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Lengthy wait for cargo as Ever Given owner declares #General_Average - The Loadstar
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As the investigation into the grounding of the Ever Given in the Suez Canal begins, the vessel’s Japanese owner, Shoe Kisen, this morning declared General Average.

And a customer circular from Evergreen, seen by The Loadstar, confirms that Shoe Kisen this morning appointed Richard Hogg Lindley as adjustor.

For the vessel, now at anchor at the Bitter Lakes area undergoing technical inspections, a possible date of departure to ports of discharge has yet to be set.

And while there is no reported damage to the cargo, and that to the vessel appeared to be minimal, the cost of the salvage operation, which ultimately required 11 tugs and two dredgers, as well as possible compensation claims from a variety of interests such as the Suez Canal Authority or shipping companies caught up in the backlog, could amount to a sizeable bill.

In addition, it remains unclear whether there will be a separate salvage claim from the vessel’s salvors.

While the backlog of vessels waiting to transit Suez is now expected to be cleared over the next couple of days, shippers and freight forwarders with cargo on the Ever Given could be in for a long wait for it to be released.

The problem for cargo interests, according to insurance sources, is that the cost of the casualty to its owners is likely to take some time to determine, if it involves claims from other parties, which means the adjustors will remain unable to fix the level of the general average and salvage securities.

The last time General Average was declared was following the 2018 fire on board the Maersk Honam. After declaring GA, the adjustor fixed the salvage security at 42.5% of cargo value and 11.5% as a GA deposit – this meant a shipper with a cargo worth $100,000 needed to pay a combined deposit of $54,000 to get its cargo released.

This leaves shippers with uninsured cargo highly vulnerable to losing it, as the owner can hold the goods under lien until the deposit is paid. Shippers with insured goods will have those deposits covered by their insurers.

According to panellists on a recent webinar on container casualties, held by the London Shipping Law Centre, GA is only declared in incidents which have incurred an extraordinary loss – the general rule of thumb being a loss of over £10m on a ship of 15,000 teu or bigger.

Container shipping service levels dropping as costs and rates rise - The Loadstar
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Container shipping costs and service levels are at risk of spiralling out of control, according to Drewry.

As well as a massive withdrawal of capacity since the start of the Covid-19 crisis – 468 blanked departures on east-west trades – the analyst said schedule reliability had been “extremely low”.

“In the first half of the year, fewer than two out of three vessels arrived within 24-hours of their ETA,” said Philip Damas, head of Drewry Supply Chain Advisors.

“To make matters worse, this is using a measurement which is fairly lenient, because we are setting the ETA at the time of the ship’s departure, by when the carriers should have a good indication of their schedules,” he added.

The blanked sailings and poor reliability naturally resulted in widespread rollovers, said Mr Damas who noted that a Drewry survey of shipper clients had revealed 83% of them had seen cargo rolled.

“It caused significant operational problems for shippers and forwarders; reworking or re-booking the shipment, making a lot of contacts and phone calls and wasting a lot of time working late hours. Many shippers today do not receive good data from carriers on rollovers, or they are not able to measure rollovers using internal systems.

“So our view is that rollovers are a key issue which has been exposed by the recent crisis – this is the new reality of a much more concentrated marketplace in which shipping lines have more power,” he said.

There has also been a notable increase in carriers offering no-roll premiums, which Mr Damas said was needed, but they were really just “offering a normal service at premium prices”.

Devant l’effondrement du trafic, les transporteurs ont fortement réduit leurs capacités. De plus, il gonfle les coûts en imposant des délais par rapport aux créneaux prévus, ce qui leur permet d’imposer des surcoûts pour garantir le délai…

Lines using cheaper Cape of Good Hope route will cost Suez Canal $10m - The Loadstar
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The Suez Canal Authority (SCA) is set to lose over $10m in revenue from container lines routing vessels via the Cape of Good Hope rather than its waterway.

According to new Alphaliner research, “the number of containerships that have opted to use the Cape route and bypass the Suez Canal has risen to a historic peace-time high,” including at least 20 sailings on the Asia-Europe, Europe-Asia and North America east coast-Asia trades.

“A unique combination of a container tonnage surplus and rock-bottom bunker prices has increasingly prompted ocean carriers to avoid the canal – and thus its fees,” the analyst noted today.

“Rather unusually, even three westbound Asia-Europe headhaul sailings have opted for the Cape route, all operated by CMA CGM.

“Carriers very rarely choose this longer route for the time-sensitive headhaul, but the low bunker price and lack of demand in European markets, hit by the Covid-19 lockdowns, have suddenly made such moves viable,” it added.

As well as the three Ocean Alliance westbound sailings – two on the FAL3 service and one on the FAL1 – Alphaliner tracked nine Europe-Asia and eight North America east coast-Asia backhaul sailings avoiding Suez with vessels operated by Evergreen, MSC, ONE and Cosco.

Suez Canal charges vary according to the size of the vessel, its routeing, the number of containers carried and the proportion of laden boxes, but as a rule of thumb, a fully laden 20,000 teu container vessel on a headhaul Asia-Europe sailing could expect to pay around $700,000 in transit fees.

The distance difference between the two routes is around 3,500km on Singapore-Rotterdam sailing.

In response to the moves, the SAC has announced cuts in transit fees, varying from around 17% for ships involved in European trades, to 60%-75% for vessels returning to Asia from the east coast of North America.

Another box ship crew scramble for their lives as containers catch fire - The Loadstar
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Fire has swept through several containers aboard the APL Le Havre just days after carriers announced they would impose heavy fines on misdeclared dangerous goods.

