With misdeclared hazardous cargoes sparking many dangerous fires on boxships around the world, Germany’s top liner has taken severe action – imposing a fine of $15,000 per wrong container.

Hapag-Lloyd suffered a high profile fire on of its ships, Yantian Express, earlier this year, that raged for weeks and caused millions of dollars of damage.

The new fines system comes into play from September 15.

“To ensure the safety of our crew, ships and other cargo onboard, Hapag-Lloyd holds the Shipper liable and responsible for all costs and consequences related to violations, fines, damages, incidents, claims and corrective measures resulting from cases of undeclared or misdeclared cargoes,” the German carrier stated in a note to clients.

Hong Kong’s Orient Overseas Container Line (OOCL), now a unit of China-based Cosco, also detailed plans yesterday to crack down on misdeclared dangerous and hazardous cargo.

OOCL said in a notice to customers that “we are aware that there had been an increasing number of marine incidents being reported in 2019, many of which were suspected of potentially carrying un-declared and/or misdeclared hazardous cargo”, adding that “to ensure safety compliance on shore and at sea is met, OOCL will strengthen its Dangerous Cargo acceptance and container inspection policy by imposing additional verification before loading through selective or random inspections on dangerous goods and potential dangerous goods cargo.”

OOCL said any inconsistencies between the declared cargo in the documents and what was physically inside the container would result in a Hazardous Cargo Misdeclaration Fee, without indicating how severe the fine would be.

Depending on the type of deficiencies found in such a shipment, the container could be put out of service and the cargo might be put on hold where penalties may be imposed, and charges associated with the misdeclaration would be on the shipper’s account.

According to the Cargo Incident Notification System (CINS), nearly 25% of all serious incidents onboard containerships are attributable to misdeclared cargo.

While the exact breakdown of cargo contents varies by container, it’s well known that at any given time, between 5-10% of an average container ship’s cargo is declared as hazardous goods and approximately 12% of global container trade comprises dangerous goods. However, it’s nearly impossible to know how much dangerous cargo is undeclared, or misdeclared.

Commenting on the news from Hapag-Lloyd, a container shipping consultant based in Singapore, applauded the initiative and urged other liners to follow suit. “The booking party is not always the payer, so they will need to ensure that the penalties are imposed or else it can become a toothless tiger. $15,000 will not cover the cost of accidents, but it might cover the cost of inspections and enforcement. All shippers should embrace this, as 99.9% suffer today due to errant actions of the 0.1%. The other carriers will need – and should – follow suit, as those errant shippers who consciously fail to declare will direct this scourge elsewhere. The is no priority higher than crew, ship and cargo safety,”

Lead columnist Andrew Craig-Bennett has repeatedly urged for a different solution to solve the scourge of fires caused by dangerous goods. Craig-Bennett has called on all liners to stop charging higher prices to carry dangerous goods.

“The incentive for shippers to lie disappears as soon as this is done. Yes, the shippers of harmless cargo will be subsiding the shippers of dangerous goods. But their own cargo will be more likely to arrive,” Craig-Bennett wrote in an earlier opinion piece.

The market is now awaiting responses from a host of other lines to see if there will be collective stance from the world’s top carriers in issuing fines on misdeclared cargoes.

CMA CGM has advised its customers that it will void its North Europe to Asia FAL 1 loop, scheduled to depart from Dunkirk on 21 August, and its FAL 3 loop, sailing from Rotterdam on 11 September.

The French carrier blamed “fluctuations between supply and demand” on the North Europe to Asia trade as the reason for cancelling the sailings.

However, European shippers are increasingly concerned that they will see a repeat of the capacity crunch chaos of previous years on vessels for Asia in September and October.

Notwithstanding the latest announcement from CMA CGM, the alliance carriers have already announced that they are blanking a number of headhaul voyages in August and September equivalent to over 150,000 teu of capacity.

The action is in response to what so far appears to be a poor peak season, and to stabilise container spot rates which had been on the slide for several weeks.

Each cancelled headhaul sailing from Asia to Europe means a withdrawn backhaul vessel from North Europe and this has, in the past, thrown the supply chain into chaos.

Shippers will also be wary of the carriers trying to take the opportunity to hike backhaul rates by only agreeing to prioritise shipment of export containers after the agreement to a premium.

