China’s crude oil imports have doubled from 2011 to 2021 and now account for 20% of global seaborne crude oil volumes. While China’s January to May 2022 seaborne crude oil imports are down 2.2% y/y, a 51.4% m/m boost in imports from Russia has helped lift China’s seaborne crude imports to 42.6 million tonnes in May, up 8.7% m/m and 13.0% y/y.


“Russian crude oil accounted for 13% of China’s seaborne crude import in May, up from 9% earlier in the year,” says Niels Rasmussen, Chief Shipping Analyst at BIMCO and adds “Meanwhile, imports from Brazil, Saudi Arabia, and Kuwait declined compared to April.”

While year-to-date seaborne and total crude imports are down 2.2% y/y and 1.7% respectively, the US Energy Information Administration (EIA) estimates that local Chinese crude production was up 3.4% y/y whereas consumption is estimated to be down 0.9% y/y. Refinery runs have also been low as local demand has faltered and the export quota in 2022 is 37% lower than in 2021. All in all, crude inventories have been on the increase and hit a 10-month high in May.

The EIA still estimates that oil consumption in China will rebound and grow 2.7% y/y from June until the end of December. It also forecasts a 1.2% rise for the full year compared with 2021. This bodes well for crude tanker volume demand, but risks related to global economic growth remain.

Changes in crude oil trade patterns are expected to accelerate during the rest of 2022, particularly towards the end, as the EU’s ban of Russian oil and oil products enters into force.

“Russia will seek to increase volumes to India and China, and they are likely to replace volumes from the Persian Gulf, Brazil, and West Africa. Those volumes will instead move towards Europe,” says Rasmussen and adds “depending on final trading patterns this could increase average sailing distances and demand for Afra- and Suezmax ships in particular. This is because they carry most of Russia’s exports as well as a higher share of volumes from the Persian Gulf, Brazil, and West Africa into Europe than into India and China.”
Source: BIMCO, By Niels Rasmussen, Chief Shipping Analyst

It’s been another bumper month for long-term contracted ocean freight rates, as the cost of securing container shipments climbed by 10.1% in June. Following on the heels of a record 30.1% hike in May, this now means rates stand 169.8% higher than this time last year, with just two months of declines in the last 18 months. Despite a degree of macro-economic uncertainty clouding the horizon, all major trades saw prices moving up, with some corridors showing significant gains.


Oslo-based Xeneta has released the figures, drawn from its Xeneta Shipping Index (XSI®) Public Indices for the contract market, which crowd-sources and aggregates real-time data from the world’s leading shippers to deliver market insights. Those insights, notes Xeneta CEO Patrik Berglund, continue to confound commentators.

A question of sustainability
“Rates developments that would have been front page news a few years ago are in danger of becoming the norm in a market environment that is historically hot,” he states. “After last month’s colossal rise, we see another hike of 10%, pushing cargo owners to the limits, while the carriers fill their pockets. Again, we have to question, is this sustainable? And the signs are gathering that, well, it might not be.”

Berglund points to falling spot rates – that may increasingly tempt shippers away from traditional contracts – in addition to looming industrial action in ports (in Europe and, potentially, the US) that could further damage schedule reliability only just recovering from recent congestion and COVID-induced disruption. In addition, there’s the fact that the US has signed into law the Ocean Shipping Reform Act, designed to stop shipping companies from profiteering, and the looming shadow of widespread inflation that may impact upon consumer demand and slow economic activity.

Frayed relationships
“The carriers have had it all ‘their own way’ for the last 18 months or so,” Berglund comments, “but will they now be studying this wide array of factors with some concern? Not while rates continue to rise, but the relationship between their community, shippers and, to some extent, other key society stakeholders has been damaged by disruption, poor quality services (in terms of reliability) and runaway rates increases.

“We’ve already seen some cargo owners looking to distance themselves from traditional carriers and, for example, charter their own vessels, and you have to ask what will happen next? Will shippers continue to pay sky-high contracted rates in an atmosphere of declining demand, inflation, geopolitical uncertainty, disruption and the ongoing threat of COVID restrictions? Something, one feels, has to give.”

Xeneta CEO Patrik Berglund

Xeneta CEO Patrik Berglund ​

The only way is up
For the time being, however, the rates arrows continue to point skywards across the board. According to June’s XSI®, which maps developments across all significant trade corridors, import and export benchmarks showed universal growth.