The Ministry of Defence in Gujarat State said fire had forced a diversion of the 10,100 teu vessel on Friday night, after it left Karachi en route to Mumbai.

Reports claim six boxes were involved, with the Indian coastguard resorting to flooding the boxes after early efforts to tackle the blaze were hampered by heavy weather.

The fire was brought under control after four hours and the next task is to determine the damage caused to the 10,000 teu vessel.

No injuries have been reported among the 26 crew members aboard the Singapore-flagged vessel, although APL has yet to release a statement on the incident.

This is the latest in a stream of box ship fires, with the TT Club pointing to “a worrying trend” amid claims that one hits every 60 days.

Last week, The Loadstar reported that Evergreen, Hapag-Lloyd and OOCL would be imposing fines ranging from $4,000 to $35,000 for misdeclared shipments.

’Bigger box ships mean bigger risks for everyone’ - The Loadstar
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It seems the ultra-large container vessels (ULCVs) that have become the ‘new normal’ on the Asia-Europe tradelane have not proved as popular as the lines that operate them hoped.

Several shippers The Loadstar spoke to at Transport Logistic in Munich last week could not hide their aversion to the ocean behemoths – and it appears the insurance industry also has concerns. 

In its 2019 Safety and Shipping review, Allianz says ULCVs “are of particular concern” for the insurance industry, given that bigger vessels mean bigger risks, with a potential for a loss as big as $4bn. 

“Insurers have been warning for years that the increasing size of vessels is leading to a higher accumulation of risk,” it said. “These fears are now being realised, potentially offsetting improvements in safety and risk management.”

“Larger vessels mean far greater accumulations of risks, and therefore larger values and exposures, both on board vessels and in ports,” said the insurer.

Noting that containerships have almost doubled in capacity in the past decade, “which brings issues as well as benefits”, the review says fires and explosions on board continue to generate large losses, with 174 reported incidents last year – and a new incident occurring every 60 days, on average.

“Such incidents can easily result in large claims in the hundreds of millions of dollars, if not more,” says the review. “A worse-case loss scenario involving the collision and grounding of two large container vessels could result in a $4bn loss, when the costs of salvage, wreck removal and environmental claims are included.”

It adds that misdeclared cargo, including incorrect labelling and packaging of goods, “is believed to be the root cause of a number of fires and is a problem exacerbated by larger vessels, which can make issues more difficult to detect, locate and combat”.

And it notes that onboard firefighting capability “continues to challenge larger vessels”, with the need for “considerable outside assistance to control a blaze” and that “significant damage to the vessel is likely to occur” due to the time required to get fire-fighting vessels to the scene.

But it is not only losses resulting from damage to the vessels that insurers are concerned about: the loss of some 300 containers in the North Sea in heavy weather from the 19,224 teu MSC Zoe in January resulted in substantial claims, and the report reminds readers that “inadequate stowing and lashing” of containers “poses a serious risk in bad weather”.

The biggest container vessel casualty to date was the 15,262 teu Maersk Honam, which caught fire on 6 March last year in the Arabian Sea, claiming the lives of five crew members.

Indeed, even for the small-by-comparison, 8,110 teu MOL Comfort, which broke its back and sank off the coast of Yemen in 2008, resulting in a total loss of the ship and its 4,380 Europe-bound containers, the insured cargo loss alone was reported at some $300m.

Marine insurers typically calculate their average exposure at $50,000-$100,000 per box, but due to the higher value of the MOL Comfort’s electronics and consumer goods cargo, the loss was considerably higher.

Moreover, there have been instances recorded by marine insurers where the value of a single packed container has exceeded $1m.

“It is very clear that in some shipping segments, loss prevention measures have not kept pace with the upscaling of vessels,” said Chris Turberville, head of marine hull & liabilities in the UK for Allianz.

“This is something that needs to be addressed from the design stage onwards.”

Les incertitudes dans la guerre douanière entre États-Unis et Chine désorganisent fortement le transport maritime. Les anticipations ont provoqué un effondrement des taux de fret, voyant cela, les BCO (propriétaires de fret) suspendent les ordres de transport espérant les obtenir à des coûts inférieurs. Ocean Alliance (dont fait partie CMA-CGM) annule 10 liaisons transpacifiques en mars et avril, soit 15% de son offre…

Ocean Alliance to blank ten transpacific sailings as spot rates plummet - The Loadstar
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The Ocean Alliance has announced plans to cancel 10 transpacific sailings in March and April, as the early signs of weak volumes on the trade become reality.

The decision by APL, CMA CGM, Cosco, Evergreen and OOCL will result in some 74,000 teu culled from US west coast services and more than 35,000 teu from those destined for the east coast, according to data from Alphaliner.

This amounts to some 15% of the capacity the alliance would normally have offered over the four-week period of the cancellations.

On Friday, The Loadstar reported that container spot rates from Asia to the US had been plummeting, with the Shanghai Containerised Freight Index (SCFI) recording a 10% drop for the US west coast and 7% for east coast ports.

One source told The Loadstar that front-loading cargo to beat the pending 25% tariffs was adding to the weakness in demand on transpacific trades. And sources at the JOC TPM Conference in Long Beach this week said: “BCOs are telling us they are holding back on contract negotiations with carriers due to the weakening spot market.

“The view of several BCOs is that there is ‘a way to go’ on spot rates and, as a result, they are not feeling any pressure to sign new deals.”