Discovery of hundreds of kilos under towels and bathrobes is one of Britain’s largest hauls

Hundreds of kilos of heroin worth up to £40m have been found hidden under towels and bathrobes in a shipping container.

It was one of the largest drug seizures in the UK and several suspects were arrested, police said.

Intelligence led to UK, Dutch and Belgian police tracking a container suspected of carrying a large drug shipment en route to Antwerp, according to the National Crime Agency (NCA).

A spokesman said the container was believed to have begun its sea voyage in Oman, stopping in various locations before the ship docked in Felixstowe, Suffolk, on 1 August.

The next day officers from Border Force and the NCA removed a container in which about 398kg (62st 7lbs) of heroin was concealed within a cover load of towels and bathrobes. The drug haul was removed and the container returned to the vessel, which carried on to Antwerp.

On arrival, the container was collected by lorry and taken to Rotterdam – all the time under police surveillance. On Monday, as suspects attempted to unload the contents, Dutch police made two arrests.

At the same time the NCA arrested a man from Bromsgrove, Worcestershire, who being questioned.

The drugs would be worth at least £9m to organised criminals selling the consignment at wholesale, and at least £40m at street level in the UK and other European countries, the NCA said.

Colin Williams, an NCA regional operations manager, said: “The seizure of such a large quantity of heroin is the result of a targeted, intelligence-led investigation, carried out by the NCA with international and UK partners.

“It is almost certain that some of these drugs would have been sold in the UK, fuelling violence and exploitation including what we see in county lines offending nationwide.

“The heroin trade also feeds addictions that put users’ lives at risk, while giving rise to crimes such as theft which make people feel unsafe in their communities. The NCA works in the UK and with partners around the world to target the crime groups posing the greatest threat to the UK.”

Mark Kennedy, the Border Force deputy director, said: “Border Force officers operate on the frontline, working every day to keep dangerous class A drugs like this off the UK’s streets.

“Substantial seizures like this help to keep communities safe and hit the organised crime groups involved in the international drugs trade hard.”

In view of market seasonality changes in order to  control capacity and increase demand to counteract possible rate reductions on Far East Europe Trade, The Ocean Alliance have announced the below Blank Voyage plan:

void sailing table

If you have any queries or require any assistance please do not hesitate to contact your FGL representative

 

South Korean carrier Hyundai Merchant Marine (HMM) is to join THE Alliance when its slot charter agreement with the 2M expires next April.

HMM will become the fourth member of  the vessel-sharing group, joining Hapag-Lloyd, ONE and Yang Ming.

An agreement signed last week also saw the founding members extend the duration of their alliance until 2030.

Hapag-Lloyd chief executive Rolf Habben Jansen said: “HMM is a great fit for THE Alliance as it will provide a number of new and modern vessels, which will help us to deliver better quality and be more efficient.”

Mr Habben Jansen has clearly warmed to the fresh overtures of HMM, previously he said: “We think it is very important that we have a level playing field and we are not in favour of government subsidies in the form that it is being done with HMM.”

THE Alliance has conceded a lot of ground to the bigger 2M and Ocean alliances over the past year, hobbled by the weak financial position of Yang Ming and the botched merger and launch of the Japanese carriers K Line, MOL and NYK as ONE.

HMM has a $2.6bn orderbook for 12 scrubber-fitted 23,000 teu vessels, which will be delivered in the second quarter of next year, and eight 15,000 teu ships stemmed for delivery a year later.

Meanwhile, Hapag-Lloyd, the only profitable carrier of the group, was recently rumoured to be talking to Asian yards about ordering 20,000+ teu ULCVs.

The news of HMM’s acceptance into THE Alliance follows HMM new president and chief executive Jae-hoon Bae’s ‘charm offensive’ visit to Europe in April for meetings with the 2M partners, Maersk Line and MSC about the carrier becoming a full member of their alliance.

The Loadstar understands from a source that, when his approach was flatly rejected, Mr Bae returned to THE Alliance members, which had rejected the advances of his predecessor, to see if there were conditions that would persuade them to change their minds.

These mainly related to obtaining assurances from the state-owned Korea Development Bank (KDB) that it would continue to fund the carrier after losses of $720m last year and $1.1bn in 2017.

