Red Sea crisis and there are essentially no new developments - also not for the discussions related tot he "MSC Aries" held by Iranian authorities.

Day 129 of the Red Sea crisis No new developments in the Red Sea or the Strait of Hormuz. It has now been 15 days since the last attack on a vessel in the Red Sea or Gulf of Aden and 9 days since the seizure of the “MSC Aries”. This is the longest period without reports on vessel attacks since the major container carriers began diverting around Africa in mid-December. Note that US forces did shoot down attack drones from the Houthies as late as 6 days ago, however this was while the drones were still over Yemen. It does bring up the question: When is it safe to transit the Red Sea again to use the Suez routing? From a carrier perspective there are many considerations and especially three elements need to be weighted: What is the risk that, despite a pause in missile attacks now, we will see another increase in attacks if the carriers are seen reverting back to the Red Sea? After all there will be an increase in attractive targets. The new round-Africa services have now stabilised and provide shippers with an ability to plan their supply chains. Going back to the Red Sea brings forth the risk of reverting again back to Africa should the attacks resume – bringing about yet another round of operational upheaval and unpredictable supply chains. This is a key consideration and likely to cause carriers to only revert back to the Red Sea when they are confident they will not be forced, once again, to revert back to Africa. The third element is that going back to the Red Sea will immediately revert the market back to the problem of overcapacity with an associated downwards pressure on freight rates. Keep in mind the carriers had very poor financial results in Q4 2023. And since the beginning of January 2024 to the present date the global container vessel fleet has grown by another 900,000 TEU equal to a growth of 3.2% in 3½ months. Compared to a year ago the fleet has grown 9½%.

Day 128 of the Red Sea crisis and other news No new developments in the Red Sea or the Strait of Hormuz. But when it comes to vessels being detained, and the web of sanctions, below news story is a worthwhile read. From my perspective it illustrates the complexities which arise when international shipping meets country-specific sanctions. In this case, apparently, a legitimate shipment is on a vessel from Russia to US. It has a problem en route and needs to get the propeller fixed in Germany. The cargo being shipped is in violation of EU sanctions against Russia and the vessels gets detained. The vessel is managed by a company in Canada and flagged in the Marshall Islands. From a strictly objective perspective this means a vessel moving cargo from country A to country B gets detained in country C because country C has sanctions against country A. The vessel only entered country C as there was a fault on the vessel which needed to be fixed – maybe because the ship might otherwise become unseaworthy. Right now this case involves Russia, USA and Germany – and there are not many Russians actively involved in my threads here on LinkedIn but I would guess there are many other here who would justify the EU sanctions on Russia, and hence justify this interaction. But the principle of the matter would be identical to a vessel sailing cargo from Germany to Dubai suddenly being detained in Iran because the Iranians have sanctions on this specific type of cargo. Note that this second hypothetical example is not the same as “MSC Aries” as that vessel was seized in international waters and had no intention of going to Iran. But the point of the hypothetical example here is to illustrate that as the world continues to fragment into more and more countries having sanctions against other countries in place, the issue of vessels being detained in various ports is likely to continue to become more problematic and more prevalent.

A good piece here from Richard Meade

Day 127 of the Red Sea crisis and other news There is a hint of hope that the Iran-Israel conflict is being averted and hence the threat to shipping in the Strait of Hormuz would also be reduced. Iran is mocking the drone attack on Isfahan as being ineffectual and to have used “toy” drones, and furthermore now seem to claim the small drones which were shot down were launched by insurgents from within Iran and not coming from Israel. Israel is not saying anything. I might be wrong, but it appears to me that this is a signal that neither party wants this conflict to continue and might have found a way whereby both can step away now without losing face and without needing to retaliate further. As mentioned, this might be good news for shipping in the Strait of Hormuz. The question is then whether this will also lead to a more speedy release of the “MSC Aries” and its crew. The weekly WCI spot rates from Drewry continued to decline this week on the headhaul trades from Asia to Europe and North America. The pace of decline being relatively steady. On Asia to Europe the spot rates have shed around 60% of the increases which the Red Sea caused, and in the Pacific it is 50% of the increase which has been shed. Contract rates appear to not have moved materially due to the Red Sea crisis. When shippers go to the FMC with a case against a carrier it is of course clear there is a dispute which need to be resolved. But sometimes the process does baffle me. Bed Bath and Beyond (or rather the lawyers in the bankruptcy proceeding) has brought claims against several carriers. Yesterday there was a filing from the FMC in the case against OOCL that the timeline for issuance of initial ruling was postponed from April 29th, 2024 to February 28th, 2025 and that the timeline for final ruling was postponed from November 12th, 2024 until September 12th, 2025. It doesn’t matter to me which of the parties are favoured by the eventual ruling, but I fail to see that it is in anyone’s interest that such cases end up moving on glacial timescales. It is not unusual to see such elongated times in court – for example the bankruptcy case for The Containership Company in 2011 where multiple shippers were requested to pay deadfreight took 9 years to get resolved through various court instances. And again, irrespective of who wins such cases it is hard to see that such timelines does anyone any great services.