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May 17, 2023

Turkish President Tayyip Erdogan announced the extension of the Ukraine Black Sea grain deal for two more months, just before Russia had the option to withdraw from the pact due to hurdles in its grain and fertilizer exports. Ship traffic had been slowing down as the deal approached its expiration date. The extension was made possible through the efforts of Turkey, and Erdogan expressed gratitude to the Russian and Ukrainian leaders as well as the U.N. Secretary-General. The deal was originally brokered by the United Nations and Turkey in response to the global food crisis exacerbated by Russia’s invasion of Ukraine. While the extension provides temporary relief, there are still unresolved issues regarding Russia’s agricultural exports, and further decisions need to be made.

Port Houston has witnessed a significant increase in loaded container exports, particularly driven by resin exports, surpassing historical volumes seen in 2022. Year-to-date, loaded exports have risen by an impressive 17%. Although import container cargo has slightly softened compared to last year, loaded containers at Port Houston have shown a 3% increase for the year.

While total container volume experienced a decline in April 2023 compared to the same month last year, the year-to-date total has remained relatively stable. Port Houston attributes this to the gradual recovery from pandemic-related disruptions in the global supply chain. With a balanced distribution of imports and exports, Port Houston has become the nation’s fifth-largest container port. Infrastructure investments and proactive measures are prioritized to meet growing demand, along with the expansion of the Houston Ship Channel. Port Houston is also transitioning its terminals to cleaner equipment, aiming to enhance efficiency and reduce emissions. The arrival of new yard trucks and the upcoming addition of neo-Panamax STS cranes further contribute to optimizing cargo movement and expanding capacity.

According to analysis by BIMCO, the world’s largest shipping organization, the number of ships heading for demolition is expected to exceed previous projections. The global merchant fleet, which is aging and facing increasingly stringent environmental regulations, could see over 15,000 ships, equivalent to more than 600 million deadweight tons (dwt), being recycled by 2032. This forecast represents a significant increase of over 100% compared to the past decade. Historically, around 50% of bulk, tanker, and container deadweight capacity has been recycled by the time the ships reach 25 years of age, with 90% recycled by 30-35 years. Applying this pattern to the current trading ships leads to the estimate of 15,000 ships being scrapped in the coming decade. This accelerated recycling trend is attributed to tighter greenhouse gas emission limits. Despite subdued levels of tonnage sent for demolition last year, the aging fleet indicates a need for proactive measures to meet the International Maritime Organization’s emission goals.

The People’s Liberation Army’s Southern Theatre Command announced that two Chinese warships, the Dalian destroyer and the Huangshan guided-missile frigate, recently conducted live-fire exercises in the Western Pacific. The exact location of the drills was not disclosed. The military emphasized the significance of training in unfamiliar and complex waters, testing the effectiveness of new equipment and warfare methods. This exercise follows the return of one of China’s two aircraft carriers, the Shandong, from a patrol in the Western Pacific and around Taiwan. China’s military modernization, including the expansion of its navy fleet and missile forces, raises concerns for the United States and its allies. Experts predict that China’s distant sea travels and naval activities will continue to increase, showcasing its growing capabilities. However, defense analysts suggest that it may take more than a decade before China can pose a credible carrier threat far from its shores.

Mediterranean Shipping Co (MSC) is poised to achieve another significant milestone in its rapid growth trajectory. With just a few more ship deliveries, MSC will become the first liner company in the world to operate a fleet exceeding 5 million twenty-foot equivalent units (TEU).

To put this achievement into perspective, the entire global container shipping capacity was at 5 million TEU at the turn of the millennium. Currently, MSC’s fleet, comprising owned and chartered container ships, stands at 4,956,720 TEU. The imminent deliveries of MSC Michel Cappellini and MSC Gemma from Chinese shipyards in the next couple of weeks will push the fleet beyond the 5 million TEU mark. In the span of just eight and a half years, MSC has doubled its fleet size, and projections suggest it could reach over 6 million TEU by the middle of next year. MSC’s fleet expansion strategy includes both new ship acquisitions and an impressive tally of 306 secondhand vessels purchased since August 2020. Industry analysts highlight that MSC’s decision to operate independently after the end of its vessel-sharing agreement with Maersk in 2025 has been pivotal in shaping its vessel acquisition strategy. Going forward, the challenge for MSC lies in maximizing cargo utilization to ensure profitability.

