Page 16 - ITLN January - February 2024 Issue for the Website

Focus
Red Sea

thereby causing a rapid shortfall in
the middle weeks of January, with a
steep capacity drop now expected for
the week of January 22, the update
added. "The seeming capacity spike in
late December/early January is more
an artefact of origin delays and should
be given less attention. A similar trend
is seen on both Asia-Mediterranean
and Asia-North America East Coast
but a week earlier.
"That said, the temptation
is to call this a disaster but such
language would be inappropriate
when the current crisis is placed The roller coaster
in the context of what the supply ride persists, that's
chains had to endure during the one way to describe it.
pandemic disruptions." Success hinges on how
It is the beneficial cargo owners effectively everyone Panama Canal worries
(BCOs) who ultimately bear the manages to weather Panama Canal reported the driest
greatest hardship, adds Vir Kotak, October since 1950 i.e 73 years due
Founder, Propelor, a digital freight the ride, holding on to the drought caused by the El Niño
forwarder. "Currently, there is a tightly and striving to phenomenon that continues to impact
noticeable trend where many BCOs minimise disruptions the reservoir system.
are postponing their bookings, for all involved. "In October 2023, there has been 41
cautiously awaiting a semblance of percent less rainfall than usual, lowering
stability before making informed Vir Kotak Gatun Lake to unprecedented levels
decisions. Consequently, stocks in Propelor for this time of year," says an official
various destinations are anticipated release. With less than two months
to dwindle, necessitating a return to Freight rates on Shanghai to left until the end of the rainy season,
addressing these concerns. However, Genoa increased by 25 percent to the Canal and the country face the
the prevailing higher rates contribute $5,213 per FEU, the update added. challenge of the upcoming dry season
to uncertainty about delivery times, "Rates on Shanghai to Rotterdam with a minimum water reserve that
creating a considerably more rose by 23 percent to $4,406 per 40ft must guarantee supply for more than
unstable operating environment for box. Likewise, rates on Rotterdam to 50 percent of the population, and, at the
everyone involved." Shanghai elevated by 19 percent to same time, maintain the operations of
$652 per 40ft container. Similarly, rates the interoceanic waterway."
Drewry WCI up 15% on Shanghai to New York increased by The Panama Canal has, therefore,
Drewry’s World Container Index eight percent to $4,170 per FEU. decided to reduce the number of
increased 15 percent to $3,072 per Drewry anticipates East-West spot sailings in a phased manner with
40ft container for the week to January rates to increase in the coming weeks reservation slots declining from 30
11, 2024. due to the Red Sea/Suez situation. in January 2024 to 18 in February. An
The index has increased by 44 "Not even during the Covid years update is expected from the authorities
percent when compared with the has the Xeneta mid-low mid-high later this month.
same week last year, and is the spread for spot container shipping To tackle the problem, Maersk has
highest since October 2022 and is 116 freight rates on Far East to Med been announced a multi-modal solution:
percent more than average 2019 (pre- this high," says Peter Sand, Chief For its OC1 service operating between
pandemic) rates of $1,420, according Analyst, Xeneta. Oceania and the Americas, the carrier
to the latest update. "A clear indication of the situation will now avoid the Panama Canal and
"The average composite index for that all supply chain professionals instead "use a land bridge that utilises
the year-to-date is $2,871 per 40ft find themselves in. During times rail to transport cargo across the 80
container, which is $196 lower than the like this, not only space onboard the km of Panama to the other side. This
10-year average rate of $2,675 (which container ships and equipment is king creates two separate loops - one
was inflated by the exceptional 2020-22 but access to the best market insights Atlantic and one Pacific. Pacific vessels
Covid period)." is paramount." will turn at Balboa, Panama, dropping
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January - February 2024 www.itln.in