Weekly Supply Chain Update: 12

Far East-Westbound Trade Sees Surging Volumes Amid Reroutings and Congestion

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Volumes on the Far East-Westbound trade lane are surpassing last year's levels, with ongoing issues like Cape of Good Hope reroutings and port congestion in Asia causing structurally blank sailings. Extra loaders were added in the second half of July to mitigate the impact of downsized vessels and longer transit times. Shipping lines have increased rates and are providing additional space to balance supply and demand. However, named account allocation remains limited, with carriers halting new long-term rate offers since May. While equipment supply has improved, shortages persist, particularly for named accounts, as carriers prioritise high-paying contracts.

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Global IT Outage Highlights Critical Vulnerability in Ocean Freight and Port Operations

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The recent global IT outage caused by a Crowdstrike update has significantly disrupted ocean freight and port operations, underscoring the critical dependence on digital systems. The outage, which occurred on 19 July, impacted major ports and shipping lines, leading to delays and operational challenges. Ports such as the Baltic Hub in Gdansk asked companies to halt sending containers due to system issues, highlighting the vulnerability of port logistics to IT failures. The outage's timing coincides with increased shipping demand, exacerbated by the ongoing crisis in the Red Sea, which has already strained available capacity. With many systems offline, ports and shipping companies are struggling to manage the backlog, affecting global supply chains and causing delays in cargo movements. The recovery may take days or weeks, as IT teams work to restore systems and ensure smooth operations. This incident serves as a stark reminder of the importance of cybersecurity and robust contingency planning in the maritime industry.

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Container Fleet Expansion Hits 15-Year High, Surpassing 29.5 Million TEUs in 2024

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Since the beginning of the year, the container ship fleet's capacity has grown by 1.6 million TEUs, marking an 11% increase to 29.5 million TEUs, the fastest in 15 years, according to BIMCO's Chief Shipping Analyst, Niels Rasmussen. The first half of 2024 saw a record 264 new ships delivered, totalling 1.6 million TEUs. Despite high demand for ships, only 36 ships, totalling 51,000 TEUs, were recycled. Year-to-date, 63 ships with a combined capacity of 400,000 TEUs have been ordered, maintaining a high order book-to-fleet ratio of 19%. The 12,000-17,000 TEU segment is growing fastest, now comprising 22% of the fleet. While larger ships dominated growth until 2021, they now represent only 17% of the order book. The container fleet's capacity is expected to exceed 30 million TEUs by the end of the third quarter of 2024 and reach 30.5 million TEUs by the year's end. As cargo volume growth is unlikely to match this expansion, an increase in ship recycling is anticipated to moderate overall fleet growth.

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Typhoon Gaemi Triggers Maritime Disasters: Tanker Capsizes, Cargo Ship Sinks, and Two Vessels Grounded

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Typhoon Gaemi has caused significant maritime casualties. On 25 July, the oil tanker Terra Nova capsized in Manila Bay, Philippines, killing one of its 17 crew members and causing a 3.7km oil spill. The Philippine Coast Guard is working urgently to contain the spill, which could become the country's largest if not managed in seven days. Meanwhile, the cargo ship Fu Shun sank off Taiwan, with all nine crew members missing. The Taiwan Coast Guard, facing strong winds, is searching for the missing crew. Additionally, the typhoon grounded two ships: the Indonesia-flagged cement carrier Iriana and the Portugal-flagged cargo vessel Sopfia. Fortunately, no crew members were injured in these groundings.

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Valenciaport Reports 14.05% Rise in TEU Handling in First Half of 2024, Driven by Increased Trade with Key Partners

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In the first half of 2024, Valenciaport handled 2,708,318 TEUs, a 14.05% increase from the previous year, with container cargo accounting for 72% of total traffic. Significant growth in container volume was seen in the Red Sea (up 65%), Baltic States (up 43%), and Australia (up 25%). The port's main trading partners include China, the US, Italy, and Turkey, with over 12 million tonnes of goods exchanged. Notable increases in trade were recorded with Egypt (up 78%), Greece (up 84%), and Saudi Arabia (up 58%). Overall, 40.86 million tonnes of goods passed through Valenciaport, a 6.95% increase from last year, including 29.49 million tonnes of containerised cargo. Vehicle traffic, however, decreased by 3.27% to 316,769 units.