Declining Spot Rates, Red Sea Houthi Attacks, Maersk Goes Digital

November 19, 2024
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In this edition of OpenTrack's Maritime Newsletter, we navigate through a sea of challenges, strategic shifts, and emerging trends that continue to shape the global shipping industry.

We start with Maersk’s latest on going digital with air freight bookings, highlighting how the shipper is building for the future. We also talk about declining shipping spot rates this February. Delve into what rate trends we can expect next.

We travel back to the Red Sea, where Houthis claimed to have conducted four new raids over UK and US vessels, as a response to the EU confirming that it expects to have at least four warships in the area in the coming weeks. We also look at how air attacks in the Red Sea are generating curiosity from Asia, as various institutions and governments prioritize solutions for ballistic missile attacks.    

We also travel to Canada, where protests have started anew against a Deep Water Vessel Dismantling Site in British Columbia. Stay informed as we navigate the ever-evolving world of maritime logistics and transportation.

Maersk Adds Digital Booking To Air Freight Services

Recognizing the need for a global digital solution allowing consumers from any part of the world to move raw materials and goods seamlessly, A.P. Moller–Maersk launched a digital air freight booking solution. This solution comes as part of Maersk’s integrated logistics services to help connect and simplify supply chains. The online tool provides instant prices for 70,000 airport connections across more than 90 countries. Customers can book cargo movements for any of the global airport pairings.

As manufacturing has diversified with global value chains, Maersk noticed that customers in one part of the world need to move raw materials from origin to destination without being at either of the locations, prompting this move.

Maersk has continued to advance its air cargo ambitions despite a modal slowdown spurred by falling demand and excess capacity. The carrier had initially introduced air freight operations in April 2022 before expanding its services to include two weekly flights between the US and South Korea later that year. The ocean shipper has also been building out its air cargo network in North America. In July 2023, Maersk opened a 123,000-square-foot air cargo gateway in Georgia in a bid to strengthen its logistics offerings, including local and regional distribution.

With the added benefit of air cargo operations and other integration opportunities, Maersk is positioning itself as an end-to-end supply chain provider. Delve into the specifics behind Maersk’s strategy to find out how the shipper is planning for the future.

Are Ocean Spot Rates Past Their Peak?

As global container spot rates drop since the beginning of February, we are left to wonder if this trend will continue, and if yes, how will it affect shippers and carriers? To understand this trend, we need to look into the recent past. Ocean spot market pricing was in decline for well over two years as the Drewry World Container Index – Global Composite peaked in September 2021 and then declined until October 2023, before stalling out the declines as ocean spot rates reached pre-pandemic levels.

In the first six weeks after the Houthi attacks in the Red Sea began, the Global Composite Index from Drewry once again increased by 170% to $3,732.70 per twenty-foot equivalent unit, which is the highest level the index has seen since September 2022. Likewise, the Freightos Baltic Daily Index – Global showed an increase from the beginning of December through the middle of January.

Since the beginning of February though, global spot rates have suffered declines. While those declines are not severe, they are an indication that the pricing power experienced throughout January is coming to a close. The Drewry World Container Index – Global Composite has dropped by 6% since its near-term peak of $3,964.18 per FEU in the week of Jan. 25. The Freightos Baltic Daily Index – Global, is down a little over 1% during the same period. Find out how ocean spot rates are likely to move in this detailed analysis.

Houthis Step Up Attacks Hitting Second Ship and Possibly Downing US Drone

The Houthis accelerated their attacks in the Red Sea after a lull claiming four efforts on 17-18 February, emphasizing that they have been targeting US and UK shipping interests. The wave of attacks came as the EU confirmed it is accelerating its response saying that it expects to have at least four warships in the area in the coming weeks.

While the shipping world was still trying to sort out the details of the attack against the Rubymar, a 32,200 dwt bulker registered in Belize, the Houthi spokesperson Yahya Saree went back on social media hailing their victory claiming to have sunk the vessel and highlighting three other attacks on the same day.

The UK Maritime Trade Operations confirmed that it had received reports of another attack 100 nautical miles east of Aden, Yemen. Security analysts said it involved a bulker the Sea Champion (48,857 dwt) inbound to Aden. The Houthis also claimed to have shot at a US aircraft operating over Yemen. Open Source Intelligence Monitor posted unconfirmed photos saying an MQ-9 “Reaper” Surveillance Drone appeared to have been taken down over Yemen. Delve into the motivations of the Houthis and the evolving situation in the Red Sea to know more.

Renewed Protests Against Deep Water Vessel Dismantling Site in BC, Canada

Residents of Union Bay, British Columbia in Canada have renewed their calls for the shutting down of a shipbreaking site where two former US government research vessels are being dismantled. Supported by environmentalists, they cite health, safety, and environmental concerns.

Calling themselves the Concerned Citizens of Baynes Sound (CCOBS), the residents are protesting against the shipbreaking site where Canadian company Deep Water Recovery (DWR) is dismantling the two vessels. Over the last three years, the two vessels have been undergoing dismantling at Baynes Sound, prompting anger from nearby communities and supported by the NGO Shipbreaking Platform they argue the ships are laden with hazardous materials including asbestos. The residents have repeatedly held protests against what they term as dirty and dangerous scrapping operations.

The two US vessels became their latest focus with the group arguing that the hazardous materials, as defined under the Hazardous Waste Regulation, are being mishandled, exposing workers, the surrounding community, and the environment to severe risks. While Canada has no federal rules specifically regulating shipbreaking, the environmental groups want the country to ratify the Hong Kong Convention for the safe recycling of ships and not allow the beaching of vessels or ship recycling in ecologically sensitive areas.

This detailed article explores this conflict, highlighting the need for sustainability standards and effective industrial waste disposal methods.

Red Sea Ballistic Missile Attacks Trigger Asian Interest in Defenses

The use of anti-ship ballistic missiles (ASBMs) in the Red Sea has spurred interest in Asia about the systems used to shoot them down, experts and industry officials say. On the sidelines of the Singapore Airshow this February, a senior executive at a US defense contractor said the air defense activity in the Red Sea and Ukraine had caught the attention of potential customers in Asia.

US Central Command (CENTCOM) media releases from Nov. 27 – the world’s first documented use of an ASBM in combat – to Feb. 20 mention a total of 48 ASBMs and 12 interceptions in the Red Sea. Those releases noted that many ASBMs fired by the Iran-aligned Yemeni Houthis posed no danger and were not engaged.

Robert Hewson of Sweden’s Saab SAABb.ST said at the air show that customers in Asia were now more interested in not just countering ballistic missiles, but also small, “low-end” aerial threats such as drones that have been launched in concert with larger attacks in the Red Sea.

US Navy Admiral Mark Melson, commander of Logistics Group Western Pacific, said at the air show the military was studying what lessons from the missile engagements could be applied in Asia and elsewhere. Read this article to understand what weapons are being used in the various global conflicts today and how governments and institutions are building up their defenses against these.

Navigating Tomorrow's Transportation Challenges with Real Time Container Tracking

In the dynamic landscape of transportation, staying informed is crucial. OpenTrack remains your reliable ally, offering:

  • Real-time Container Tracking: Ensure visibility at every stage of your container's journey.
  • Predictive Analytics: Anticipate disruptions and proactively adjust your logistics strategies.
  • Dynamic Route Optimization: Optimize shipping routes based on the latest trends and developments.

Ready to revolutionize your logistics operations? Book a demo with OpenTrack today and discover how our solutions can elevate your shipping and tracking capabilities. Stay ahead in the fast-paced world of transportation!

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