Clarifying FMC Rules, Reducing Blank Sailings, and Market Shifts

This week’s market update highlights critical changes across global shipping. The FMC’s new detention and demurrage rules prompt calls for clarification from carriers, while Gemini Cooperation moves to improve schedule reliability by eliminating blank sailings. The Port of Portland’s container closure underscores challenges for smaller ports, potentially disrupting regional trade flows. Meanwhile, HMM’s expansion plans aim to double its fleet by 2030, and ocean rates on the India-US trade lane continue to decline, presenting both opportunities and challenges for stakeholders. Stay informed as we navigate these shifts in the maritime industry.

Ocean Carriers’ Quest for Clarity: FMC’s New Detention and Demurrage Rules

• The World Shipping Council (WSC) files a petition with the District of Columbia Court of Appeals to seek clarification on the FMC’s detention and demurrage rules regarding billing for port truckers.
• The Federal Maritime Commission (FMC) issues final rules for detention and demurrage billing, aiming to protect port truckers from shouldering charges, but cargo receivers may still bear fees without contracting for transportation.
• Highlights of the FMC’s final rules include rejecting marine terminals’ exemption requests and specifying time requirements for ocean freight forwarders to issue bills.

Gemini Cooperation’s strategy to eliminate blank sailings

• Maersk and Hapag-Lloyd’s initiative to eliminate blank sailings as part of their vessel-sharing partnership indicates a shift towards prioritizing schedule reliability and customer service.
• The adoption of a ‘hub-and-spoke’ model aims to optimize network efficiency and improve transit times, aligning with customer demands for faster and more reliable shipping services.
• Achieving 90% schedule reliability on 58 global services upon partnership launch demonstrates a commitment to meeting customer expectations and enhancing market competitiveness.

Port of Portland’s container business closure

• The Port of Portland’s decision to cease container service by October underscores the challenges faced by smaller ports in maintaining container operations amid financial constraints.
• The inability to find a third-party operator highlights the competitive nature of the container shipping industry and the difficulty in sustaining operations without sufficient demand or financial viability.
• This development may have implications for regional trade flows and logistics networks, potentially leading to shifts in cargo routing and port utilization patterns.
• For TP trade lane, both SML and MSC deploy one direct call service to Portland and if with terminal closure at Portland then there would be no capacity available for these services.

HMM’s expansion plans

• HMM’s ambitious plan to double its container vessel fleet and lifting capacity by 2030 reflects a proactive approach to capitalizing on anticipated growth opportunities in the container shipping market.
• The expansion aligns with South Korea’s government support for the maritime industry and aims to enhance the country’s competitiveness in global trade.
• Increasing fleet size and capacity may enable HMM to capture a larger market share and strengthen its position as a key player in the container shipping industry.

India-US ocean rates decline

• The continued decline in ocean rates on the India-US trade lane highlights the volatility and cyclical nature of container shipping markets.
• Factors such as fluctuating demand, changing supply chain dynamics, and competitive pressures contribute to rate fluctuations and market instability.
• While lower rates may benefit shippers in the short term, they pose challenges for carriers in maintaining profitability and sustainability, especially amid rising operating costs and regulatory pressures.
• Monitoring rate trends and adjusting pricing strategies accordingly are essential for stakeholders to navigate market uncertainties and remain competitive in the dynamic container shipping landscape.
• Generally, the rate level for TP trade from India to east coast is cheaper with direct calling service while the level hikes up to around $3,700-$3,800/40HQ in Apr while rate to west coast is only $2,900-$3,000/40HQ.
• With considering upcoming new service “WIN” operated by ONE, HMM and COSCO are hopefully to sharing space allocation with enjoying direct service to USEC.

Industry Trends