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Trade War Fallout: Cancellations Of Chinese Freight Ships Begin As Bookings Plummetin International Shipping News 18/04/2025 U.S. importers are being notified of an increase in canceled sailings by freight ships out of China as ocean carriers try to balance the pullback in orders resulting from President Trump’s tariffs and the escalation of tensions in the trade war. A total of 80 blank, or canceled, sailings out of China have been recorded by freight company HLS Group. It wrote in a recent note to clients that with the trade war between China and the U.S. leading to a demand plummet, carriers have started to suspend or adjust transpacific services. Major ocean freight alliance ONE has “suspended until further notice” a route it had previously been planning to bring back in May, which would include ports of Qingdao, Ningbo, Shanghai, Pusan, Vancouver, and Tacoma. Meanwhile, an existing route is planning to cancel its port call at Wilmington, North Carolina. The impact of the diminished freight container traffic to North America will be significant for many links in the economy and supply chain, including the ports and logistics companies moving the freight. If each sailing was carrying 8,000 to 10,000 TEUs (twenty-foot equivalent units), that would equal a decline in freight traffic of between 640,000-800,000 containers, and lead to decreased crane operations at the ports, lower fees that could be collected, and declines in container pick-ups and transports by trucks, rails, and to warehouses for storage. The World Trade Organization warned on Wednesday that the outlook for global trade has “deteriorated sharply” in the wake of Trump’s tariffs plan. JB Hunt shares hit their lowest level since November 2020 after commentary during the trucking company’s earnings call about the uncertainty from tariffs. “We have no way of knowing how significant this drop in orders will be on vessel schedules,” said Alan Murphy, CEO of Sea-Intelligence. “There are no models to extrapolate this. What I can tell you is the majority of containers on the vessels servicing the Asia to U.S. trade routes is China. We won’t go to zero containers, but we will see a decrease in containers and as a result, in the future, we will see a massive raft of blank sailings announced.” China accounts for approximately 30% of all U.S. containerized imports (down from 37% in 2018), but accounts for approximately 54% of all U.S. containerized imports from Asia (down from 67% in 2018). Bruce Chan, director of global logistics & future mobility for Stifel, said the tariff policy has created significant uncertainty with respect to consumer demand, and retailers have been positioning their businesses conservatively with inventory, especially given “scar tissue” from the recent overstock after the post-Covid supply chain squeeze from 2021-2022. “That uncertainty is beginning to manifest in blanked container ship sailings on core eastbound transpacific lanes, in our view, opening the potential for a double-digit decline in inbound containerized imports as early as next month,” he said. Booking volumes from the last week of March to first week of April across global and U.S. trade lanes plummeted. There were sharp decreases in bookings across several categories, including apparel & accessories; and wool, fabrics & textiles, both down over 50%. Major product categories from China that are moved in containers include apparel, toys, furniture, and sports equipment, all of which are subject to steep tariffs. As a result of the decrease in containers, ocean carriers will not only cancel vessels, but also adjust or cancel vessel routes commonly called “vessel strings,” such as the ONE service from China to Vancouver and Tacoma. These routes dedicating vessels to move the ocean freight at specific ports take months of planning. The elimination of vessels also impacts U.S. exports bound for Asia and relying on ships traveling in both directions. Ocean carriers need to move full vessels to generate a return on investment, but it is not in their best interest to use large vessels if they cannot be filled. To ensure vessels are used at full capacity, carriers have a number of ways to alter the vessel strings. Stretching out ship arrivals by canceling sailings is an option for container volume to better match capacity. According to Murphy, 99% of vessel services are weekly and it takes a vessel approximately seven weeks to make a round trip. “During Covid, ocean carriers parked their vessels for maintenance,” Murphy said. “Ocean carriers can also blank (cancel) a sailing, omit vessel strings entirely, use smaller vessels, or slow steam the vessels where they are traveling longer.” These measures will cut the available vessel capacity for containers, according to Murphy, which helps remaining ships to be filled, with uncertain implications for overall pricing in the ocean freight business. While a decline in sailings could lead to a drop in prices, during Covid, blank sailings were identified by shippers around the world as a reason for container rates that spiked as high as $30,000. In that case, shippers say the ocean carriers canceled sailings for longer than needed. Vietnam continues to gain on China The global supply chain demand and pricing situation remains fluid and subject to sharp short-term swings tied to tariffs policy. As Chinese trade comes under strain, a key metric in ocean freight rates shows Vietnam surging in early April. The “mid-low” ocean rates, which represent the costs of shipping goods for a larger-sized shipper on a particular ocean route, have jumped by 43% since March 30 for Vietnam. Xeneta calculates the market mid-low and market mid-high segments by looking at the values of the 25 and 75 percentiles of a trade lane rate. “The fact that the lower end of the market has been rising shows the heat is on,” said Peter Sand, chief analyst at Xeneta. He said that is continuing after Trump’s decision to pause what he called “reciprocal” tariffs on countries other than China for 90 days. “Shippers large and small all have to pay up for frontloading, as the ‘pause’ made the pulling forward of freight possible again,” Sand added. This demand from U.S. shippers importing goods can be seen in the increase in container shipping spot rates on the Ho Chi Minh City to Los Angeles ports route, jumping by 24% going into April. According to data compiled by Xeneta for 2025, the spread between China’s largest container port, Shanghai, and Vietnam’s largest container port, Ho Chi Minh City, has also narrowed per forty-foot equivalent unit (FEU) for shipments to the ports of LA and Long Beach. Even with increased costs for shippers, they will continue to bring in imports from non-China nations because the situation remains highly unpredictable, Sand said. “There is every possibility the higher tariffs come into effect 90 days from now or even at an earlier stage,” he added. Source: CNBC