Shippers have become more cautious with their bookings after the bankruptcy of  carrier compatriot Hanjin Shipping in 2016, which resulted in over 100 ships and more than 500,000 teu of cargo stranded at sea and in ports for several weeks.

It prompted THE Alliance to build a funding mechanism into its new vessel-sharing agreement that allows the remaining parties to take action to facilitate the movement of cargo carried by a failed container line partner.

Ocean Network Express (ONE) chief executive Jeremy Nixon said he was “happy to see HMM join THE Alliance”. He claimed this would improve sailing frequencies and provide “a better balance of our cargo flows”, while Yang Ming’s chairman and chief executive, Bronson Hsieh, said it was “an important milestone for THE Alliance”.

Lars Jenson, chief executive and partner at SeaIntelligence Consulting, said HMM’s injection of large ULCVs would strengthen THE Alliance’s growth opportunities, without member carriers needing to “leverage themselves into a large new orderbook”.

According to Alphaliner data, HMM is currently the ninth-ranked global carrier, with an operating fleet of 425,550 teu and an orderbook of 396,000 teu.

Mr Bae said: “Being a full member of THE Alliance gives us a lot of pride. We are convinced that we will be successful and generate additional value for our customers, employees and shareholders with combined experience, strategic skills, competitive fleet and a strong focus on our clients’ needs.”

In October, HMM set a target to expand its fleet capacity to 1m teu and be generating annual revenue of $10bn by 2022.

A slot charter agreement with the 2M was a condition of HMM’s financial restructuring in 2016, but the South Korean carrier was always the ‘poor relation’ in the group and, according to insider sources, “the last to be told” when containers were rolled over.

Companies trying to prepare for a ‘no-deal’ Brexit by stock-piling supplies will face another headache this time around – warehouses already fully booked for the Christmas rush, The Sunday Times reported yesterday.

The prospect of the UK leaving the EU without a withdrawal agreement has become a real possibility again, with several of the candidates to succeed Teresa May as Conservative leader and UK prime minister, including frontrunner Boris Johnson, pledging to take the country out of the bloc by the end of October with or without a deal.

Ahead of the first Brexit target date of March 29, many firms stockpiled a broad range of goods in anticipation of chaos and gridlock at Channel ports due to the re-introduction of border controls.

But Shane Brennan, chief executive of the Food Storage and Distribution Federation, told The Sunday Times: “We have built our warehousing infrastructure in this country around being able to cope with Christmas. It’s booked up already. Unless (companies) know for certain no deal is going to happen within five or six months’ notice, they will have to carry on as normal and deal with problems as they arise.”

His comments echo those expressed by Tesco boss Dave Lewis last week, who said: “To do (in October) what we did in March (this year) will be more difficult because we won’t have the space in our logistics system to be able to cope because we’ll be preparing for Christmas.”

Carmaker BMW, which had brought forward the annual shutdown of its Mini plant near Oxford to April to offset any potential disruption around the original Brexit deadline, said it had no plans for a repeat, while Jaguar Land Rover said “no decision has been made” about the autumn, the report noted.

Commenting on the prospect of company chiefs having to gear up for a no-deal Brexit again, Adam Marshall, director-general of the British Chambers of Commerce, told the newspaper: “Businesses are incredibly frustrated.”

The development of new trade routes will help meet predicted freight transport demand growth in the decades ahead, according to a major new report.

ITF Transport Outlook 2019 – produced for the OECD by the International Transport Forum (ITF), an intergovernmental think tank,  predicts global freight demand will triple between 2015 and 2050, based on current demand growth rates.

ITF argues that new shipping, barge and rail routes will help meet such demand growth, transforming trade flows and logistics strategies in the process. “These shifts could result from new and improved freight networks in Eurasia and Africa and from new maritime routes opening up in Arctic waters,” it said.

“Using the Northern Sea Route for maritime freight between Northern Europe and Japan could reduce voyage distances by 37% relative to routing through the Suez Canal,” it added. “The distance from Northern European ports to Korea would be reduced by 31%, to China by 23% and to Chinese Taipei (Taiwan) by 17%.

