Author: Sagar Joshi

9th February 2024

Report: Maersk alert overstock could hits profits

In a stark contrast to recent optimism, Danish shipping giant Maersk sent shockwaves through the industry on Thursday by warning that overcapacity in container shipping will significantly impact profits this year. This unexpected announcement, coupled with the suspension of its share buyback program, sent Maersk’s shares plummeting 17%, wiping out gains from the Red Sea disruptions.

The container shipping industry, a key indicator of global trade, witnessed a boom during the pandemic. This led to a surge in new ship orders, anticipating continued high demand. However, Maersk CEO Vincent Clerc painted a different picture, highlighting that “twice as many new vessels are coming to market compared to the extra capacity required.” This oversupply, he added, will fully materialize in 2024 and be felt well into 2026, squeezing profit margins.

Despite the Red Sea disruptions causing a jump in freight rates due to rerouted vessels, Clerc downplayed its long-term impact. He stated that the crisis “did not match the scale of disruption caused by the pandemic” and its effect on freight rates will be temporary. This contradicts analysts at JP Morgan who predicted a first-quarter boost from the Red Sea events, followed by a return to the overcapacity scenario.

Also Read: World’s Largest Cruise Ship a Climate Concern

Maersk’s revised profit forecast further dampened investor sentiment. The company now expects underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to fall between $1 billion and $6 billion this year, significantly lower than the $9.6 billion achieved in 2023. This unexpected dip, coupled with the suspension of the share buyback program, contributed to the sharp fall in Maersk’s share price.

The news also impacted other European container shipping companies, albeit less severely. Hapag-Lloyd, a major competitor, saw its shares drop by around 11%. This highlights the broader concern within the industry about the looming oversupply issue.

Conclusion

Maersk’s alert is a clear reminder of the challenging problems that the shipping industry around the world is facing. The Red Sea disruptions provided a brief respite, but the impending glut threatens the industry’s long-term viability. In the upcoming months and years, stakeholders and investors will be closely observing how businesses like Maersk handle this difficult environment.

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31st January 2024

Report: Indian Refiners Return to Iraq from Russia

After a whirlwind year of Russian domination, Indian refiners are turning back to Iraqi crude, pushing it back to the top of their import list in January 2024. This shift comes as US sanctions and Houthi rebel attacks in the Red Sea complicate Russian oil shipments, driving up costs and anxieties.

Iraq has emerged as the clear winner stated by Crude Analyst at Kpler, citing record-breaking Iraqi exports to India. Kpler estimates Iraqi cargoes reaching India at a staggering 1.30 million barrels per day (mb/d) this month, while Vortexa puts the figure at 1.11 mb/d, still the highest since April 2022.

Also Read : Kerala Sets Sail for Statewide Shipping with Vizhinjam Port Launch

The reasons for this switch are manifold. Western sanctions and tightening regulations on Russian oil have limited the pool of available vessels willing to transport it. This, coupled with the ongoing standoff between Western nations and Houthi rebels in the Red Sea, a crucial shipping route for Russian oil, has triggered panic buying and inflated insurance costs. Ships ferrying Russian crude are increasingly opting for the longer Cape of Good Hope route, adding 10-14 days and significant expense to their journeys.

Meanwhile, Iraqi Basrah crude has become a more attractive option. Prices fell to an average of $76.96 per barrel in December 2023, a welcome decline from the $82.82 and $87.58 recorded in November and October, respectively.

These competitive prices, combined with readily available tankers and a reliable supply chain, have made Iraqi oil the safer and more economical choice for Indian refiners.

This shift has significant implications for both India and the global oil market. India, the world’s third-largest oil consumer, relies heavily on imports to meet its energy needs. Diversifying its import sources away from Russia not only bolsters its energy security but also sends a message of increased geopolitical flexibility. For the wider oil market, the return of Iraqi crude could help ease supply concerns and bring some stability to volatile prices.