European imports index continued their recent climb, rising 13.7% to stand 163.4% higher than the equivalent period last year. The regional export index jumped by 6.2% and is now 148.2% up year-on-year. Similar signs were seen for Far East imports and exports, with the former rising 5% (up 62.5% against June 21) and the latter jumping 11.6%. The export benchmark is now a mighty 200.6% up year-on-year. This performance was mirrored by the US import figure, which climbed 8.6% over the month to stand 203.2% against last June. Growth on exports was more modest, with a 0.3% rise taking the index 41.7% up year-on-year.

“As we enter another period of turmoil, shippers will transform themselves into risk-averse buyers. Top of mind for them will be which trades they will procure on the spot market and which on the contract market, and their duration. They will aim to strike the best possible balance between both markets depending on their own business needs,” surmizes Berglund.

Stay tuned
He concludes: “The carriers are acutely aware of how their strategies have paid dividends, and won’t want to relinquish this position of power in contract negotiations. But at the same time, they, like the shippers, cannot control the macro-factors that dictate the wider economy. The complexity of the situation makes it difficult to forecast how this will develop, but, one thing’s for certain, develop it will. Stay tuned to the latest market intelligence to give you the understanding your business needs.”

Xeneta’s XSI® is compiled from the latest crowd-sourced ocean freight rate data aggregated worldwide. Companies participating in the benchmarking and market analytics platform include names such as ABB, Electrolux, Continental, Unilever, Nestle, L’Oréal, Thyssenkrupp, Volvo Group and John Deere, amongst others.
Source: Xeneta

( The shipping industry is currently in an ongoing transition towards decarbonization. Many market actors are accentuating their focus on modern and greener ship designs, operations, alternative fuels, energy efficiency and carbon capture technologies. Green financing, environmental, social and governance (ESG) reporting and European Union (EU) taxonomy are just a few examples of mechanisms that were previously downplayed by the industry and have now become increasingly widespread. Furthermore, there is an increased demand for green or carbon neutral freight, with many companies calling for full neutrality by 2040. As a result, shipowners are engaging more actively with partners in their commercial eco-system (shipyards, designers, original equipment manufacturers, etc.) to ensure that vessels incorporate design elements that facilitate the conversion from fossil-based to zero-carbon marine fuels.

The urgency of finding solutions to the climate change problem is growing as a top priority for both domestic and international policymakers. Around a quarter of the world’s greenhouse gas (GHG) emissions are linked to international trade, according to the most recent estimates. As the lifeblood of global trade, the shipping sector faces significant challenges in decarbonizing due to its diversity, which ranges from ferries to massive tankers, as well as the fact that clean fuels such as green hydrogen, ammonia and methanol are not yet available at scale.

Policymakers are considering ways to encourage the shipping industry to use low-carbon modes of transportation. A specific reference to shipping was not included in the Paris Agreement, and some observers believe this omission can be explained by the fact that countries are cooperating with the International Maritime Organization (IMO), which is a specialized agency of the United Nations (U.N.), to reduce the emissions associated with international shipping.

Individual countries may include targets for shipping in their national mitigation plans, and they may be able to act more promptly than the IMO. For example, in a new climate plan, the European Union (EU) proposes that the scope of its Emissions Trading System (ETS) be expanded to include carbon dioxide (CO2) emissions from ships, which would be the first time this has been done. In a similar vein, Japan has informed the IMO that it would support a carbon tax that would raise more than $50 billion (B) per year, marking a significant step forward by the world’s second-largest shipowner nation in addressing emissions from maritime transport. The inclusion of this provision would impose a price on emissions from shipping.

ABS has launched its industry-shaping Low Carbon Shipping Outlook to help the maritime sector evaluate potential pathways to low-carbon shipping.

The Outlook defines ship technologies, operational efficiencies and alternative fuels and energy sources needed to reach 2030 and 2050 targets.

2030 targets can be met through operational measures and efficiencies driven by connectivity and data analytics and energy efficient designs. Fuels are in focus to get to 2050. The conceptual designs confirm that the fuel technology today does not meet the 2050 demands.

To fully understand what it will take to adopt alternative fuels globally, we can compare to LNG as fuel. It has taken 10 years for LNG bunkering infrastructure to develop and supply less than 1% of the global fleet. Other alternative fuels will face similar infrastructure development, regulatory and supply chain challenges.