“Regular use of the North-West Passage could reduce voyage distance between North America and large ports located in Northeast Asia by up to 20%. New canals could also provide alternative maritime routes that would shorten existing trade routes.”

The report said plans to construct the Kra Canal across the Malayan peninsula would cut the distance for oil and other shipments from the Middle East to China and Japan by 1,200 km, the equivalent of two to three days vessel transit time via the Strait of Malacca. Equally, the proposed Nicaragua Canal across the Central American isthmus could theoretically provide an alternative to the Panama Canal that would be better able to accommodate the biggest ships.

Modernising infrastructure and improving the efficiency of customs processes at border crossings on Euro-Asian overland routes has the potential to shorten transit times by four to seven days, helping ease rail flows on the three main corridors between China, Central Asia, Europe, South East Asia and South Asia.

“Among these corridors, the northern route – using the Trans-Siberian railways or Kazakhstan’s rail system – is currently the only route with stable and reliable transport services and infrastructure,” said the report. “[But] Azerbaijan, Kazakhstan, Georgia and Turkey have agreed to construct the Trans-Caspian International Transport Route as part an intermodal East-West transport infrastructure initiative.”

The report said the economic case for rail transport from Asia to Europe was clear and in China there was now considerable political will to increase network capacity.

“Although transport by rail is five times more expensive than transport by sea, it is about 1.7 times faster,” said ITF. “This makes rail an attractive mode for transporting highly time-sensitive goods, such as fashion goods, electronics, car parts and perishables including food.”

In Africa, the report found that investments in infrastructure projects were accelerating quickly and a number of plans and initiatives could further the continent’s integration and boost trade. The construction of the Mombasa-Kampala corridor between Kenya and Uganda, for example, had reduced transit times from fifteen to five days, while in Namibia and Zambia, the Walvis Bay Corridor Group had reduced customs clearance time from forty-eight to two hours.

“Greater connectivity between South Africa and eastern Africa is expected to be developed by 2030, and between eastern and western Africa by 2040,” added the report. “In Africa, trans-continental freight transport options could lead to increased intra-African trade and could also shorten international trade routes by 2050, if current and planned transit infrastructure projects in Africa continue to reap similar benefits in terms of cost and time savings.”

However, the report also warned that while the environmental decimation of the Arctic could mean the Northern Sea Route will be ice-free on a seasonal basis sometime between 2040 and 2050, operators would face high costs.

“Apart from meteorological conditions and heightened safety concerns in Arctic waters, operators face logistical barriers due to scarce infrastructure, strict certification requirements, and tight environmental regulations,” the report noted.

“The Polar Code sets strict standards including on ship design, crew training, fuel tank characteristics, or sewage discharge. Even more stringent environmental regulations could apply to Arctic shipping in the future, for instance regarding the use of heavy fuel oil, already prohibited in the Antarctic.

“Conforming to these regulations reduces the net economic gains of shorter transit times.”

After two tankers were reportedly hit by torpedo attacks in the Gulf of Oman early this morning, the UK Maritime Trade Operations (UKMTO) Royal Navy agency has issued a warning to shipping, urging “extreme caution” in the area.

The 110,000 dwt Aframax oil tanker Front Altair was en route from the UAE to Taiwan when it was attacked at around 2.30am local time, while the 27,000 dwt product carrier Kokura Courageus, going from Saudi Arabia to Singapore with a cargo of methanol, was attacked in roughly the same area around three hours later.

According to sources, the crew of both tankers abandoned ship and 44 seafarers were picked up by passing merchant vessels, with fortunately no reports of serious injuries.

Both ships are reported to be ablaze and drifting, with their AIS systems still operational, but reports that the Front Altair sank have been denied by the ship’s Norwegian owner, Frontline.

The ships had already transited the 21-mile wide Strait of Hormuz, which Iran has repeatedly threatened to block as tensions rise over US trade sanctions, when they were attacked.

In a statement this morning, the Singapore office of Bernhard Schulte Shipmanagement (BSM), the Kokuka Courageous’ manager, said it had launched a “full-scale emergency response following a security incident” on board the vessel.

It said the 21-strong crew of the vessel had abandoned ship after an incident that saw damage to the ship’s hull on the starboard side.