However, some analysts remain cautious. “While the current trend may suggest a permanent shift back to Iraq, it’s vital to remember that the geopolitical landscape is fluid,” said by Senior Energy Analyst at Vortexa. “If Russia manages to overcome its logistical hurdles and offer compelling discounts, the situation could rapidly reverse.”

19th January 2024

Report: Sri Lankan Trawler where rescued from Somali Pirates

In a chilling echo of a bygone era, a Sri Lankan fishing trawler hijacked by suspected Somali pirates has been rescued, raising alarming concerns about a potential resurgence of piracy in the volatile waters off the Horn of Africa. The Sunday incident, involving six crew members aboard the vessel, marks the latest in a series of attacks that have fueled anxieties about a return to the rampant piracy that plagued the region from 2008 to 2018.

For years, international efforts and heightened security measures had significantly curbed pirate activity. However, the recent spate of attacks, including the hijacking of a Maltese-flagged merchant ship – the first such incident since 2017 – and a firefight between pirates and British security personnel aboard a bulk carrier, has cast a shadow over these achievements.

The Sri Lankan trawler’s ordeal began on Sunday, drawing immediate attention from authorities. A nearby boat accompanying the trawler alerted authorities, prompting the Seychelles Coast Guard to launch a swift response. According to Gayan Wickramasuriya, a spokesperson for the Sri Lankan Navy, “After a special operation, the trawler and all its crew were rescued, and three suspected Somali pirates were also detained.” The rescue unfolded approximately 230 nautical miles from Seychelles’ Mahe Island, highlighting the pirates’ expanding range of operation.

Also Read : Hapag-Lloyd Strengthens Trade Ties Between Türkiye and the Red Sea with New Service

While the successful rescue offers a sigh of relief, it underscores the underlying causes fueling the resurgence of piracy. Experts point to the ongoing instability in Somalia and the chaos in the region due to attacks by Yemen’s Houthi group as exacerbating factors. These challenges are compounded by economic desperation in Somalia, with many turning to piracy as a desperate means of survival.

The attack on the Sri Lankan trawler comes on the heels of the hijacking of the MV Ruen, the first merchant ship targeted by Somali pirates in seven years. While the vessel was later released unharmed, the incident served as a stark reminder of the vulnerability of commercial shipping in the region.

As the rescue of the Sri Lankan trawler fades from headlines, the echoes of this incident must serve as a call to action. The international community, regional authorities, and Somali stakeholders must work together to prevent a full-blown resurgence of piracy and ensure the safety and security of everyone navigating these troubled waters. Only then can the promise of a piracy-free future truly become a reality.

27th January 2024

Report: Tanker in Flames after Houthi Missile Strikes

Chaos erupted in the vital Gulf of Aden shipping lane when a British-owned oil tanker was struck by a Houthi missile, igniting a fire that cast a menacing shadow over international maritime trade. The targeted vessel, the Marshall Islands-flagged MT Marlin Luanda, owned by UK-based Oceanix Services and chartered to Trafigura, was transiting the Red Sea when the attack occurred on Friday evening.

The United Kingdom Maritime Trade Operations (UKMTO) swiftly confirmed the incident, reporting it 60 nautical miles southeast of Aden. According to a statement received by Trafigura, the missile strike impacted one of the Marlin Luanda’s cargo tanks, sparking a blaze that the crew battled heroically using onboard firefighting equipment. Thankfully, all 25 crew members were reported safe and transferred to lifeboats as a precautionary measure.

The MT Marlin Luanda, a large tanker with a capacity of 109,991 deadweight tonnes , was carrying a cargo of Russian oil, further adding to the tense geopolitical backdrop of the attack. While the specific destination of the oil remains unclear, its disruption on this crucial artery for global energy transportation is undeniable.