Source: ABS

LNG shipping stocks are proving resilient despite uncertainties about growth in global GDP, high inflation and the ongoing geopolitical crisis caused by the Russia-Ukraine conflict. Drewry’s LNG shipping equity index increased by 12.7% YTD as of 28 June 2022, outperforming S&P 500 which declined by 19.8% during the same period. Golar LNG stock price surged the most (up 87.9%), while Flex LNG increased by 24.8% and Nakilat by +18.2.%. LNG stocks have mainly benefited from the rising European LNG demand as the region switches away from Russian natural gas. We explore the reasons for the resilience of LNG shipping stocks amid the sell-off in the broader equity market and whether investors should consider adding LNG stocks to their portfolios.


FSRU focused stocks are key beneficiaries
Companies with FSRU exposure have particularly benefited as European countries are opting for FSRUs over their land-based counterparts. FSRU terminals can be installed in one-two years compared to three years for LNG import terminals. Golar LNG’s share price has profited from its exposure to FSRU, the company’s stake in New Fortress Energy (NFE – a leading FSRU player) and high crude oil prices. Amid a buoyant FSRU market, Golar LNG has entered into a contract with Snam to sell its 19-year-old LNG vessel Golar Arctic for USD 287.9mn (EUR 269mn) as an FSRU after conversion. The company has also signed an agreement with Snam to sell Golar Tundra FSRU for USD 350mn. NFE, which has a fleet of seven FSRUs and in which Golar LNG has a stake of 6%, has gained 68.5% YTD.

FSRUs are in high demand with Europe seeking at least 16 FSRUs to replace most of the Russian gas imports. We believe countries like Germany, France and Italy are willing to pay a high premium to acquire the assets, but with only 50 FSRUs (as of March 2022) in operation globally, the demand for FSRU providers has strengthened.

Buoyant market drives new charter wins
The upcoming EEXI and CII regulations and charters’ desire to secure LNG ships amid the geopolitical tensions are other factors driving LNG shipping demand. Flex LNG has won fixed charter for 12 vessels since March 2021, suggesting strong demand for its young fleet, with three of these charter wins in June 2022. Latest charter wins announced in June 2022 extend between seven and ten years, longer than most of the company’s existing charters and suggest increasing preference of charterers to go for longer term charter. Nakilat announced during its 4Q21 results that it has won the term-charter for all the four newbuild vessels delivered between 2Q20 and 1Q22.

LNG shipping prospects
The Russia-Ukraine war has brought the energy sector to the center stage with more focus on the LNG industry as Europe tries to wean away from Russian LNG imports and is ramping up its LNG import facilities by investing in FSRUs. As the coming years should see more FID for LNG liquefaction projects, leading to higher demand for LNG ships, we expect spot and long-term LNG shipping rates to firm up. LNG shipping companies stand to benefit from this high charter rate environment. Expectations of tight LNG supply and European geopolitical tensions is accelerating sale and purchase agreements for LNG and in turn, FIDs for new LNG projects. Charterers are preferring long-term charter to cover volatility in a tight supply market. While new order momentum is high in 2022 YTD with close to 100 LNG ship orders, we expect LNG shipping rates to continue to rise as most of the new orders have firm charter.

Upcoming EEXI and CII regulations to support LNG freight rates
As EEXI and CII regulations come into effect from 1 January 2023, we expect an increase in conversion activity of older stream turbine vessels into FSU for import projects as we believe these vessels will be more impacted by the new regulations. While these vessels will need to reduce their speed to comply with the regulations, the very old vessels will become unviable and will exit the fleet, affecting capacity and consequently supporting higher freight rates.

More borrowing capacity with a healthier balance sheet
LNG shipping companies have a healthier balance sheet at the end of 1Q22 compared to 4Q20. Furthermore, an increase in LNG vessel prices since mid-2020 indicates higher borrowings potential which can be used to acquire new vessels. Given the strong prospects, it is comparatively easier now to win a long-term charter compared to the previous two years.

We expect earnings of LNG shipping companies to benefit from positive LNG shipping prospects in the coming quarters. Given the tight LNG shipping prospects and LNG stocks’ resilience thus far, we believe investors can consider adding LNG shipping stocks to their portfolio. We prefer companies with solid revenues, young fleet and healthy balance sheet.
Source: Drewry

The UN Conference on Trade and Development (UNCTAD) says the war in the Ukraine is stifling trade and logistics of the country and the Black Sea region, increasing global vessel demand and the cost of shipping around the world.

