Hello Club Members! Here is your weekly Dispatch with all the maritime news you need to know to end your week.
The Iranian-backed Houthis struck the Greek-owned bulk carrier M/V Laax with five missiles in the Red Sea this week while transporting grain to… Iran. Despite the attack, the vessel continued its journey and no casualties were reported. The incident, however, highlights the ongoing threat to commercial vessels in the region, irrespective of their alignment with the terrorist group’s stated targeting profile. It’s also one of several reported this week, coinciding with a pledge by Houthi leader Abdulmalik al-Houthi to escalate attacks “in quality and quantity.” It’s worth nothing that the group continues to claim attacks on ships for which there is either no substantiating evidence or which outright never occurred. That is to say, that group’s claims should be taken seriously, but with a big pinch of salt.
Meanwhile, the U.S. and UK carried out their latest round of defensive strikes in Yemen, said to be the deadliest yet although unlikely to lead to any material changes the situation.
Container spot rates continued to rise this week with both Drewry’s World Container Index and the Shanghai Container Freight Index (SCFI) solidly up, continuing the upward trajectory in the post-Chinese New Year period.
For months, experts have predicted the knock-on effects of rerouting ships around the Cape of Good Hope, including bottlenecks, vessel bunching (where multiple ships arrive at the port simultaneously), and shortages of equipment and capacity. After months of theorizing, the real-world consequences of these longer voyages are becoming more evident. This is particularly true in Singapore, where authorities have had to reopen defunct container terminals to help relieve the growing pressure.
In many ways, the current situation echoes the early days of the COVID supply chain crisis, when a sudden demand surge met pandemic-related port issues, causing congestion and skyrocketing freight rates. Rates out of China are predicted to continue rising next week due to the early onset of peak season and forward imports by shippers. But with multiple risks on the horizon, from port congestion in Asia, to labor strikes in North America, to increased U.S.-China trade tensions, or the drought in the Panama Canal, how high rates go this time is really anyone’s guess or control.
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The Panama Canal Authority has increased the maximum authorized draft of the expanded Neopanamax locks to 45 feet, effective immediately, as water levels of Gatun and Alhajuela Lakes have now surpassed 2023 levels. The change, which was originally planned to be implemented on June 15, coincides with the start of rainy season in Panama and a gradual lifting of drought restrictions that have throttled the waterway for over a year. From today, June 1, an additional slot will be included in the Neopanamax locks. This will increase total daily transits to 32, up from a low of 24 but still below the canal’s design capacity of approximately 36 daily transits and a maximum draft of 50 feet. While nothing is certain, this is nonetheless progress.
An interesting report from Alphaliner this week highlights the growing global fleet of ‘megamax’ containerships, which now stands at close to 200 ships and exceeds 4 million TEUs in overall capacity.
In recent years, ‘megamax’ ships have become the mainstay of the Asia-Europe trade, gradually replacing neo-panamax vessels on the key route. The ‘megamax’ concept (typically defined as being around 400 meters long, at least 23 rows wide, with a capacity of 18,000 TEU or more, and a design that separates the superstructure from the engine room) was first introduced in 2013 with Maersk’s Triple-E class Maersk McKinney Moller.
Since then, ‘megamax’ capacity has exploded, hitting 1 million TEU in April 2017, 2 million TEU in July 2019, and 3 million in October 2021. However, Alphaliner’s report notes that the pace of ‘megamax’ ship orders has slowed, with the next milestone (5 million TEU) not expected until mid-2028.
The U.S. Department of Defense worked this week on recovering three military vessels that ran aground in Gaza due to rough seas. The vessels, part of the DOD’s Joint Logistics Over-the-Shore (JLOTS) operation, were used to construct the U.S. military-built humanitarian aid pier off Gaza’s coast. The pier, which also sustained damage in the swells, has now been temporarily relocated for repairs.
The $320 million project, which President Biden announced in March, was operational for just two weeks and facilitated the delivery of approximately 1,000 metric tons of aid. Officials estimate that the repairs will take about one week, after which the pier will be re-anchored.
The U.S. Navy has mishandled oversight of its $22 billion frigate program, according to a congressional audit by the Government Accountability Office (GAO). The Navy’s Constellation-class Guided Missile Frigate program intends to acquire and deliver up to 20 multi-mission, small surface combatant warships over at least two decades to replace the Littoral Combat Ship. However, the Navy awarded the initial construction contract despite an incomplete design, resulting in growing weight and potential subsystem failures. The Navy’s inadequate design review practices contributed to prematurely starting construction before the design was sufficiently mature. The first frigate, which started construction in 2022, is now projected to be three years later than its contracted April 2026 delivery date.
Interestingly, the program’s design challenges closely mirror those faced by the U.S. Coast Guard’s Polar Security Cutter program, where current plans are to begin construction of the new-class heavy icebreaker before finalizing the design, contrary to GAO recommendations.
Read the report: Unstable Design Has Stalled Construction and Compromised Delivery Schedules
 realclearpolicy.com In June 2023, the Bureau of Ocean Energy Management proposed a rule that would require stricter financial assurance standards for oil companies operating in the Outer Continental Shelf. This costly… |
 oilprice.com The shipping industry is one of the main targets of global decarbonization efforts, but a combination of factors is making that task an increasingly difficult one. |
 xeneta.com Failure to understand top market risks is a risk in itself. Here are the top ten risks your company needs to monitor, and steps you can take to navigate them. |
 twz.com The FPV drone strike on a kamikaze USV is the latest example of rapidly evolving drone-on-drone warfare in Ukraine. |
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apnews.com The United Nations over the last decade has logged an increasing number of crew members abandoned by shipowners around the world. |
 theguardian.com Sudden cut in pollution in 2020 meant less shade from sun and was ‘substantial’ factor in record surface temperatures in 2023, study finds |
 tradewindsnews.com Naval shortcomings could be bolstered by use of domestic ferries, researchers claim |
As always, we’d love to hear your feedback. Email [email protected] with any questions, comments, tips, or concerns. Don’t forget to check out the Club Discord and gCaptain.com for the latest maritime news.
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