In this week’s Roar: more trouble in the Red Sea, the European Union’s Emissions Trading System takes effect, diesel prices continue their drop, air cargo and emissions, and investing in talent.
The volatile situation in the Red Sea has prompted carriers A.P. Moller-Maersk and Hapag-Lloyd to stop commercial shipping in the region — at least temporarily. The ongoing violence and attacks on shipping by Houthi rebels have led to a pause of all cargo movement through the area in an effort to protect crews and cargo. For now, vessels will be rerouted around the Cape of Good Hope, further disrupting international shipping in the region. However, the situation is in flux, and things can change at any moment, meaning shippers should stay abreast of the news.
Jaguar Freight sent out the following Service Update to customers: Due to the ongoing Panama Canal vessel transit restrictions and the continuous attacks/ threats in the Red Sea deviating vessels towards the Cape of Good Hope; containers shipping to the East Coast of the United States will require additional transit time. If your cargo is sailing through Panama, please expect 5-6 days additional to the original schedules. If your cargo is sailing through the Cape of Good Hope, please expect 10-15 days additional to the original Suez schedules.
The new year brought the expected update to the European Union’s Emissions Trading System (EUETS). Regulations mean any vessels that stop at EU ports are required to pay for their carbon emissions with EU Allowances (EUAs). And the cost is high, which has some companies unhappy — with a price tag of about $200,000 per voyage for some vessels, that feeling is not too surprising.
The new year also came with the report of another drop in diesel prices. After a two cent per gallon increase the previous week, the Department of Energy reported a decline of 3.8 cents on January 1. In nine of the past ten weeks, the price has fallen, after surging as concerns over the situation in the Red Sea and at the Suez Canal increased. As prices decline again, some analysts feel that the market isn’t taking the situation in the Red Sea seriously enough.
It seems there are some challenges when it comes to making blue skies green. New policies for emission controls have the potential to make air cargo more expensive, pushing shippers to less costly modes of freight. However, some analysts feel that due to slower demand, there’s no cause for immediate concern. And despite efforts to introduce restrictions that would curb emissions, these have been squashed by market pressures.
Going forward, a successful supply chain will require an investment in talent. There’s a shortage of qualified employees in the industry, and that, plus overall resiliency are key themes of the Association for Supply Chain Management’s (ASCM) annual supply chain trends list for 2024. In the face of constant disruptions, many companies are just trying to develop strategies to deal with them, including a focus on digital transformations. Other key issues include visibility and risk management in the face of increased cybersecurity concerns.
For the rest of the week’s top shipping news, check out the article highlights below.