In a report entitled Maritime trade disrupted: The war in Ukraine and its effects on maritime trade logistics” published on 28 June, UNCTAD says Ukraine’s trading partners now have to turn to other countries for the commodities they import.

It attributes the shipping and transport hurdles in the Black Sea region to disruptions in regional logistics, the halting of port operations in Ukraine, the destruction of important infrastructure, trade restrictions, increased insurance costs and higher fuel prices.

Shipping distances have increased, along with transit times and costs.

“Grains are of particular concern given the leading role of the Russian Federation and Ukraine in agrifood markets, and its nexus to food security and poverty reduction,” the report says.

Soaring shipping costs raise food prices

Fewer grain shipments over longer distances are leading to higher food prices.

Grain prices and shipping costs have been on the rise since 2020, but the war in Ukraine has exacerbated this trend and reversed a temporary decline in shipping prices.

The report says between February and May 2022, the price paid for the transport of dry bulk goods such as grains increased by nearly 60%.

The accompanying increase of grain prices and freight rates would lead to a 3.7% increase in consumer food prices globally.

The Russian Federation is a giant in the global market for fuel and fertilizer, which are key inputs for farmers worldwide.

Disruptions in their supply may lead to lower grain yields and higher prices, with serious consequences for global food security, particularly in vulnerable and food-import-dependent economies.

Higher energy prices exacerbate challenges for shippers

The Russian Federation is also a leading oil and gas exporter.

“Confronted with trade restrictions and logistical challenges, the cost of oil and gas has increased as alternative sources of supply, often at more distant locations, are called upon,” the report says.

Daily rates for smaller-size tankers, which are key for regional oil trading in the Black Sea, Baltic Sea and Mediterranean Sea regions, have dramatically increased.

The higher energy costs have also led to higher marine bunker prices, raising shipping costs for all maritime transport sectors.

According to the report, by the end of May 2022, the global average price for very low sulphur fuel oil had increased by 64% since the start of the year.

Taken altogether, these increased costs imply higher prices for consumers and threaten to widen the poverty gap.

Policy actions needed to keep global trade flowing

UNCTAD calls for urgent action to open Ukraine’s ports to international shipping so the country’s grain can reach overseas markets, at lower shipping costs.

The organization says continued collaboration is needed among vessel flag states, port states and other actors in the shipping industry to maintain all necessary services, including bunkering supplies, health services for sailors and certification of regulatory compliance.

This will help to keep to a minimum the negative impacts on costs, insurance premiums and operations.

UNCTAD also says alternative ways of transport must be pursued and that easing transit and the movement of transport workers – even temporarily – can reduce the pressure on cross-border trade and transit.

Also, UNCTAD calls for more investment in transport services and trade and transit facilitation.

And more international support for developing countries, especially the most vulnerable economies, as the war in Ukraine adds to the challenges posed by the COVID-19 pandemic and the climate crisis.

(Dreamstime photo of Odessa grain dryer facilities blocked from export shipping)


Chief Executive Bob Chapek introduced Walt Disney Co’s first new cruise ship in a decade on Wednesday, the culmination of the first project the former theme parks executive championed to the company’s board of directors.

The launch of the 4,000-passenger Disney Wish is a bright spot for Chapek, who became Disney’s CEO in February 2020 and secured a three-year contract extension on Tuesday following recent controversies that prompted questions about his tenure.

It took more than six years to bring the 144,000-ton Wish to the market, Chapek told guests at a christening ceremony that featured fireworks and appearances by Mickey and Minnie Mouse, Ant-Man, Chewbacca and other characters from Disney’s vast portfolio.

On the ship, “we combine these amazing characters and stories with incredible technology to create brand new experiences,” Chapek said.

The cruise business is part of Disney’s massive theme parks, experiences and products unit, which has rebounded from pandemic closures. Operating income hit $4.2 billion in the first half of fiscal 2022, reversing a $535 million loss a year earlier.

Disney does not disclose how much cruises contribute to earnings, but Chapek said in November that the business has generated “a double-digit return on investment” given the premium price that Disney charges.

The Wish, the fifth vessel in Disney’s fleet, “kicks off the largest expansion in Disney Cruise Line history,” said Josh D’Amaro, chairman of Disney’s parks division. Two more ships will be delivered by 2025.

The new ship sets sail as the industry works to lure customers back after a 15-month shutdown during the COVID-19 pandemic.

The Cruise Lines International Association estimates it could take until the end of 2023 for passenger volume to surpass the levels of 2019, when 29.7 million people boarded ships around the world.

