• At 0001 UTC on 1 January 2023 the Indian Ocean High Risk Area (HRA) for piracy will be removed.
• The removal of the HRA reflects a significantly improved piracy situation in the region, but voyage preparation, threat and risk assessment is essential when following Best Management Practice 5 (BMP5).

22 August 2022. London, UK. After more than a decade of effective threat-reducing counter-piracy operations the shipping industry has removed the ‘Indian Ocean High Risk Area’ (HRA).

Notification of the removal of the HRA from 0001 UTC on 1 January 2023 by industry bodies was forwarded in a submission today, 22 August, to the International Maritime Organization (IMO) for the next meeting of the Maritime Safety Committee scheduled to start on 31 October 2022.

The removal of the HRA reflects a significantly improved piracy situation in the region, largely due to concerted counter-piracy efforts by many regional and international stakeholders. No piracy attacks against merchant ships have occurred off Somalia since 2018.

The IMO has been informed of the decision made by International Chamber of Shipping (ICS), BIMCO, International Marine Contractors Association (IMCA), INTERCARGO, INTERTANKO and Oil Companies International Marine Forum (OCIMF).

Measures enacted to secure the waters by military, political, civil society, and shipping industry, as well as Best Management Practices guidance, have reduced the threat of piracy in the Indian Ocean.

The removal of the HRA will come into effect at 0001 UTC on 1 January 2023, allowing charterers, shipowners and operators time to adapt to the changed threat from piracy. Best Management Practices 5 (BMP5) will continue to provide the necessary guidance for shipping to ensure threat and risk assessments are developed for every voyage to mitigate the risks presented by remaining security threats in the region. The shipping industry will continue to monitor and advise on maritime security threats to assist the safe transit of vessels and the seafarers who crew them. Pre-voyage threat and risk assessments should consider the latest maritime security information from organisations supporting the VRA.

The area being removed is the “High Risk Area” as shown on UKHO Chart Q6099. The Voluntary Reporting Area (VRA) administered by UKMTO has not changed. Ships entering the VRA are encouraged to report to the UKMTO and register with the Maritime Security Centre for the Horn of Africa (MSCHOA) in accordance with industry BMP (Best Management Practices).

The HRA IMO submission co-sponsors commented:

“This announcement is a testament to nearly 15 years of dedicated collaboration to reduce the threat of piracy in the Indian Ocean. Through a combination of efforts by military, political, civil society, and the shipping industry over the years, operators and seafarers are now able to operate with increased confidence in these waters.

“Thanks and gratitude is given to all the seafarers and offshore workers who have served during this time in safely maintaining global trade and operations.

“Threat and risk assessments should still be carried out, and best management practices followed to continue to mitigate the risks presented in a changeable and often complex and potentially threatening environment.”

Source: https://www.ics-shipping.org/press-release/shipping-industry-to-remove-the-indian-ocean-high-risk-area/

The Misdemeanors and Violations Court in Dubai reportedly imprisoned an Asian ship captain and four other individuals who owned a vessel and shipping firms. This was due to them mistakenly contributing to the burning of properties of others and incurring a massive loss of about Dhs24 million, as containers with several materials were burnt and part of Jebel Ali Port was impaired, besides the damage of unloading and loading machines at the port.

The court sentenced them to jail for one month with a three-year suspension.

During the same session, the court further convicted four shipping firms, one of whom owned the vessel, fined Dhs100, 000 to each firm, and referred the case to a more competent civil court.

The details of the incident date back to 2021 (July), when a massive fire broke out in one of the ships in Jebel Ali based in Dubai.

The civil defence teams immediately rushed to the scene and were able to put out the fire in approximately 40 minutes without death but with minor injuries to the Asian sailors.

The Dubai Government Media Office had declared at that time that the fire caused the burning of a part of the vessel besides causing extensive material damage to the port’s berth. The site of the accident was referred to competent authorities for conducting inspections.

Per the case file and the forensic lab report at Dubai Police, the fire resulted from sheer negligence and incompetence in adhering to the safety protocols, as the cargo shipper did not check the validity and quality of used containers and the validity of transporting dangerous material. They also kept the containers of dangerous materials under the sun for 21 days in Jebel Ali Port at a temperature of about 44°C.

The report suggested that containers were loaded with about 640 barrels of harmful materials, and the vessel owners and cargo shippers failed to coordinate with one another regarding the appropriate time for the container delivery.

