Weekly Supply Chain Update: 4
SCFI Surges Amid Stabilising Routes and Equipment Shortages
The Shanghai Containerised Freight Index (SCFI) experienced a significant increase of 9.3% this past Friday, reaching 2,520.76 points, a rise of 214.97 points from the previous week. This boost followed a substantial 365.16 point surge the week before, marking a total increase of 29.8% over the last two weeks. This recent upswing in container spot rates comes as the disruptions in the Red Sea, which prompted rerouting via the Cape of Good Hope, begin to stabilise. Despite these gains, the container shipping sector is still grappling with equipment shortages. This year, the industry added 1.14 million TEU of new capacity, yet, according to shipping analyst Alphaliner, there remains a deficit of 36 ships specifically on the Asia-Europe trade route. I expect ex-China freight rates to rise due to increased demand, tight capacity and the need to reposition empty containers.
Houthi Leader Threatens to Extend Maritime Attacks
In a recent televised speech, Abdulmalik al-Houthi, the leader of the Houthis, has reiterated threats that his group might extend its area of maritime attacks to include the Mediterranean. Al-Houthi declared that his group would target any vessels en route to Israeli ports using drones and missiles. The Houthis, who have a history of making similar threats, have since last November escalated their attacks on merchant shipping, progressively striking targets farther from their own shores. These operations are supported by Iranian-supplied hardware and intelligence.
DP World Launches Three New Facilities in Romania
This week marked the inauguration of three new DP World facilities in Romania, significantly enhancing the country's marine infrastructure to accommodate the increasing maritime traffic of recent years. In Constanta, Romania's largest container port on the Black Sea, DP World unveiled two new installations thanks to a €65 million investment: a project cargo terminal spanning 5 hectares and a roro terminal designed to process up to 80,000 vehicles annually at full capacity. Additionally, plans are underway for a €50 million multi-transport platform in Constanta, set to launch in 2025. The third facility, an 8-hectare intermodal logistics hub, opened in Aiud in the industrial core of Romania, following a €21 million investment. This hub links rail and road transport, boosting the logistical capabilities of the area.
Hapag-Lloyd Reports Q1 2024 Financials
Hapag-Lloyd, reported its financial results for the first quarter of 2024, posting revenues of US$4.6 billion, Group EBITDA of US$942 million, EBIT of US$396 million, and a profit of US$325 million. These figures represent a notable decline from the same period last year. The Hamburg-based carrier handled 3 million TEUs during the first three months of the year, marking a 6.8% increase compared to the first quarter of 2023. Despite facing substantial cost increases due to rerouting ships around the Cape of Good Hope, the company maintained its transport expenses at US$3.3 billion, consistent with the previous year, largely through active cost management strategies.
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