The U.S. Centers for Disease Control and Prevention still advises that COVID-19 “spreads easily between people in close quarters on board ships” and that even vaccinated passengers may become infected.

D’Amaro said he believed Disney’s cruise line would return to full capacity, noting steady gains in bookings.

“When all is said and done, we’ll have seven of them, and all seven of them will be filled out,” he said in an interview. “I have 100% confidence in that.”

The ship also “complements everything that we do,” D’Amaro added. “For example, people that will come to get aboard this ship … they’re spending three days at Walt Disney World.”

The company will seek to entice vacationers to the Disney Wish with what it touts as its first attraction at sea, the AquaMouse. The theme-park-like ride incorporates animated short films featuring Mickey and other characters as guests float through 760 feet (230 meters) of winding tubes suspended above the upper decks.

Dining experiences place families inside the worlds of Disney’s “Frozen” and Marvel’s Avengers. For adults, Disney created a Star Wars-themed hyperspace lounge that evokes the look of star cruisers in “Solo: A Star Wars Story.”

The ship also boasts an interactive experience that marries the physical and digital worlds. A Disney Cruise Line app turns a user’s phone into a virtual “spyglass” for peering at constellations in the night sky (which appear as Disney and Pixar characters) and embarking on adventures.

The interactive game marks a step toward Chapek’s goal of establishing a presence in the metaverse. The executive has advocated virtual experiences as a way to keep consumers connected to Disney characters and stories in between movie releases and park visits.

The Disney Wish will set out on its first voyage on July 14 from Port Canaveral in Florida.

Disney has been embroiled in controversy in the state after the company opposed legislation to limit LGBTQ discussion in schools. That prompted state lawmakers to pass a measure that removes the company’s self-governing status for Walt Disney World in Orlando, though it has not yet taken effect.

Employees at Disney had urged the company to speak out against the LGBTQ legislation, which opponents dubbed a “Don’t Say Gay” bill.


The world’s largest cash buyer of ships for recycling will be at Posidonia 2022 and on the lookout for like-minded shipowners to deliver ESG friendly ship recycling.

A fundamental shift in attitudes towards ship recycling is forcing a change in the way owners deal with scrapping.

Operating shipowners, private equity and tonnage providers feeling the heat from cargo clients, banks and investors are now being urged to engage with the entire ship recycling process – from the sale contract to the last steel plate lifted ashore.

GMS’s Head of Green Recycling, Dr Anand Hiremath, says that evidence of the shift is overwhelming.

“Look at the data. Last year, for the first time, every ship GMS sold to India went to a yard holding Hong Kong Convention Statement of Compliance.”

Pressure from prominent shipping banks that work closely with ship cash buyers and other stakeholders such as DNB and Nordea to improve standards is taking the form of solid recommendations to their owner clients to get closely involved in ship recycling. Engagement, they say, will minimize the impact on the environment and society that results from poor recycling practices.

Getting involved typically involves developing a company recycling policy, obtaining an Inventory of Hazardous Materials (IHM) for every ship in the existing fleet, using fewer hazmats used during construction, conducting due diligence of scrap yards, proper supervision, and documentation at the waterfront. Involvement can also extend to inserting responsible ship recycling clauses in sale contracts for ships approaching the end of their trading lives.

Changing commercial landscape

Senior Trader of top cash buyer of ships for recycling, GMS, Vagelis Chatzigiannis acknowledges that historically there has been a reluctance to engage with green recycling from some quarters. But he points to the ever-growing number of high-quality ship recycling yards in India combined with ESG pressure on owners as main drivers for the shift in both attitude and practices. “The landscape is changing for sure. Owners who were solely price-driven are considering the impact of the continuously changing ESG environment. Green deals, involving yard selection and auditing, supervision and documentation are now very much part of our daily trading activities,” he says.

Chatzigiannis says ship and offshore owners are now looking for turnkey green solutions. “We aren’t simply ship cash buyers; We actively walk clients through the ship recycling process hand to hand, and cover all aspects of their recycling needs from regulatory, commercial and operational aspects; not just delivery of the units, but including completion of the recycling process and the issuance of the recycling completion certificate.

He adds that owners now want to see evidence and hard facts about the benefits of opting for a green solution. “It is important to be able to quantify the benefits and savings to the environment by choosing ESG practices, which our SSORP can deliver.”