Per the report, the ship’s captain, operators, and owners did not register the dangerous materials or separate the containers. They also kept them adjacent to each other; this resulted in the first container exploding.

References: Gulf Today, Khaleej Times

Since the 24 February escalation of the war in Ukraine, the export of foodstuffs and fertilizers from Ukraine has been negatively impacted, something which in turn has threatened supplies to several developing countries desperately reliant on import of food stocks from Ukraine.

However, on 22 Jul 2022, Türkiye, Russia, and Ukraine together with the United Nations signed the Initiative on the safe export of foodstuffs and fertilizers, including ammonia, from Ukrainian ports. The purpose of this Initiative is to facilitate the safe navigation for the export of foodstuffs and fertilizers, including ammonia from the Ports of Odesa, Chernomorsk (Chornomorsk) and Yuzhny (Pivdennyi) (the Ukrainian ports).

International coordination

The operational execution of the initiative will be coordinated by a Joint Coordination Centre (JCC) in Istanbul where representatives of Türkiye, Russia, Ukraine and the United Nations will oversee and coordinate the operation. The warring parties have agreed not to attack any of the merchant ships taking part in this initiative.

A set of procedures for merchant vessels taking part in the initiative have been developed, a copy of which can be found via the link below. The procedures must be followed by all ships taking part in the initiative.

A high-risk operation

The initiation of exports from Ukraine-controlled ports is a welcome development but there is no question that the resumption of shipping operations is a high-risk endeavour. While both Russia and Ukraine have publicly promised not to attack ships involved in the initiative, there have been several sightings of mine-like objects in the area, and the risk of a rogue mine detonating against a ship is still present. Add to this that the perceived mine threat provides for plausible deniability for any malign actor with a motive to disrupt global food supplies, especially by means of underwater weapons such as limpet mines or torpedoes. The resultant security situation amounts to something which by any measure will be a high-risk operation.

Ship protection measures

Ships getting involved in this initiative are encouraged to perform a voyage-specific risk assessment and consider the relevant self-protection measures described in chapter 4 incl. annexes in the NATO publication Naval Cooperation and Guidance for Shipping (NCAGS) – Guide to Owners, Operators, Masters and Officers.

It should be noted that the NATO procedures for passage coordination etc. described in this NATO publication DO NOT apply to this scenario. Instead, the procedures outlined in the specific guidance developed by Türkiye, Russia, and Ukraine together with the United Nations should be applied. However, the section in the NATO publication about how to mitigate against underwater threats (mines, submarines, underwater sabotage) would seem particularly relevant to the scenario ships are faced with when participating in the described initiative.

Source: https://www.bimco.org/insights-and-information/ukraine/20220809-ukraine-grain-security

There’s an old Greek shipping saying that goes: “Ninety-eight tankers and 101 cargoes, boom. Ninety-eight cargoes and 101 tankers, bust.” This doesn’t translate so well into modern-day container shipping because the consolidated liner sector manages the number of ships in service a lot better than the fragmented tanker business.

Tanker spot rates can plunge violently lower when supply exceeds demand. One of the big questions for container shipping has been: Will spot rates plunge precipitously after demand pulls back, as it has in the past in bulk commodity shipping? Or will there be a gradual decline toward a soft landing?

So far, it looks gradual. Trans-Pacific rates have steadied in July and early August. In fact, some indexes show spot rates ticking higher again.

Spot rates are at least temporarily plateauing because U.S. import demand remains above pre-COVID levels, some U.S. ports remain extremely congested, and ocean carriers are “blanking” or “voiding” (i.e., canceling) sailings, both because their ships are stuck in port queues and because they’re matching vessel supply with cargo demand to avert the fate of Greek tanker owners.

“Void sailings are still the go-to options for carriers at this point to try and stymie the fall in rates,” said George Griffiths, managing editor of global container freight at S&P Global Commodities.

“Congestion is still the buzzword for East Coast ports, with Savannah currently feeling the full force of loaded imports and associated delays,” he told American Shipper.

FBX trans-Pac rates up 3% from recent lows
Different spot indexes give different rate assessments but generally show the same trends. The Freightos Baltic Daily Index (FBX) Asia-West Coast assessment was at $6,692 per forty-foot equivalent unit on Friday.

The good news for shippers booking spot cargo: That’s just one-third of the all-time peak this index reached in September. The bad news: Friday’s assessment is up 2.7% from the low of $6,519 per FEU hit on Aug. 2, and it’s still 4.5 times higher than the rate at this time of year in 2019, pre-COVID.

