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UN’s Warning on Maritime Trade
Global maritime trade saw a modest 2.4% uptick in 2023 after the previous year’s slump, but UNCTAD’s 2024 Review of Maritime Transport warns of rough waters ahead. Key maritime chokepoints like the Suez and Panama Canals face growing risks from geopolitical tensions and climate impacts, forcing costly detours and straining supply chains. Meanwhile, conflicts in the Black Sea threaten global grain supplies. Small island nations and developing economies are feeling the pinch most acutely, while frustrated shippers grapple with rising costs and supply delays—which are increasingly likely to drive up global consumer prices in 2025.
To protect global commerce, UNCTAD is calling for urgent action to bolster maritime chokepoint resilience, enhance infrastructure, promote sustainable shipping, and address fraudulent registrations to safeguard global trade, but whether they can be implemented quickly enough to maintain the recovery—that’s anyone’s guess.
High Seas, Higher Profits
While many struggle from the disruptions to global trade, ocean carriers are thriving—at least on paper. With Red Sea reroutes boosting transit times and freight costs, industry giants Maersk and Hapag-Lloyd this week have raised their 2024 forecasts, reporting surging earnings as demand stays strong and ships continue to reroute away from the Red Sea.
Maersk’s fourth guidance upgrade this year comes as the world’s second-largest ocean carrier reported strong preliminary third-quarter results, including $15.8 billion in revenue and an anticipated full-year EBITDA of up to $11.5 billion, a major increase from the $1–6 billion in earnings it expected as recently as February. Meanwhile, Hapag-Lloyd upped its expectations to a Group EBITDA range of $4.6 to $5.0 billion, compared to its earlier estimate of $1.3 to $2.4 billion.
Both giants attribute their outlook to robust demand and costly but necessary Red Sea detours via the Cape of Good Hope, bypassing Houthi-threatened routes. The stakes are high as the partners gear up to launch their Gemini Cooperation next year, tackling new routes with a “hub and spoke” strategy that is scheduled to continue to bypass the Suez Canal—meaning these higher profits are likely to stick around for a while.
Russia Intensifies Black Sea Port Attacks
In a stark escalation, Russia has recently intensified attacks on Ukraine’s Black Sea ports, threatening global food security and maritime trade. UK Prime Minister Keir Starmer condemned the strikes, highlighting their impact on Ukraine’s grain exports during harvest season—a lifeline for millions in Africa, Asia, and the Middle East. Recent strikes have hit four merchant vessels, raising war risk insurance premiums and jeopardizing the region’s stability.
Ukraine’s coastal grain corridor, critical in stabilizing food prices, is now under threat, potentially reversing recent gains in global cereal prices. In response, the UK has pledged further support for Ukraine, leading the Maritime Capability Coalition to secure trade routes in the Black Sea. The situation underscores the conflict’s far-reaching consequences, from food insecurity to disrupted global shipping networks.
Panama Canal’s Drought-Proof Profits
Despite a challenging drought that reduced ship traffic, the Panama Canal Authority has reported a record $3.45 billion in profits for the fiscal year. With strict water conservation measures limiting daily transits, the Canal saw fewer ships but managed to increase revenue through higher tolls and optimized scheduling. The Authority’s ability to maintain profits despite significant headwinds underscores its crucial role as a global trade artery. However, as climate challenges continue, questions remain about the Canal’s long-term adaptability to ensure reliable passage for the global fleet.
Pirates Returns: ATALANTA Warns of Somali Pirates on the Move
The EU Naval Force’s Operation ATALANTA has raised the alarm over a fresh wave of Somali piracy as a group of 13 armed pirates set sail from Ceel Huur, Somalia, aiming for the Indian Ocean. This resurgence comes after monsoon weather had kept pirate activity in check, but favorable conditions are now drawing pirates back. Just days earlier, a Chinese bulk carrier, Huan Hang 99, reported a close call with five suspicious skiffs in the Gulf of Aden. ATALANTA warns of renewed high risks, particularly in the western Indian Ocean where hijacked dhows often serve as mother ships for attacks up to 600 miles offshore. With threats mounting, vessels are urged to ramp up security protocols to navigate the perilous waters safely.
$102 Million Settlement Over Baltimore Bridge Disaster
Singapore-based Grace Ocean and Synergy Marine have agreed to a hefty $101.9 million settlement with the U.S. government, covering federal cleanup costs after the M/V DALI struck Baltimore’s Francis Scott Key Bridge in March, resulting in six tragic deaths. The incident halted port operations as agencies worked to clear debris from the Fort McHenry Channel, reopening shipping lanes by June. While the settlement closes the book on the DOJ’s civil suit, the companies face a wave of additional lawsuits: Maryland is seeking up to $1.9 billion to rebuild the bridge, and claims from victims’ families, affected workers, Baltimore City and County, and various insurers continue to pile up. Grace Ocean and Synergy, while denying fault, say they’re fully insured for the settlement costs and ready to contest further claims in court.
ILA and USMX Ready to Re-Dock Talks
In the wake of a strike that shook ports along the U.S. Atlantic and Gulf Coasts, the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) are ready to head back to the bargaining table. Set to begin next month in New Jersey, the resumed negotiations aim to lock down a new Master Contract covering ILA port workers across 36 ports from Maine to Texas. The latest agreement extension, set to expire January 15, 2025, includes a generous 62% wage bump over six years, though key issues like automation remain up for discussion. With the Biden Administration advocating for collective bargaining over intervention, both sides appear hopeful for a smooth resolution—just in time to avoid another disruption ahead of the busy Chinese New Year shipping season.
Belgium’s Russian LNG Transfers Spark Controversy Ahead of 2025 Ban
Belgium is resuming transshipments of Russian liquefied natural gas (LNG) destined for Asia, reviving a long-standing winter practice that’s grown contentious ahead of a looming EU ban. Two ships, LNG Dubhe and LNG Phecda, are set to load Russian LNG at the Zeebrugge terminal later this month, marking the first transfers from Russia’s Yamal LNG plant since August. Typically, ice-class vessels transport the LNG to Europe for transfer to conventional ships bound for Asia, a route that bypasses the ice-blocked Northern Sea Route in winter. But with an EU-wide ban on Russian LNG transshipments kicking in by March 2025, the practice’s days are numbered. Some EU nations, including France and Belgium, are pushing for even stricter tracking to curb reliance on Russian energy as the region braces for tighter regulations.
Sanctions Freeze Russia’s Arctic LNG 2 Exports Ahead of Winter
Russia’s Arctic LNG 2 project has come to a standstill, halting liquefaction amid growing Western sanctions and the challenges of winter transport. Operations at the Gydan Peninsula facility stopped on October 11 due to high inventories and a shortage of ice-class tankers, compounded by limited buyer interest for sanctioned fuel. The last shipment left on October 7, with over a million cubic meters of LNG now stored in floating units near Murmansk and Kamchatka. Production output this month has dropped to half of September’s levels, while satellite images show decreased flaring, confirming the facility’s standby mode. With harsh Arctic conditions closing off conventional shipping routes, Arctic LNG 2 is unlikely to restart until next summer, if at all.
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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