Singapore based GMS trader Jamie Dalzell believes owners are helping to force the pace of change. ‘We are seeing more requests for HKC compliant offers these days as owners seek to comply with growing ESG requirements. This is indeed encouraging and in turn, leads to an increase in the number of yards along with upgrades on existing HKC yards as they seek to satisfy this demand.’

No short cuts

The person in charge of SSORP, Dr Anand Hiremath holds a PhD in ship recycling and divides his time advising shipowner clients and recyclers on delivering a green solution.

He recognizes the challenges but is proud of his team’s achievements. “Our purpose is safer and greener recycling – up to now, 102 ships (including 25 offshore units) have been safely recycled under our supervision. The SSORP team has completed more projects than any other compliance monitoring company in the world.”

He says the services required by owners are all significant contributors to responsible recycling. “Typically, the work involves preparing the Inventory of Hazardous Materials (IHM), helping the yard develop a Ship Recycling Plan, evaluating the Ship Recycling Facility Plan, hazardous waste management, risk assessment, daily safety observation, effective implementation of ship recycling plan, estimation of carbon footprint, monitoring the recycling process and providing a weekly/monthly/ completion report as per HKC guidelines.”

Dr Hiremath says owners are looking for full transparency backed up by accurate data. “Under SSORP, we collect 281 data points during the compliance monitoring process. But it is not all about the number of data points – more the transparency and accuracy we bring, acting as shipowner’s eyes and ears at ground zero”.


Melting ice in the Arctic Ocean could yield new trade routes in international waters, reducing the shipping industry’s carbon footprint and weakening Russia’s control over trade routes through the Arctic, a study found.

With climate change rapidly warming the world’s oceans, the future of the Arctic Ocean looks grim. Climate models show that parts of the Arctic that were once covered in ice year-round are warming so quickly that they will be reliably ice-free for months on end in as few as two decades. The Arctic’s changing climate will endanger countless species that thrive in sub-zero temperatures, scientists say.

Another critical consequence of melting ice in the Arctic? The potential for shorter, more eco-friendly maritime trade routes that bypass the Russian-controlled Northern Sea Route.

In a new study, a pair of climate scientists at Brown University worked with a legal scholar at the University of Maine School of Law to predict how Arctic Ocean ice melt could affect the regulation of shipping routes over the next few decades. They projected that by 2065, the Arctic’s navigability will increase so greatly that it could yield new trade routes in international waters — not only reducing the shipping industry’s carbon footprint but also weakening Russia’s control over trade in the Arctic.

The study was published on Monday, June 20, in the Proceedings of the National Academy of Sciences.

“There’s no scenario in which melting ice in the Arctic is good news,” said Amanda Lynch, the study’s lead author and a professor of Earth, environmental and planetary sciences at Brown. “But the unfortunate reality is that the ice is already retreating, these routes are opening up, and we need to start thinking critically about the legal, environmental and geopolitical implications.”

Lynch, who has studied climate change in the Arctic for nearly 30 years, said that as a first step, she worked with Xueke Li, a postdoctoral research associate at the Institute at Brown for Environment and Society, to model four navigation scenarios based on four likely outcomes of global actions to halt climate change in the coming years. Their projections showed that unless global leaders successfully constrain warming to 1.5 degrees Celsius over the next 43 years, climate change will likely open up several new routes through international waters by the middle of this century.

According to Charles Norchi — director of the Center for Oceans and Coastal Law at Maine Law, a visiting scholar at Brown’s Watson Institute for International and Public Affairs, and one of the study’s co-authors — those changes could have major implications for world trade and global politics.

Norchi explained that since 1982, the United Nations Convention on the Law of the Sea has given Arctic coastal states enhanced authority over primary shipping routes. Article 234 of the convention states that in the name of “the prevention, reduction and control of marine pollution from vessels,” countries whose coastlines are near Arctic shipping routes have the ability to regulate the route’s maritime traffic, so long as the area remains ice-covered for the majority of the year.

Norchi said that for decades, Russia has used Article 234 for its own economic and geopolitical interests. One Russian law requires all vessels passing through the Northern Sea Route to be piloted by Russians. The country also requires that passing vessels pay tolls and provide advance notice of their plans to use the route. The heavy regulation is one among many reasons why major shipping companies often bypass the route’s heavy regulations and high costs and instead use the Suez and Panama canals — longer, but cheaper and easier, trade routes.

But as the ice near Russia’s northern coast begins to melt, Norchi said, so will the country’s grip on shipping through the Arctic Ocean.