“The master and the crew were quickly rescued from a lifeboat by a nearby vessel the Coastal Ace,” it added. “One crewman was slightly injured and is receiving first aid.”

BSM added that the vessel remained in the area, was not in danger of sinking and that its cargo of methanol “is intact”.

The incidents come after four tankers suffered “sabotage” attacks off the UAE last month, while anchored outside the port of Fujairah.

It is estimated that over 20% of the world’s oil is exported from the Middle East through the Strait of Hormuz, making any disruption a potential choke point for supply. The US has deployed warships in the region to counter “clear indications” of threats from Iran.

Oil markets around the world were understandably nervous this morning, with Brent Crude spiking 5% from a five-month low in early trading in London.

Brokers told The Loadstar today that shipowners were “increasingly concerned” at the development of events in the Gulf of Oman, adding that the whole region was becoming a “tinderbox”.

Paolo d’Amico, chairman of tanker trade association Intertanko, also expressed concern about the risks to ships and their crews transiting the area.

“If the waters are becoming unsafe, the oil supply to the entire western world could be at risk,” he warned.

Meanwhile, the international shipping association, BIMCO, said the increase in attacks and the escalated threat to seafarers was “an urgent concern for the industry”, and agreed that any disruption would have a “major impact on the oil trade and shipping industry”.

BIMCO secretary general Angus Frew said: “We strongly call for nations to do what they can to de-escalate tension and ensure a safe passage for merchant shipping in the Strait of Hormuz.”

The trade war between the US and China has started to impact the makeup of US containerised imports from Asia, with a significant shift away from China.

According to Alphaliner data, in the first five months of the year, imports from China to the US fell 6.5% on the same period of 2018, to 3.87m teu, while imports from Asia excluding China jumped 14.6%, to 2.25m teu.

Vietnam is the biggest beneficiary of the tit-for-tat trade war, growing its exports to the US by 30.7%, to 564,420 teu, notes the consultant.

It added: “Transpacific carriers have been cashing in on the increased volumes from Vietnam, adding two new direct calls at northern Vietnam’s Haiphong (HICT) this year to complement 12 calls at Vietnam’s southern port of Cai Mep.”

However, there has been some scepticism over whether Vietnam has really been able to ramp up production so fast. Bloomberg reported yesterday that Chinese firms were allegedly producing fake product-origin certificates and making illegal transfers to avoid tariffs, routing US exports through Vietnam.

According to Alphaliner data, US containerised imports grew overall by 2.8% between January and May, to 9.3m teu. After Vietnam, the biggest winners in Asia were Malaysia with a 19.8% gain, Thailand at 18.1%, Taiwan at 11.5%, South Korea at 11.1% and India with 11%.

Other notable above-par increases were recorded from Africa, at 14.3%, the Middle East, at 10.3%, Europe, at 8.1% and Latin America, 6.6%.

Putting this shift of trade into perspective, Alphaliner said that after China, the next 15 largest origins, with a combined volume of 3.6m teu, was still smaller than the 3.87m teu of Chinese exports to the US during the period.

Drewry has also looked at the impact the escalating trade war is having on trade. Referring to the ramping up of rhetoric and the US president’s threat to encompass 100% of Chinese imports with trade protectionist duty of 25%, the consultant said Mr Trump’s “weaponisation of tariffs is forcing cargo owners to seek cover and re-shape global supply chains to avoid fallout”.

It added: “Switching the locations of production is not something done lightly and cargo owners have to weigh a myriad of factors, including local labour costs and skills, infrastructure and proximity to demand, as well as political and legal stability – that all varies in importance depending on the sector.”

Drewry warned that cargo owners having identified a new location should be aware that “there can be no guarantees that the new production countries won’t find themselves being targeted by future tariffs”.

“It is a costly endeavour with no safety assurances,” cautioned the consultant.

Drewry added that while it seemed likely that all Chinese imports to the US would ultimately be affected by tariffs, expediting a trade diversion, it would take time for new location sources to ramp up production capacity to meet demand, and in some cases this was “doubtful”, due to China’s dominance of certain products.

Meanwhile, economists do not expect any further developments in the trade spat between the US and China until the potential meeting by presidents Trump and Xi on the sidelines of the G20 summit in Osaka on 28 and 29 June.