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18 April 2025

Hellenic Shipping News

Record-Breaking Carbon Emissions In Ocean Container Shipping: Here’S What Shippers Need To Knowin International Shipping News,Shipping: Emission Possible 18/04/2025 Latest data reveals global ocean container shipping emitted all-time high carbon emissions in 2024, driven largely by the impact of conflict in the Red Sea. The data, released by Xeneta and Marine Benchmark this week, is a timely reminder that, while the geo-political climate is heating up due to the US tariff announcements, we must not forget the actual climate emergency and the work that needs to be done in supply chains to combat it. With emissions heading in the wrong direction, it raises fundamental questions around whether the International Maritime Organization’s (IMO) target of net zero by or around 2050 is remotely achievable. Shippers must also understand the impact emissions regulations will have on their business and the role they can play in reducing carbon in supply chains. Record-breaking emissions Global container emissions increased 14% in 2024 to 240.6m , comfortably surpassing the previous record of 218.5m tons of carbon set in 2021. To be clear, this record-breaking statistic should not be used as a stick to beat the maritime freight industry with because it is largely due to ships sailing longer distances around the Cape of Good Hope following the escalation of conflict in the Red Sea in December 2023. A new record high is the inevitable outcome of these diversions, both in terms of the increase in transport work and the record-high demand of laden containers being moved in 2024 as shippers responded to the Red Sea crisis by frontloading imports. Overall transport work (a measurement of tons of cargo moved multiplied by nautical miles sailed) increased 18% in 2024. Emissions on the agenda The record-high emissions data is a timely reminder of the colossal task at hand following a meeting last week (7-11 April) of the International Maritime Organization’s (IMO) Marine Environment Protection Committee (MEPC) in London. Agreement was reached during the meeting on specific reduction targets on fuel intensity in container shipping, as well as the financial penalties for non-compliance (more details are provided later in this blog). Biggest increases coming from the biggest ships Firstly, we must understand the detail behind the record-breaking emissions in 2024. The biggest increases in carbon emissions came from the largest ships, with these also the ones to experience the biggest increases in transport work. Emissions from ships between 14 500 and 20 000 TEU hit 24.2m tons in 2024. This is up 7.3m tons (+43%) compared to 2023. Ships over 20 000 TEU also saw large increases, up 35% from 2023 to 19.6m tons. The two categories of ships over 14 500 TEU accounted for 18% of total CO2 emissions from the container shipping fleet in 2024, but this statistic is cast in a different light when we consider they make up 25% of total global capacity. While ships over 14 500 TEU may have had the biggest year-on-year increases, they are perhaps not the main cause for concern. That is because ships between 8 000 and 12 000 TEU have a much higher share of total emissions. A higher base in 2023 means the 51.3 million tons of CO2 emitted by this category of ship in 2024 is only up 8% year-on-year. However, these ships account for more than fifth of total emissions despite only making up 20% of global container shipping capacity. The disproportionate relationship between share of shipping capacity and share of emissions is explained by bigger ships tending to be newer and therefore much more carbon efficient. Increase in transport work explains much of the emissions growth – but not all… Across many ship sizes the increase in emissions in 2024 is within a few percentage points of the increase in transport work. For example, ships between 14 500 and 20 000 TEU saw transport work increase 43%, in line with its growth in emissions. This significant increase in transport work has in part been made possible by fleet growth of 