“The Russians will, I’m sure, continue to invoke Article 234, which they will attempt to back up with their might,” Norchi said. “But they will be challenged by the international community, because Article 234 will cease to be applicable if there’s no ice covered-area for most of the year. Not only that, but with melting ice, shipping will move out of Russian territorial waters and into international waters. If that happens, Russia can’t do much, because the outcome is driven by climate change and shipping economics.”

According to Lynch, previous studies have shown that Arctic routes are 30% to 50% shorter than the Suez Canal and Panama Canal routes, with transit time reduced by an estimated 14 to 20 days. That means that if international Arctic waters warm enough to open up new pathways, shipping companies could reduce their greenhouse gas emissions by about 24% while also saving money and time.

“These potential new Arctic routes are a useful thing to consider when you recall the moment when the Ever Given ship was stranded in the Suez Canal, blocking an important shipping route for several weeks,” Lynch said. “Diversifying trade routes — especially considering new routes that can’t be blocked, because they’re not canals — gives the global shipping infrastructure a lot more resiliency.”

And it’s better to ask questions about the future of shipping now, Lynch said, rather than later, given how long it can take to establish international laws. (For context, she said, it took 10 years for world governments to negotiate the Convention on the Law of the Sea.) Lynch hopes that kicking off the conversation on the Arctic’s trade future with well-researched scholarship might help world leaders make informed decisions about protecting the Earth’s climate from future harm.

“Flagging these coming changes now could help prevent them from emerging as a crisis that has to be resolved rapidly, which almost never turns out well,” Lynch said. “To actually craft international agreements with some forethought and deliberation is certainly a better way to go.”


The research vessel Polarstern has departed on a seven-week-long voyage to the Arctic, where the onset of summer also marks the beginning of the annual sea-ice melting. 

Over the past 40 years, the summer sea-ice extent has decreased by 40 percent – making it one of the most visible impacts of climate change. In a process study to be conducted in the marginal ice zone, the team of researchers on board will investigate how heat fluxes and water layering in the ocean, as well as the characteristics of the ice, interact and influence melting. A further focus of the expedition will be on the warming produced by Atlantic Water circulation and its effects on marine glaciers in northeast Greenland.

From her home port in Bremerhaven, the Polarstern will set course for Fram Strait and the marginal ice zone north of Svalbard, where warm, nutrient-rich Atlantic Water flows into the Arctic Ocean. Closely monitoring energy and material flows in the marginal ice zone from the ship and from on ice floes is the goal of the team led by Prof Torsten Kanzow, expedition leader and a physical oceanographer at the Alfred Wegener Institute, Helmholtz Centre for Polar and Marine Research (AWI).

Kanzow explains:

“We will make transects from the open water into the dense sea ice and back. Along the way, we will gather a variety of physical, chemical and biological measurements in the marginal ice zone, which is especially productive and therefore especially interesting. The team will also venture onto the ice to take a closer look at the thickness and characteristics of the sea ice and measure ocean currents and eddies away from the ship. We’ll also deploy so-called gliders in the ocean, buoys on the ice and moorings on the seafloor, all of which will record valuable data for the next several years. Lastly, we’ll extend our research radius with helicopter flights, during which we’ll observe, for instance, the melt ponds on the ice.”

The study will be supplemented with atmospheric research, in which the characteristics and flows of aerosols and greenhouse gases in the atmospheric boundary layer, as well as the distribution of water vapour and clouds, will be evaluated. A further project is intended to show how oceanographic fronts, eddies and the ice edge itself, as well as sea-ice characteristics (melt ponds and light transmission), influence carbon export. In order to quantify the latter, the experts will assess the nutrient supply in the sunlit zone, as well as the distribution of phytoplankton and zooplankton (including jellyfish) and primary and net community production. This fieldwork in the marginal ice zone will help us to understand the impacts of climate change in the Arctic.

Another key target region for the expedition is northeast Greenland, where the team will investigate the ocean’s influences on marine glaciers. The two glaciers there (79 N Glacier and Zachariae Isstrom) are both characterised by ocean-driven ice loss and accelerated ice flows, making them contributors to sea-level rise.

Kanzow, who’s been pursuing research in the region since 2016, says:

“We plan to install moorings in order to gauge the sensitivity of ocean-driven glacier melting to changing environmental conditions.”

