By Kim Buoy Snr Vice President Logistics Services from Wallenius Wilhelmsen
International shipping is certainly an interesting business – only a few years ago the container rates where all times high with significant shortage of capacity, fast forward to 2024 and we see a complete turn-around with a slight reduction on the demand side and a significant increase on the supply side.
For the RoRo industry the challenge is somewhat different with demand still exceeding supply, and freight rates remains all time high – with the expectation that this situation will remain largely unchanged in 2024 and into 2025.
For the RoRo industry there is however a very strong order book of new buildings, with up to 200 new vessels expected to come into the market over the next 4 years – this includes a significant build program for new Chinese players in the RoRo market such as COSCO, SAIC, Chery and BYD, which will really put the Chinese on the map within this industry.
For the RoRo and the Container shipping industry industry there are currently two main “chokepoints” — the Panama Canal and the Bab-el-Mandeb Strait in the Red Sea — both simultaneously under threat. For the container industry, which are under significant financial pressure, it will with strong likelihood lead to more cancelled sailings – especially with the he dockworkers union serving the US East and Gulf Coast ports threatening to strike as well.
So, it should not come as a surprise that the current low freight rates will start to increase, with increasing delays in shipments starts growing. For the RoRo industry, which is still enjoying an undersupply in shipping capacity, it is leading to longer voyage times as vessels shifts from using the Suez and Panama canals to sail around Cape of Good Hope. The downside with longer voyages is increased operating cost and longer voyages – which is bad news for shippers.
So what does this mean for shipping to Australia ?
• As supply of new container vessels is outrapping supply, the shippers using containers should expect no noticeable upturn in rates short term.
• Shippers using RoRo should expect ongoing shortage of shipping availability into 2025 – when some of the additional tonnage will start to have an impact – which should also be reflected in rates.
• Geopolitical issue will continue to create uncertainties , particularly the situation with Ukraine and Taiwan – and the emerging situation in middle east, as well as the upcoming election in USA.
• Increasing environmental regulations, such as ETS, will create additional complexities with some vessels will no longer be suitable for certain markets.
In terms of Terminal and Shipping delays in Australia the container industry could breathe a sight of relive with the Dubai Ports/ MUA dispute seemingly now being resolved – however the RoRo shipping industry is still challenged by delays and volatility driven by tightening Bio-security regulations and delays in moving vehicles off-wharf due to build-up of stock. As per 22 Feb the delays in Brisbane, Port Kembla and Fremantle were 2-4 days, and Melbourne up to 10 days.
The smart shipper of Agriculture Machinery into Australia will need to rely on a wide range of options in the short to medium term, including exploring alternative suppliers and entry points – however it is also reasonable to assume that 2025 will see capacity and frequency returning to “pre-covid” levels, with freight rates remaining on the high side due to additional environmental requirements.