Industry News

For an industry that has spent much of the 2020s making extraordinary money from things going wrong, this week brought an unfamiliar threat: things starting to go right.

Some of shipping’s most important pressure points showed signs of easing. At the Panama Canal, for instance, improving rainfall allowed the authorities to announce this week an increase in drafts and more daily transit capacity from October 15. 

Half a world away, the return to Suez is gathering momentum. The Premier Alliance will send its FE1 Asia-Europe service back through the canal this month, joining Maersk, Hapag-Lloyd, MSC and others in gradually abandoning Cape of Good Hope diversions. More than 140 containerships representing over 2m teu have returned to Suez routings since May.

Normality is relative. Merchant ships are still queuing for EU naval escorts through the southern Red Sea, with Brussels admitting it lacks sufficient warships to satisfy demand. 

The same tentative recovery is evident at Hormuz despite a host of attacks in recent days. Middle Eastern crude exports rebounded sharply in September and traffic through the strait has recovered dramatically from July’s lows.

Even Washington and Beijing managed a temporary outbreak of cooperation. Presidents Xi Jinping and Donald Trump extended the suspension of reciprocal port fees until January and agreed new commodity trade commitments, providing shipping with some breathing space from a dispute that had briefly turned vessels themselves into weapons of trade policy.

All of which raises an awkward question for shipowners: what happens when the disruptions that created so much effective vessel demand begin to disappear? For now, absolutely nothing resembling a correction.

The ClarkSea Index reached another all-time high of $66,421 a day last Friday, while VLCCs remain in another universe. More extraordinarily, a five-year-old VLCC is now valued at $207.6m, 49% more than a newbuilding, while even a 15-year-old ship has crossed newbuild parity for the first time. Splash compared the tanker market today with climbers entering Everest’s death zone: spectacular altitude, but historically not somewhere markets remain for long.

Dry bulk, meanwhile, is beginning to tell a slightly different story. First-half tonne-mile demand increased 6.7%, more than twice the growth in actual cargo volumes, while the actively trading fleet expanded just 3.2%. Guinea, Simandou and changing commodity sourcing are providing longer-haul demand that looks less dependent on any single crisis.

That divergence sits at the heart of this week’s Maritime CEO interview with Norden chief executive Jan Rindbo. Norden is reducing tanker exposure and directing more capital towards dry cargo, where Rindbo sees a better risk-reward balance. His warning for the wider industry is a familiar one: do not chase yesterday’s earnings with investments made near the top of a cycle.

Ashore, APM Terminals chief executive Keith Svendsen supplied an equally useful dose of discipline in this week’s Splash Ports CEO interview. Rather than automatically building more, Svendsen wants terminals to extract far more from what they already own. APM Terminals’ Gemini hubs are handling over 70% more moves per hour than a decade ago. “Without operational discipline, you simply buy a larger version of the same problem,” he told Splash Ports.

Over at SplashTech, meanwhile, this week’s lead feature looked at why fatigue, weak access discipline, blurred IT/OT accountability and poor onboard processes still leave vessels exposed in ways software alone cannot solve.

AI was the theme that dominated much of discussion at last week’s Splash Singapore. For those unable to attend the event, this week’s Splash Wrap podcast, carried below, identifies the key themes surrounding AI and shipping from Asia’s leading shipowner conference.

Read more: https://splash247.com/splash-wrap-when-normal-becomes-the-risk/