The incident gained further intrigue when the U.S. Central Command (CENTCOM) verified that they had received a distress call from the Marlin Luanda and reported damage that seemed to be caused by a missile strike. Just hours before the tanker attack, the U.S. Navy destroyer USS Carney, which was cruising in the area, successfully intercepted and shot down an incoming anti-ship ballistic missile launched from Yemen, sparking fears of a more extensive Houthi operation.

Also Read : Container Shipping Back in the Black: Red Sea Crisis Creates Profit Boom

Yemen’s civil war, now in its eighth year, has seen the Houthis, backed by Iran, increasingly target shipping in the Red Sea and Gulf of Aden. This brazen attack on a prominent commercial vessel, regardless of its cargo’s origin, marks a dangerous escalation of the conflict, threatening the free flow of vital goods through the region.

The implications of this incident extend beyond immediate safety concerns. The disruption of tanker traffic, particularly for Russian oil, could contribute to further disruptions in the global energy market. Additionally, the increased risk of piracy and attacks on shipping in the Gulf of Aden could drive up insurance costs and deter vital commercial activity, impacting economies reliant on international trade.

The burning tanker on the horizon of the Gulf of Aden serves as a stark reminder of the fragilities of the global economy and the human cost of prolonged conflict. The international community must work together to navigate these turbulent waters and ensure the peaceful passage of commerce and life within this vital international artery.

25th January 2024

Report: Two U.S. flagged Maersk ships Attack by Houthi Missile

As two U.S. flagged Maersk ships, the Maersk Detroit and Maersk Chesapeake, barely avoided a Houthi missile attack close to the Bab el-Mandeb Strait on Wednesday, tension in unreliable Red Sea increased. Although it is fortunate that neither of the ships nor its crews suffered injuries, the incident highlights the growing danger to international shipping in the area and shadows the important trade route.

According to the UK Maritime Trade Operations (UKMTO), which monitors piracy and armed robbery in the area, the attack unfolded around 2:00 PM (Sanaa time). Three anti-ship ballistic missiles were launched from Houthi-controlled territory in Yemen, targeting the Maersk Detroit. While one missile landed harmlessly in the sea, the remaining two were intercepted and destroyed by the accompanying U.S. Navy destroyer USS Gravely.

Both Maersk Detroit and Maersk Chesapeake ,vessels is operated by Maersk Line Limited (MLL), a U.S. subsidiary, were carrying cargo for the U.S Department of Defense, Department of State, USAID, and other government agencies. Both ships were enrolled in the Maritime Security Program (MSP) and Voluntary Intermodal Sealift Agreement (VISA), programs that allow them access to U.S. military protection during transits through high-risk zones.

The spokesperson for the Houthi military, Yahya Saree said in a statement that on Wednesday, during a “clash” that lasted over two hours, Houthi forces used ballistic missiles to target several U.S. warships. As a result, one U.S. warship was directly hit, and the two commercial vessels were forced to “to withdraw and return.”

This event comes after a string of Houthi 30th attack in the Red Sea on commercial ships including warship since November 2023, frequently utilizing coastal artillery and explosive drones. The attacks have caused anxiety among crews navigating the vital waterway, disrupted shipping, and increased insurance costs.

Also Read : Shipping Companies Fine $2 Million for Deliberate Oil Dumping and Record Falsification

The potential ramifications for global shipping are stark. The Bab el-Mandeb Strait, connecting the Red Sea to the Gulf of Aden, is a critical chokepoint for international trade, with around 25% of all global oil shipments passing through its narrow confines. Disruptions here can have cascading effects, raising energy prices and impacting economies worldwide.

Shipping giants like Maersk are bearing the brunt of this heightened risk. Wednesday’s attack prompted MLL to temporarily suspend all US-flag operations in the Red Sea, highlighting the significant operational and financial challenges posed by the volatile security situation.

The incident’s larger implications persist even though the Maersk vessels are no longer in immediate danger. A coordinated worldwide response is required in light of the growing danger in the Red Sea to prevent additional attacks and guarantee the security of vital maritime traffic. If this isn’t done, the region may experience more unrest and the delicate global supply chain may be compromised.