The FBX Asia-East Coast spot rate assessment was at $9,978 per FEU on Friday, less than half the record high in September. However, it was up 3.5% from the recent low of $9,640 on Aug. 2 and still 3.6 times higher than 2019 levels.

Drewry indexes show gradual slide
The weekly index from Drewry portrays a gentler descent than the FBX, because Drewry did not include premium charges in its spot assessments at the peak.
Unlike the FBX, Drewry’s Shanghai-Los Angeles assessment does not show a recent uptick. It was at $6,985 per FEU for the week announced last Thursday, its lowest point since June 2021. It was down 44% from its all-time high in late November 2021, albeit still 4.2 times higher than rates at this time of year in 2019.

Drewry’s weekly Shanghai-New York assessment was at $9,774 per FEU on Friday. Rates were relatively stable over the past two week, yet the latest reading is the lowest since June 2021 and down 40% from the peak in mid-September.

Drewry’s Shanghai-New York assessment on this route is still 3.5 times pre-COVID levels.

S&P Global: East Coast rates 50% higher than West Coast
Daily assessments from S&P Global Commodities (formerly Platts) show a widening divergence between North Asia-West Coast and North Asia-East Coast Freight All Kinds (FAK) rates.

S&P Global assessed Friday’s North Asia-East Coast FAK rate at $9,750 per FEU, up 2.6% from the recent low hit on July 29. Spot rates on this route have roughly plateaued since late April, according to this index.

S&P Global put Friday’s North Asia-West Coast rate at $6,500 per FEU, still gradually falling and at the lowest point since late June 2021. The gap with East Coast assessments has been widening since May, with the East Coast rates now 50% higher than West Coast rates.

Port congestion still very high
Matthew Cox, CEO of ocean carrier Matson (NYSE: MATX) explained on his company’s quarterly call earlier this month: “In fall of last year, we saw over 100 vessels waiting at anchor or offshore waiting to get into the ports of Los Angeles and Long Beach. We still have 100 ships waiting. But a lot of that congestion has moved into different ports. We [have] the same number of ships but just more distributed to different places.”

The number of ships waiting off all North American ports topped 150 in late July, according to an American Shipper survey of ship-position data from MarineTraffic and queue lists for Los Angeles/Long Beach and Oakland, California.

The count fluctuates by the day (and by the hour as ships enter and leave queues) and is now down 15% from its peak — but still historically high. As of Monday morning, there were 130 ships waiting offshore. East and Gulf Coast ports accounted for 71% of the total, with the West Coast share falling to just 29%.

The queue off Savannah, Georgia, was the largest at 39 ships on Monday morning. It was considerably higher just a few days earlier. According to Hapag-Lloyd, there were 48 container vessels off Savannah on Friday, with wait times of 14-18 days.

The queue off Los Angeles/Long Beach has now virtually vanished. On Monday morning, it was down to just 11 container vessels, according to the queue list from the Marine Exchange of Southern California. It hasn’t been that low since November 2020. It hit a high of 109 ships on Jan. 9.

Spot rate easing expected to continue
On last Wednesday’s quarterly call by ocean carrier Maersk, CFO Patrick Jany said port congestion preempted a steeper drop in spot rates. Even with support from congestion, he predicted short-term rates will decline further in the months ahead.

“We have seen an erosion of short-term rates in the past few months that has been stopped here and there by renewed or new disruptions,” Jany said. “The erosion of the short-term rates will continue. It won’t be a one-day drop but a progressive erosion toward a lower level of short-term rates in the fourth quarter.”

Jany predicted that when rates stop falling, they “will stabilize at a higher level than they were in the past [pre-COVID] and higher than our cost level.”

During the latest quarterly call by logistics provider Kuehne + Nagel, CEO Detlef Trefzger predicted rates would ultimately settle at levels two to three times pre-COVID rates. A Seko Logistics executive made the same prediction during a recent briefing.

According to Cox at Matson, spot rates “are adjusting slowly. There’s no falling off a cliff. The word we use is ‘orderly.’ We’re seeing rates decline from their peak, but … we expect an orderly marketplace for the remainder of the year, with our vessels continuing to operate at or near capacity.”
Source: Freight Waves by Greg Miller, https://www.freightwaves.com/news/no-precipitous-plunge-in-container-shipping-rates-just-orderly-decline