After enjoying strong growth during the shipping surge experienced over the past two years, Sea-Intelligence reports that non-alliance carriers are again losing market share. With the current levels of overcapacity rising across most segments of the container shipping industry and possibly getting worse as more new tonnage enters the market, the analysis firm is predicting that the market share for the independent carriers will continue to decline.

“As the market strengthened after the initial Covid hit, there was a confluence of small carriers that started to deploy capacity, especially on the transpacific trade,” said Alan Murphy, CEO of Sea-Intelligence. He notes major carriers also started to introduce services outside the alliance networks. “The idea was to take advantage of the opportunity provided by the very high freight rate environment.”

Taiwan-based carrier Wan Hai for example in 2020 launched an independent transpacific route after its alliance with Pacific International Lines and COSCO ended. In addition, new specialized carriers emerged seeking to offer niche services and appealing to shippers that found it difficult to place smaller cargoes with the big carriers.

According to Sea-Intelligence’s data, non-alliance carriers were able to increase their share in the three key regions, including Asia to the West and East coasts of North America and Asia to Northern Europe and the Mediterranean. 

For the West Coast trade lines, Sea-Intelligence calculates that non-alliance carriers rose from an average of just above 15 percent of capacity before the pandemic to approaching nearly 40 percent of capacity at the end of 2021 and the beginning of 2022. The addition of these non-alliance services Sea-Intelligence says meant that at the peak of the market, the market share of non-alliance carriers had essentially doubled.

“But as the freight rates began to drop in 2022, the share of non-alliance services also began to decline, and looking into 2023-Q1, they are poised to continue to decline,” predicts Murphy. “There is still more relative capacity operated by non-alliance services than before the pandemic, but if the rate of decline continues, this will revert back to pre-Covid levels before the end of 2023.”

On the Asia-North America East Coast routes, Sea-Intelligence reports there was a similar trend of increasing non-alliance capacity as the market initially strengthened. “However, even though there is a distinct decline coming into 2023, there is no sign presently that we are about to go back to pre-pandemic levels,” says Murphy.

On the Asia-Europe trades, the non-alliance capacity has increased, but not materially according to Sea-Intelligence. They calculate that the independent carriers represent between two and five percent of capacity. However, on the Asia-Mediterranean routes, there are no signs of non-alliance services reducing their market share in 2023-Q1.

The domination by the alliances has been a rising concern for regulators in many parts of the world. It was a major issue cited in the U.S. markets by the president and other elected officials driving the passage of the reforms to the Shipping Act in 2022. The World Shipping Council for example argued that the alliances create greater market efficiency while the White House cited the rapid growth in the three alliances. They contended that from 1996 to 2011 the major alliances grew from operating about 30 percent of global container shipping compared to 80 percent of global containership capacity and 95 percent of the east-west trade lines in 2022.

The Neptune Declaration Crew Change Indicator, which was launched in May 2021 to track the predominance of crew stuck at sea, is at its lowest level since it was launched. Yet, while the situation remains fairly stable, the Global Maritime Forum which compiles the indicator says the rise of infections in China is a cause for concern as other countries reintroduce restrictions.

Built from aggregated data from ten leading ship managers, the Neptune Declaration Crew Change Indicator looks to identify seafarers either at or near the end of their contracts. Now provided on a quarterly basis, for the fourth quarter the indicator showed that only 2.7 percent of seafarers are still stuck onboard vessels beyond their contract expiration, down six-tenths of a percent. At the same time, the percentage of seafarers onboard vessels for more than 11 months fell to just two-tenths of one percent, a decrease of 0.1 percentage points since October.

“The numbers trend in the right direction, but the figures still represent thousands of seafarers who can’t get to work or journey home as they were supposed to,” said Susanne Justesen, GMF Project Director for Human Sustainability. “The fundamental issues of seafarers not being treated as key workers also haven’t changed, which will be a global problem if the pandemic resurges or when we face a similar problem in the future.”

Ship managers contributing to the report also said that they believe that the recent easing of restrictions in China is simultaneously encouraging and concerning. China recently officially relaxed its national policy for COVID-19 which among other things dropped most of the restrictions impacting crew changes and shore leave. For example, the requirements for quarantine were removed, yet the managers note that local and central governments in China are not yet aligned. They report that crew changes in China are very reliant on local agents to ensure compliance with regulations.

After China ended its official no COVID policy and reopened its borders, the country experienced a spike in cases. It has been hard to determine the full extent of the latest surge due to a lack of transparency from China.

An analysis by Airfinity, a London-based global health intelligence firm, for example, is raising concern that China might be staring at one longer, more severe COVID wave as the Lunar New Year festival fuels infections. Cases they speculate could peak at 4.8 million a day with 62 million infections predicted across the period from January 13 to 27, before beginning to fall. Deaths are forecast to peak at 36,000 a day on January 26 during the Lunar New Year Festival, up from the previous estimate of deaths peaking at 25,000 a day.

Fears of this spike and the possibility that it would again spread beyond China’s borders are driving countries such as India, Japan, and South Korea to implement new test requirements and restrictions on travelers including seafarers arriving from specific areas in Asia. India for example imposed mandatory COVID-19 negative test reports for travelers arriving from China, Japan, South Korea, Hong Kong, and Thailand. Japan, which is also recording an increase in new cases, has decided to tighten border controls for COVID-19 by requiring tests for all visitors from China.

The indicator however also shows that the number of seafarers vaccinated against COVID-19 is high and continues to rise. They are reporting that the number of vaccinated seafarers reached 95.6 percent up a further 2.7 percent versus the third quarter of 2022. In addition, some ship managers are reporting as an added protection they have opted to replace non-vaccinated crew members with vaccinated crew members when possible.