23 January 2024

Icon of the Seas a climate concern

Royal Caribbean’s “Icon of the Seas,” an engineering marvel that is billed as the largest cruise ship ever built sets out on its first official voyage on January 27. The luxurious amenities and eye-catching entertainment offer vacations that will never be forgotten, but environmentalists cry foul, labeling it a “climate liability.”

Largest Cruise Ship

The Icon, the largest cruise ship in the world, is 360 meters (more than 1,000 feet) long and weighs about 250,000 gross registered tons. 20 distinct decks, 40 eateries, lounges, and bars, seven pools, 6 waterslides, and a 55-foot waterfall are among its many features, concept offer unparalleled leisure experiences. But this opulence comes at a cost, measured in tons of carbon dioxide (CO2).

Bryan Comer, Director of the Marine Program at the International Council on Clean Transportation (ICCT), has done the math. In a 2022 report, he estimates that a typical passenger on the Icon, even on the most efficient cruise line, will generate about 1,100 pounds of CO2 per 1,200-mile cruise. That’s nearly double the footprint of a plane trip and hotel stay for the same distance.

The issue lies not just in the sheer size and energy consumption of the ship, but also in its fuel. While the International Maritime Organization (IMO) has set regulations for cleaner fuels for new ships, these standards fall short of what’s needed to curb the industry’s rapidly growing emissions. As a result, cruise lines like Royal Caribbean, while adopting some cleaner technologies, still rely heavily on heavy fuel oil, a notorious polluter.

The consequences are serious a recent report states that between 2019 and 2023, emissions from international shipping—which includes cruise ships—grew by 2.9%. The international attempts to tackle climate change could be jeopardized by this upward trend. The majority of this impact is felt by ocean ecosystems, which are especially susceptible to warming and acidification brought on by CO2. Coral bleaching is already occurring at an alarming rate, which is detrimental to marine biodiversity.

Also Read: US hits the Houthis and the Indian Navy recovers the crew after an attack

The Icon’s arrival serves as a stark reminder of the cruise industry’s crossroads. While it represents economic prosperity and technological advancement, its disregard for environmental consequences cannot be ignored.

The key is innovation Cruise lines need to advocate for tougher IMO regulations and make investments in greener fuels like hydrogen or renewable biofuels. In addition to choosing more environmentally friendly options, passengers can also contribute by holding the industry accountable. In the end, the “Icon of the Seas” might represent both human creativity and our duty to protect the environment. The decision is to steer toward a future in which technological wonders coexist with the health of our planet.

22 January 2024

Report: Drone Attack at Ust-Luga Russia

A major fire at Ust-Luga, Russia a crucial Russian fuel export terminal has temporarily halted operations, raising concerns about potential disruptions to global energy markets and escalating tensions between Russia and Ukraine. The incident occurred on January 21st, 2024, at the Ust-Luga complex, a massive facility located on the Baltic Sea roughly 170 kilometers west of St. Petersburg.

Novatek NVTK.MM, Russia’s largest liquefied natural gas producer and operator of the Ust-Luga terminal, confirmed the fire and subsequent suspension of some operations. While the company attributed the incident to “external influence,” Ukrainian media outlets and officials claim responsibility for a drone attack, marking a potential turning point in the ongoing conflict.

The Ust-Luga terminal plays a vital role in Russia’s energy exports, processing gas condensate into various petroleum products like naphtha, kerosene, and diesel for shipment to international markets. The facility’s closure, even if temporary, could have significant repercussions for global energy prices and supply chains.

The full extent of the damage and the duration of the disruption remain unclear. Novatek stated that an operational headquarters has been established to address the situation and assess the damage. The regional administration in Leningrad Oblast has placed critical infrastructure facilities in the area on high alert and authorized security forces to destroy any detected drones.

