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Hello Club Members! Here is your weekly Dispatch with all the maritime news you need to know to end your week.
Despite a UN-backed ceasefire plan that tanked shipping stocks early in the week, Houthi attacks on shipping in the Red Sea have intensified with several successful strikes that have resulted in severe injuries to one seafarer, left another missing, and caused damage to four ships, including one that has now been abandoned and at risk of sinking.
Houthi rebels on Wednesday attacked the Greek-owned bulk carrier Tutor in the Red Sea, resulting in one missing sailor and significant damage to the ship, which has now been abandoned. The incident marked the first successful use of an unmanned surface vessel (USV) by the Houthis. The next day, two anti-ship cruise missiles struck the Polish-operated bulk carrier Verbena, causing a fire and severely injuring one crew member.
Since November, Houthi rebels have been launching drone and missile strikes on ships in the Red Sea, the Bab al-Mandab Strait, and the Gulf of Aden, citing solidarity with Palestinians in the Gaza war. So far in June, there has been a notable increase in both the number of attacks and their accuracy. In addition to the Verbena and Tutor incidents, on June 8th, the M/V MSC Tavvishi and M/V Norderney were attacked with missiles, resulting in minor damage but no reported injuries, and both ships were able to continue their voyages.
A new U.S. intelligence report this week showed how Houthi attacks on shipping are placing pressure on international trade, with at least 65 countries and 29 different energy and shipping firms directly affected by the attacks. According to the report, the attacks are responsible for a significant drop in container shipping through the Red Sea, with a 90% decrease since December 2023, impacting 10-15% of maritime trade.
Every headline hinting at a potential ceasefire seems to spark misguided optimism that shipping will instantly return to normal. However, if this week has taught us anything, it’s that a return to “normal” is even more distant than ever before, irrespective of any ceasefire developments.
Contract negotiations between the International Longshoremen’s Association and the U.S. Maritime Alliance have stalled over a dispute over automation, raising the possibility of a potential strike at U.S. East and Gulf Coast ports later this year. If no deal is reached by the September 30 deadline, the strike could coincide with the peak holiday shipping season and ahead of a presidential election, with major implications both politically and for shippers already dealing with longer transit times and higher costs.
Experts suggest the threat of labor action, combined with the Red Sea ongoing situation, could hasten the front-loading of imports by shippers, worsening already severe port congestion Europe and Asia. “It seems shippers are caught in a vicious circle where any action they take to protect their supply chains can result in making the situation worse,” said Peter Sand, Chief Analyst at Xeneta. Shippers also might consider importing into the U.S. West Coast if East and Gulf Coast disruptions become a major concern, which could further tighten capacity and keep rates higher for longer.
“If an agreement cannot be reached and strike action takes place when ocean freight container networks are still under extreme pressure, it could be a hugely difficult end to 2024,” said Sand.
Crude oil and oil product flows around the Cape of Good Hope increased by nearly 50% in the first five months of 2024 due to commercial vessels avoiding Middle East chokepoints, according to a new report by the U.S. Energy Information Administration. Key Middle Eastern crude oil producers, Asian and Middle Eastern refiners, and the United States have adjusted their oil trade dynamics accordingly
Middle Eastern crude oil producers sent more oil to Europe, while Asian and Middle Eastern refiners increased their exports to Europe, and the U.S. received more oil from the Middle East and Asia. Russia also sent nearly four times as much crude oil and oil products to Asia around the cape in the first five months of 2024 than in 2023.
This week was marked by significant international actions aimed at limiting Russia’s ability to finance its war against Ukraine. Britain entered the fray by imposing its first sanctions on vessels in Russia’s “shadow fleet”, which is being used by the Kremlin to circumvent Western sanctions on Russian oil trade. In a parallel move, it was reported that the European Union is contemplating sanctions against Russia’s state-owned shipping company, Sovcomflot. The proposed action follows a U.S. decision to sanction Sovcomflot and 14 related tankers earlier this year, with the EU also considering sanctions on 13 vessels involved in shipping defense goods and contributing to the growth of the Russian energy sector. The U.S. also implemented new economic sanctions designed to hinder Russia’s future energy production and export capacity. These sanctions impact seven ice-class LNG carriers built by the Far East Zvezda shipyard, as well as a Chinese yard manufacturing large-scale modules for Russia’s LNG projects. The measures are anticipated to affect the development of Arctic LNG 2 and other upcoming Russian energy projects.
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Exactly 76 days since the collapse of the Francis Scott Key Bridge in Baltimore, the U.S. Army Corps of Engineers and the U.S. Navy Supervisor of Salvage and Diving, working together as part of a Unified Command, have successfully restored the Federal Channel to its original dimensions. The operation involved removing 50,000 tons of bridge wreckage and coordinating responses among 56 federal, state, and local agencies over eleven weeks. The restored channel now allows for two-way traffic with no restrictions.
Significant milestones in the operation included the start of bridge wreckage removal on March 30. This was closely followed by the opening of Temporary Alternate Channels and a Limited Access Channel. On May 13, Section 4, which had trapped the M/V Dali under a 10-million-pound segment of Key Bridge wreckage, was safely demolished, allowed for the refloating and removal of the Dali on May 20. At that point, the Federal Channel was cleared to a width of 400 feet and a depth of 50 feet. The last major piece of steel truss was removed from the Federal Channel on June 4.
An official reopening ceremony held on Wednesday gave the Biden Administration and other state and local officials a chance to take a victory lap. “What happened that early morning of March 26th was horrific. What happened next was inspiring. And it is what happened next and every day since that day that has allowed us to come together and mark and celebrate the fact that, as of today, as of this week, the channel is open, the ships are moving, the terminals are operating, and this great American port is full steam ahead,” said U.S. Transportation Secretary Pete Buttigieg.
The World Shipping Council (WSC) reported a record low of 221 containers lost at sea in 2023, a significant improvement from the previous low of 661 in 2022 and rolling three-year average of 1,061. Despite this positive development, the WSC stressed the urgency of preventing such incidents, as yearly losses of shipping containers can vary significantly due to major incidents and weather conditions. Notable examples include the MV Rena and MOL Comfort incidents in 2011 and 2013, respectively, and weather-related incidents involving the ONE Apus and Maersk Essen in 2020 and 2021, respectively, leading to an average loss of 3,113 containers over 2020 and 2021.
New mandatory reporting requirements for containers lost at sea will be effective from January 1, 2026, as adopted by the IMO’s Maritime Safety Committee. The amendments aim to improve navigational safety, enable swift response actions, and reduce potential environmental hazards.
The Panama Canal has, at least for now, averted a shipping crisis that threatened $270 billion a year in global trade through careful water management and some luck. Due to drought conditions last year, the number of vessels allowed to cross each day was reduced to 22, about 60% of normal. However, with rising water levels, the limit has begun to increase, with plans to allow 34 vessels daily from late July. If rain patterns continue, the canal could return to full capacity in 2025. The canal’s turnaround is attributed to successful water-management measures and a wetter-than-expected dry season.
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