Panama’s shipping registry says it has withdrawn its flag from 136 vessels linked to Islamic Republic in the last four years, denying claims it is knowingly helping Iran violate sanctions. 

"The Panamanian registry canceled 136 ships in which their direct link with the National Iranian Oil Company (NIOC) was proven," Panama's Maritime Authority (AMP), said in a statement late on Tuesday. According to the US Treasury, the NIOC has strong links with Iran’s Islamic Revolutionary Guard Corps, which is coordinating the country’s sanctions evasion campaign. 

An AMP spokesperson said that one-fifth of the 678 ships for which the registry withdrew flags for various reasons since 2019 were Iran-linked, adding "Panamanian authorities maintain a close relationship with the US secretary of the Treasury and other authorities of the United States. 

Providing its flag to some 8,650 ships, the AMP runs the world’s largest vessel registry with 16 percent of the global fleet. It denied failing to act on evidence that tankers operating under its flag had shipped Iranian crude oil in contravention of US sanctions, reacting to allegations by United Against Nuclear Iran (UANI), which seeks to prevent the Islamic Republic from becoming a nuclear-armed regional superpower.

On Monday, former Florida Governor Jeb Bush, who is a member of UANI, called on Washington to pressure Panama to stop "helping" Tehran to evade sanctions.

Shipments of Iranian crude were much higher in 2022 than in 2019 and 2020, when US sanctions had a greater impact. Iran boosted illicit shipments to China from late 2020 as Joe Biden got elected US president and pledged to return to the 2015 nuclear deal, the JCPOA.

Earlier in the month, Iranian navy commander Rear Admiral Shahram Irani said Tehran is planning to extend its area of operation to the Panama Canal that divides South and North America.

Spokesman of Iran’s Valfajr Shipping Company says his company is operating a regular container shipping line from southeastern Chabahar port to various ports in India.

According to Abbas Kabousi, 15 voyages have been conducted along the mentioned line over the past three months, ISNA reported.

“The first vessel with a full capacity of 550 TEU arrived in Chabahar from Indian ports a few weeks ago and its cargo has been completely unloaded,” Kabousi said, adding that his company is ready to transport more goods between Indian ports and Chabahar port.

The official noted that his company has also been operating some direct lines from Persian Gulf Arab countries to Chabahar port.

“Valfajr Shipping Company has reduced the time of cargo transportation on the route from the southern ports of the Persian Gulf to Chabahar while reducing the freight rate and improving the schedules,” he said.

Kabousi further said the shipping company is ready to launch a direct line from Oman to Chabahar port.

Back in May 2022, Iran’s Ports and Maritime Organization (PMO) announced that three direct

container shipping lines were launched from Chabahar Port to Nhava Sheva and Kandla ports in India as well as Jebel Ali Port in United Arab Emirate.

Iran and India had previously launched shipping lines between Chabahar and the Indian ports of Mumbai, and Mundra.

The first shipping route between the two countries was put into operation in 2017 between Iran’s Chabahar port and Mumbai.

In January 2019, Iran and India inaugurated the second direct shipping route which passes

through Mumbai, Mundra, Kandla, Chabahar, and finally Bandar Abbas in southern Iran.

India is using the mentioned shipping routes to transit goods to Afghanistan and Persian Gulf nations as well as the countries in Central Asia.

Through Chabahar port India can bypass Pakistan and transport goods to Afghanistan and Central Asia, while Afghanistan can get linked to India via sea.

Iran has awarded India the project for installing and operating modern loading and unloading equipment including mobile harbor cranes in Shahid Beheshti Port in Chabahar.

The strategic Chabahar port in southeastern Iran is the only ocean port on the Makran coast and it has a special place in the country’s economic affairs.

Back in September 2021, Indian Prime Minister Narendra Modi had called on Central Asian countries to benefit from Chabahar Port capacities for expanding their trade in the region.

Antitrust authorities have approved Hapag-Lloyd’s acquisition of a minority stake in the Spinelli Group, after signing took place in September 2022.

With the closing of the transaction, Hapag-Lloyd has acquired 49% of the shares in one of Italy’s leading terminal and transport operators Spinelli Group. The remaining 51% of the shares in the corporate group remain in the hands of the Spinelli family. The parties have agreed to not disclose any financial details of the deal.

In driving its Strategy 2023, Hapag-Lloyd has continuously expanded its involvement in the terminal sector, most recently through an agreement to acquire a stake in the terminal business of Chile-based SM SAAM.

In addition to the now completed investment in the Italy-based Spinelli Group, Hapag-Lloyd also has stakes in JadeWeserPort in Wilhelmshaven, the Container Terminal Altenwerder in Hamburg, Terminal TC3 in Tangier, and Terminal 2 in Damietta, Egypt, which is currently under construction

On Sunday, January 22, Bangladesh requested Russia against sending embargoed cargo ships as they don’t want to sour relationships with the US. The move came when an embargoed ship carrying goods for the Rooppur plant wasn’t allowed to dock.

Dr AK Abdul, Bangladesh Foreign Minster, said that Russia had been advised not to send 69 US-sanctioned ships to the country. 

Sparta III carrying goods for the Rooppur power plant, wasn’t allowed to dock at the Mongla port on December 24. The Foreign Minister highlighted how Russia changed the ship’s name to avoid sanctions. 

Before the ship’s arrival, the US Embassy informed Bangladesh authorities about the vessel, stating it was indeed the embargoed ship Ursa Major, classified as Attack Cargo Ship (AKA) on their sanctions list. The vessel comes equipped with troops and equipment along with cargo. 

Bangladesh Prime Minister Sheikh Hasina is concerned about the situation as it could affect the country’s economic conditions.