Also Read : EU Naval Forces Thwart Pirate Attack, Capture Suspects in Gulf of Aden

Ukrainian officials view it as a successful operation against a critical Russian asset, potentially impacting fuel supply for the military and causing economic damage. On the other hand, the incident raises concerns about a potential escalation of the conflict, with Russia facing the possibility of deeper strikes within its own territory.

Beyond the immediate impact on energy markets and military logistics, the attack at Ust-Luga carries broader geopolitical implications. It signifies a potential shift in Ukrainian tactics, demonstrating their ability to strike targets deep inside Russia despite facing defensive challenges on the battlefield. This development could further strain relations between Moscow and the West, particularly regarding energy security and potential military responses.

The scenario is being closely observed by the international community, which is advising both parties to use caution and avoid escalation. Although the full effects of the Ust-Luga attack are still being felt, it is clear that it has had an impact on the world’s energy markets, the ongoing conflict in Ukraine, and the larger geopolitical environment.

19th January 2024

Report: US hits the Houthis and Indian Navy recovers the crew

This week saw a new wave of tension emerge in the Red Sea, a crucial route for international trade, as the US launched airstrikes on Houthi missile launchers and the Indian Navy rescued crew members from a US-owned ship that was attacked off the coast of Yemen. The growing conflict poses grave questions regarding both the region’s precarious geopolitical situation and the security of maritime trade.

On Wednesday, US Central Command confirmed drone strikes targeting two Houthi anti-ship missiles aimed at the southern Red Sea. This preemptive action followed days of Houthi attacks on international shipping, including two US-owned vessels, the assault drone caused a small fire on board the Genco Picardy, which is registered by the Marshall Islands Genco Shipping, based in the US the attack did not result in any substantial damage or casualties, but it did inspire the Indian Navy to launch a daring rescue effort. In response to the distress call, the Indian frigate INS Kochi sent helicopters to safely extract the 22-member crew, which included Indian nationals. An additional “direct hit” on the US ship Chem Ranger, tanker registered under the Marshall Islands flag and run by Greek enterprises, classified in Japan, covered by insurance in the UK and Norway.

In a statement, the US military justified the strikes as “self-defense” and “necessary to protect freedom of navigation and prevent attacks on maritime vessels.”

President Biden’s statement later that day acknowledged the ongoing challenges. “These air strikes are not deterring the Houthis,” he admitted, underscoring the complex regional dynamics at play. The Houthis, backed by Iran, are locked in a bloody civil war with the Yemeni government, supported by a Saudi-led coalition that includes the US. This proxy conflict spills over into the Red Sea, threatening the lifeline of global trade passing through one of the world’s busiest shipping lanes.

Shipping is experiencing the effects of the increase. The cost and duration of international trade have increased due to the surge in insurance premiums for crossing the Red Sea and the rerouting of some shipping companies’ vessels along the Cape of Good Hope, also referred to as the sea route to India or the European-Asian sea route. Global supply networks are seriously threatened by the disruption, which could result in higher costs for necessities.

The Red Sea’s volatile security situation carries wider geopolitical implications. The potential for escalation could draw in regional powers further, exacerbating existing tensions between Iran and Saudi Arabia. An unchecked conflict could destabilize the Horn of Africa, with cascading humanitarian consequences.

Also Read: US and UK forces attack Houthi targets in Yemen in retaliation for Red Sea attacks

Navigating the complex web of regional grievances and interests while ensuring the safety of maritime trade requires both diplomatic finesse and a determined effort to address the root causes of the conflict in Yemen.

conclusion

Regional conflicts have turned the Red Sea into a hot spot that endangers international trade and undermines geopolitical stability. Although the Indian Navy’s rescue mission and the US military action both show quick reactions, the absence of a more comprehensive diplomatic solution allows for further escalation.