26% between December 2023 and December 2024 for ships with capacity between 14 500 and 20 000 TEU. There are however some exceptions where transport work growth and emissions growth aren’t aligned. On the positive side, emissions increases for smaller size ships are lower than transport work. This is driven by improved efficiency through higher capacity utilization and stable (if not slightly decreasing) average sailing speed. On a less positive note, the biggest ships over 20 000 TEU saw emissions increase 35% in 2024, more than double the 16.6% transport work growth. That gap is explained by falling efficiency for these larger ships. Firstly, sailing speed increased 5% in 2024, which adversely impacts fuel efficiency. Secondly, the ships saw a drop in utilization, which is measured in tons of cargo carried multiplied by nautical miles sailed divided by TEU capacity in tons multiplied by nautical miles sailed. Or in more simple terms, how much cargo ships carried compared to how much they could have carried based on its capacity. This utilization measure has fallen by almost 10 percentage points for the biggest ships compared to 2023. The explanation is quite straightforward – total capacity offered by the largest ships in the fleet has increased, while at the same time, demand growth on key backhaul trades slowed. This meant ships were even less full on these return legs than they were previously, which eats into a ship’s annual utilization. Fronthaul volumes, measured in TEU, grew 9.5% in 2024, while demand on backhaul trades rose only 0.9%. Regulation is coming Turning attention back to the IMO agreement in London last week, a key standard in this new regulation will be the fuel intensity used by global shipping. This is measured on a well-to-wake basis (including the full life-cycle of the fuel). Starting in 2028, ships must lower their fuel intensity by a certain percentage compared to the baseline set in 2008. There are two tiers when it comes to the reduction factors: Tier 1 – the base target Set at a 4% reduction in 2028. A ship will pay USD 380 for every ton of GHG emissions above the base reduction target. Tier 2 – the compliance target Set at 17% reduction in 2028. A ship falling between the base target and compliance target will pay USD 100 for every ton of GHG emissions or buy remedial units. Any ships outperforming the compliance target will earn surplus units, which can be banked for two years, or traded with non-compliant ships. Reduction targets will increase every year, with expectations of a 65% reduction in carbon intensity by 2040. Plenty of details still need to fall into place, many of which should come in October 2025 when the agreement is expected to be finalized, and adopted. While opinions on the deal are mixed, carriers now have more certainty on the path to decarbonization. Carbon reduction strategy for shippers We must be realistic when it comes to priorities right now. With the threats of US tariffs on every nation in the world and more than 100% from China, it will be difficult to get carbon emissions in supply chains onto the board meeting agenda at the moment. However, while there are currently massive financial pressures for shippers, they can still include carbon reduction in their freight procurement strategy. The carriers are anonymized for this blog (Xeneta customers have visibility of Carbon Emissions Index data in the platform), but it is clear there is a significant spread in performance. It is important to stress that lower emissions do not always equate to lower freight rates. While it is understandable shippers will be prioritizing the optimal rate during negotiations for their next contract, this does not mean they cannot also factor in carbon emissions, especially when they are choosing between two carriers with similar price and service delivery. This data is also essential for those shippers looking to move more goods via ocean rather than the more expensive and more carbon intense air cargo. Source: Xeneta

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18 April 2025

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