The Ukraine crop corridor faces a severe disruption as Russia threatens to withdraw from the grain pact, resulting in a halt in traffic. The Joint Coordination Centre in Istanbul, responsible for inspecting all boats, experienced a disagreement among the involved parties, leading to a cessation of fresh inbound ship clearances through the corridor for over a week.

Consequently, the safe passage only sees a trickle of outbound traffic, as indicated by United Nations lineup data. The Black Sea agreement has been instrumental in enabling Ukraine to export more than 30 million tons of produce from major ports, contributing to the stabilization of global food prices after Russia’s invasion caused a spike. However, Moscow has repeatedly expressed intentions to exit the pact, citing insufficient progress in a parallel agreement aimed at removing obstacles to its own agricultural exports. Nikolay Gorbachov, president of the Ukrainian Grain Association, emphasizes that without the corridor, Ukraine would not be able to fulfill its full crop-export potential of approximately 44 million tons in 2023-24. Currently, only seven ships remain in the system, with one in port, one transiting the corridor, and the rest awaiting inspection. The interruption in shipments has paralyzed trade, and alternative options such as river and rail transport via EU neighbors also face challenges. Temporary import restrictions on Ukrainian grain by five eastern EU nations further compound the situation. Discussions are ongoing, and the UN, which brokered the grain deal with Turkey, continues to engage with the parties involved. While Russia raises grievances, it is anticipated to achieve record grain volumes this season, alongside increasing fertilizer exports to pre-war levels.

China’s Yangzijiang Shipbuilding is expected to be the chosen shipbuilder for the upcoming methanol-fueled boxship orders from Maersk and CMA CGM. Maersk is seeking eight firm orders for 8,000 TEU methanol dual-fuel ships, with options for four more, while CMA CGM is closing in on an order for ten 24,000 TEU megamax containerships. Alphaliner reports that Yangzijiang is likely to win all of these orders. If the orders materialize, CMA CGM’s newbuilding pipeline would increase from 0.91 million TEU to 1.15 million TEU, potentially propelling it ahead of Maersk to become the world’s second-largest container carrier. Previously, Mediterranean Shipping Co (MSC) overtook Maersk as the largest carrier, with MSC recently celebrating the milestone of operating a 5 million slot fleet.

Contractors involved in the removal of the OS 35 shipwreck in Gibraltar have provided an updated plan and timeline to the Captain of the Port. The preparatory work to ensure airtightness of the wreck’s forward and aft sections is taking longer than anticipated, resulting in a delay in the full removal by the initial May 30th deadline.

The contractors now plan to float out the aft section on May 29th, followed by the lifting of the forward section using barges starting on June 2nd. The revised projected completion date for the entire removal operation is now June 16th. The OS 35, a Tuvalu-flagged bulk carrier, sank and broke up after colliding with an LNG carrier in August 2022. The removal process involves establishing airtight seals, lifting the sections using lifting points and chains, and utilizing containment booms to mitigate potential oil spill risks. The Gibraltar Port Authority emphasizes the importance of a careful and safe operation to minimize environmental impact.

You can read previous issue of ‘Currents’ here.

Disclaimer: ‘Currents’ is an online shipping news service by Earl’s Rock Trading (Pvt) Ltd that reports on the latest developments and trends in the maritime industry. We do not take any responsibility for the accuracy or completeness of the information provided in our news stories or for any opinions expressed by the people quoted in them. Our aim is to provide our readers with up-to-date news and insights from reliable sources. However, we do not endorse or take any responsibility for any actions taken by our readers based on the information provided in our news articles. We also want to make it clear that we do not own any of the images used in our news stories, unless stated otherwise. All images belong to their respective owners, and we use them solely for illustrative purposes. If you are the owner of any image used in our news stories and want it to be removed or credited, please contact us, and we will take the necessary action.