Red Sea movements and financial security
Recent Houthi attacks on vessels passing through the straits of Bab al-Mandab on their way through the Red Sea mean that the shipping industry has moved beyond trade press reporting and onto front page news.
While the causes of the current situation are very different, it is possible to draw a significant parallel with the grounding and arrest of the containership Ever Given in the Suez Canal in March 2021. Then, as now, the spectre of delays in the supply of goods and rising costs ensured that the wider world woke up to its reliance on the globalised shipping industry.
European shipowners’ priorities 2024-2029
Ahead of the 2024 European elections, ECSA launches its policy priorities for the next five years. The four pillars are Climate and energy transition, People-centred green and digital transition, Ship Finance and Competitiveness and Trade.
Europe is facing an existential transformation as it strives to meet climate neutrality by 2050 while maintaining industrial leadership at global level. European shipping has been a cornerstone of Europe’s energy, food, and supply chain security. European shipping, representing 39.5 percent of the world fleet, enables Europe to play a leading role in the international supply chains. Shipping delivers the goods and energy we need, supports EU exports and connects European citizens within Europe and with the rest of the world.
Bulkers slowing down to comply with emission rules
Sailing speeds of older ships in particular have slowed down considerably, as a result of the latest emission reduction rules. In its latest weekly report, shipbroker said that “the integration of the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) regulations, in conjunction with the Emissions Trading System, appears to have indirectly limited the availability of shipping tonnage by influencing vessel speeds. Through the analysis of vessel tracking data, it has been observed that the average speed of bulk carriers has decreased to a current low of 10.86 knots.
China reopens after Chinese new year, container rates plateau
Geopolitical risks are impacting the supplier strategy of many companies globally. While majority (63 percent) of the companies surveyed by Container xChange in the month of February’24 are looking to diversify their supplier portfolio, 37 percent are still going to reduce the number of suppliers they aimed to diversify in the year 2021 in response to the pandemic and its resulting repercussions.
Persistent geopolitical tensions in eastern Europe and the Middle East, have led to shifts in trade patterns, requiring industry players to redesign supplier mix for their supply chain.
The month of February 2024 marked a pivotal moment in the trajectory of container leasing and trading rates, which had been on the rise since past three months (starting November 2023), coinciding with the onset of the Red Sea crisis. This inflection point closely aligned with our forecast from the preceding months, as Container xChange had anticipated a reduction in demand and subsequently a reduction in average container prices and leasing rates post Chinese New Year.
EU ETS and FUELEU call for proactive risk management
The EU Emissions Trading System (EU ETS) and FuelEU Maritime regulations will have far-reaching implications for shipowners, managers, and charterers with vessels trading to, from, or within the bloc. The system is complex and could lead to penalties for non-compliance but also, with careful management, opportunities for competitive advantages.
The EU ETS, in operation for maritime since 1 January 2024, imposes a wide range of obligations on owners, managers and their customers, and requires proactive risk management. This was the key message from a recent LR webinar – Optimising compliance under the EU’s new emissions regime.
Panama canal drought issues improved, but not eradicated
The Panama Canal, one the world’s largest shipping gateways is plagued by drought issues, adding another factor in the shipping market’s freight rate equation. In its latest weekly report, shipbroker said that “the Panama Canal stands as one of the world’s most vital intercontinental waterways, playing an important role in facilitating global trade, particularly along the routes connecting the Americas and Asia. However, in recent years, a combination of climate change and structural factors have posed significant challenges to the maritime trade passing through this essential artery”.
According to source, “climate change has significantly impacted the water levels of Lake Gatun, one of the two natural lakes of the Panama Canal system. According to data from the Panama Canal Authority (ACP), the average water level for February currently stands at 80.3 feet.
Is your guarantee a guarantee? note to shipowners
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the difference between a guarantee and an indemnity, why it matters, and what steps can be taken to protect the shipowner’s position.
Ships are typically shipowners’ largest assets and they are often considered a security for any claims that the charterers may have against the owners. However, in some instances, the charterers may insist on additional security by way of a guarantee, especially where the shipowner is a special purpose vehicle with no other known assets. A common scenario is where the charterers ask the parent company of a shipowning company to guarantee the due performance of its subsidiary’s obligations under a charterparty.
A guarantor who is the de facto owner and provides a guarantee covering only the scope of the shipowners’ obligations under the charterparty may not be exposing themselves to any additional risks. However, the law of guarantees is not always obvious or easy to understand.