Accompanying geodetic-glaciological studies will be conducted on Greenland. On the one hand, they will assess how the solid ground is rising on extremely small scales, because it is still rebounding from the past weight of ice masses that melted after the last glacial maximum. On the other, they will explore temporal variations in supraglacial lakes; their drainage out to sea can have considerable effects on glacier flow speeds and glacier melting.

For the AWI’s time series dating back to 1997, the expedition team will also deploy measuring devices at the FRAM Observatory between Greenland and Svalbard. And farther to the north in the Arctic Ocean, new instruments will be deployed in the Aurora Vent Field, where they will continually record the seismic activity and physical characteristics of the local heated-water discharges (hydrothermal vents) for the next year. In mid-August, the Polarstern is slated to return to Bremerhaven, from where, following a nearly two-week break, she will depart again, this time bound for the Antarctic.


When demand to transport cargo weakens, short-term rental rates decline for the ships that carry that cargo. When freight demand rises, lease rates rise. You can see this now in spot rates for supertankers moving crude oil from the Middle East and large bulkers moving iron ore to China (weak demand, low rates) and for product carriers moving diesel, gasoline and jet fuel (high demand, high spot rates).

You can’t see it in container shipping, though. At least, not yet.

The container freight market is awash in negative sentiment on import demand, yet short-term ship charter rates remain stratospherically high.

“The charter market is undeterred by the weaker sentiment across the global shipping industry and remains extremely strong,” affirmed data provider Alphaliner on Wednesday. “Charter rates continue to evolve at historic highs with, remarkably, some further gains achieved by certain sizes.” There is “a continued bonanza.”

Operators still hungry for ships

Alphaliner reported that BAL Container Line has just chartered the Northern Prelude (built in 2009, capacity: 4,600 twenty-foot equivalent units) for $160,000 per day for 40-60 days.

It also reported that Sinotrans has chartered the 2021-built, 2,743-TEU X-Press Mekong for $149,000 per day for 40-45 days. “This rate … is not far off the historical high of $175,000 per day [for that size category] obtained in January,” said Alphaliner.

Even the very smallest ships — in the sub-1,000-TEU category — “continue to generate staggering rates.” Ships with capacities of just 700-800 TEUs are being employed at $20,000-$30,000 per day. Most recently, SITC chartered the 2008-built, 724-TEU Atlantic Pioneer for $30,000 per day.

Why the disparity between the charter market and the freight market? Freight rates are off their peaks and still softening, yet they’re still extremely high — high enough for ship operators to generate profits even if they’re still paying sky-high charter rates.

According to Alphaliner, “The continued fall in spot rates on most major routes is obviously a concern, but they remain at historical highs for now, giving both NOOs [non-operating owners, the companies that lease ships to liners] and charterers confidence in short-term market prospects.”

For NOOs, “the short term remains bright.”

And despite medium- and long-term concerns on rising capacity given new ship deliveries in 2023-25, there are still multiyear charters being inked at very strong rates. Alphaliner reported that ocean carrier Zim (NYSE: ZIM) just chartered the 4,520-TEU, 2011-built sister ships Seaspan Chiba and Seaspan Kobe for five years at $43,000 per day.

No collapse in charter rates yet

Data from companies that track charter rates does not indicate a market collapse. On the contrary, it shows a market that’s holding at or near the high point.

Brokerage Harper Peterson & Co. publishes the Harpex index. The index (covering 700- to 8,500-TEU ships) peaked in mid-March, dipped slightly through April, held steady in May and began rising again this month. The Harpex is currently down 3% versus its peak, but still more than double its level at this time last year.

Alphaliner tracks average rates over time, estimating rates for 12-month charter durations. (These figures are assessments only, given the lack of available ships for rent and the rarity of 12-month deals.)

For 8,500-TEU container vessels, it currently assesses rates at $150,000 per day, just below the $155,000-per-day record hit in late March to mid-April. The current rate is up 114% year on year (y/y).

For 5,600-TEU ships, it puts rates at $130,000 per day. That’s the all-time high and up 110% y/y. It assesses 4,000-TEU ships at $110,000 per day, an all-time high and up 93% y/y, and 2,500-TEU ships at $76,000 per day, just below the peak of $80,000 per day in February to early May and up 105% y/y.

Alphaliner puts one-year rates for 1,700-TEU ships at $58,000 per day, near the all-time high of $62,500 per day in late February to mid-May and up 71% y/y. It estimates charter rates for 1,000-TEU container ships at $32,000 per day, down materially — 36% — from a brief high of $50,000 per day reached in early March, albeit still up 68% y/y.