Coordinated international action is needed to address Yemen’s underlying political and humanitarian dilemma in order to protect international maritime lanes and prevent a larger conflict. The Red Sea won’t be able to play the crucial role of a bridge between continents or a theater of proxy conflicts until then.

16th January 2024

Report: Houthis Strike US-Owned dry bulk ship

In a tense escalation, Houthi forces in Yemen launched an attack on the US-owned and operated dry bulk ship Gibraltar Eagle on Monday, striking it with an anti-ship ballistic missile. While no injuries or significant damage were reported, the incident has sent shockwaves through the global shipping industry, raising concerns about the safety of critical maritime arteries and potentially disrupting vital trade flows.

The Gibraltar Eagle, operated by US-based Eagle Bulk Shipping, was sailing approximately 100 miles off the coast of Yemen in the Gulf of Aden when it was hit. US Central Command confirmed the attack but refrained from specifying the type of projectile used. Eagle Bulk Shipping acknowledged the incident, initially describing it as an attack by an “unidentified projectile” and reporting limited damage to the cargo hold.

This attack comes just one week after US and British forces conducted a series of airstrikes against Houthi targets in retaliation for previous attacks on commercial vessels in the region. Since the U.S. and British strikes, the Houthis, who control most of Yemen’s west and north as well as the capital city of Sanaa, have vowed to keep up their attacks in the Red Sea. Since November, the Houthis, who are supported by Iran, have launched 29 missile attacks on shipping in an effort to aid the Palestinians in Gaza.

The arrival of the Iranian spy ship M/V Behshad in the Gulf of Aden on January 12 increased the risk of attacks in the region, according to security firm EOS Risk Group, based in the UK.The Houthis on Yemen’s shores are probably receiving targeting information from MV BEHSHAD.

The ongoing conflict in Yemen has already thrown a wrench into global shipping patterns. The Houthi control of key ports and the threat of missile attacks have forced commercial vessels to navigate alternative routes, adding time and cost to maritime operations. This latest incident risks further disrupting crucial shipping lanes in the Red Sea, a vital artery for the movement of oil, goods, and people between Asia, Africa, and Europe.

Potential Impact on Global Shipping

• Route Diversions: Increased risk of attacks may lead to shipping companies rerouting vessels away from the Yemeni coast, adding days and potentially weeks to voyages, impacting delivery times and increasing logistical costs.
• Insurance Costs: The heightened risk of attacks in the Red Sea will likely lead to higher insurance premiums for ships traversing the region, further adding to the financial burden on shipping companies.
• Disruptions to Trade Flows: The potential slowdown or rerouting of shipping could disrupt the flow of vital goods, including oil, food, and other essential commodities, potentially impacting global supply chains and consumer prices.
• Geopolitical Tensions: The Houthi attack on a US-owned ship raises the specter of a wider regional conflict drawing in major powers. Increased military presence in the Red Sea could further destabilize the region and add to shipping risks.

Also Read : IAPH Joins Forces with Indian Ports at International Ports Conclave

International Response and Measures

The international community has condemned the Houthi attack and called for restraint. The UN Security Council is expected to discuss the incident in coming days.

Possible measures to address the situation include:

• Diplomatic efforts: Increased international pressure on the Houthis to cease attacks on commercial vessels and engage in a peaceful resolution to the conflict in Yemen.
• Enhanced maritime security: Increased naval patrols and surveillance in the Red Sea to deter further attacks and protect shipping lanes.
• Escort services: Providing military escorts for high-value or vulnerable vessels passing through the Yemeni coast.

The assault by the Houthis on the Gibraltar Eagle serves as a clear reminder of how susceptible international shipping is to local conflicts. Even though the Red Sea may be the only area affected right now, the maritime sector and international trade could be significantly impacted in the long run. De-escalating the Yemeni conflict, improved maritime security, and diplomatic efforts are all necessary components of a multipronged strategy to tackle this problem. The future of secure and effective international shipping is in jeopardy, and navigating this tight and dangerous situation will require international cooperation.