Shipping rates for refrigerated containers have returned to around pre-pandemic levels, according to William Duggan, North America advisor at New Jersey-based Eskesen Advisory, a boutique consulting firm that serves the refrigerated transportation sector.

While dry cargo rates have fallen sharply over the past year, it is a mistake to think that reefer rates have done the same since they never spiked to the same degree as the dry market during the COVID-19 container shipping crisis, Duggan told delegates at the recent National Fisheries Institute (NFI) Global Seafood Market Conference in Palm Springs last month.

“Rates overall on refrigerated business are at about pre-pandemic levels but that’s more of a tweak on the east and west bound,” Duggan said.

“North and south rates are pretty much over 2022. That’s because demand for space and equipment is still there and the supply demand ratios are in favor of holding the rate levels.”

The east-west refrigerated container market shipping seafood to Asian markets, including China for reprocessing, is completely different to that on north-south routes.

The United States, for example, gets most of its refrigerated imports in via north-south routes, posing implications for those shipping in shrimp from Ecuador and frozen Chilean salmon and frozen Brazilian tilapia.

Container rates more than quadrupled following the onset of the global COVID-19 pandemic, rising particularly steeply in 2021, but have since cooled significantly.

Following the onset of the pandemic in early 2020, the seafood and many other industries suffered from soaring shipping rates and reduced shipping options, battling for space aboard vessels.

The crisis began in early 2020 when containers became stranded where they were not needed due to congestion at ports sparked by COVID checks combined with spikes in demand for commodities and consumer goods, shipped particularly from China.

Last year, shipping sector analysts Drewry forecast modest declines through 2023 in its Reefer Shipping Annual Review and Forecast 2022/23 report.

Lower reefer charges come as the era of sharp increases in marine cargo insurance for seafood exporters largely slips into the past.

But while these rates may be falling, the main issue is on land, with the US food industry is facing a 10 percent shortfall in cold storage capacity at a time when refrigerated warehouse space is already tight and companies are struggling to shake off the after effects of the pandemic.

A vessel with 10 metres draught berthed at a jetty of the Chattogram port for the first time, a major leap forward as the movement of larger ships is expected to cut costs and save time

Port users hope that the increased draught limit would enable the transportation of more cargoes and containers by a single vessel and help ease congestion at the seaport, which handles around 90 per cent of Bangladesh’s $135 billion annual trade.

“It is very good news,” said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association.

Owing to the lower draught in the Karnaphuli channel, relatively larger ships could not enter the channel as of yesterday. Now they will be able to come with higher loads.

“It is a good signal to international shipping companies. Our buyers will also become happy,” Hassan said.

“The port is performing well and further dredging would increase the depth of the channel.”

Port users say initially container vessels would benefit from the move since the new draught limit is applicable for only the container jetties at General Cargo Berth, Chittagong Container Terminal (CCT) and New Mooring Container Terminal.

A team led by CPA Member (Harbour) Commodore M Fazlar Rahman successfully berthed MV Common Atlas, a Marshal Island-flagged vessel, at a jetty of the CCT at 5.24pm yesterday. The vessel arrived from the Port of Santos of Brazil with 60,500 tonnes of sugar.

The vessels with a draught of up to 7.5 metres and a length of 160 metres could berth at the port in 1975. The Chittagong Port Authority (CPA) gradually increased the draught limit in the last 47 years to cope with the increasing trade demand.

Until yesterday, ships with a maximum 9.5-metre draught, the vertical distance between the waterline and the bottom of the ship’s hull, and of up to 190 metres in length could berth at some of the port’s main jetties.

The authority has fixed the new draught limit upon recommendation by United Kingdom-based consultant firm HR Wallingford.

The firm conducted a detailed hydrological study in the Karnaphuli and gave the opinion that the port can accommodate vessels with 10 metres in draught, said CPA Secretary Md Omar Faruk.

“The navigability of the port channel and the jetty areas has improved thanks to the prevention of siltation through continuous maintenance and dredging. This enabled the port to raise the draught limit.”

Bangladesh Shipping Agents Association (BSAA) Chairman Syed Md Arif said till to date, container vessels arriving at the port jetties could carry around 2,000 twenty-foot equivalent units (TEUs) of containers to 2,500 TEUs.

“With the new draught and length limit, vessels would now be able to carry at least 500 TEUs to 700 TEUs more.”

As vessels would be able to carry more containers, freight costs would be reduced, leading to a decrease in import and export costs. The turnaround time of vessels would also come down, he said.

“Definitely, this will help us save a lot,” said Abdul Bashar Chowdhury, chairman of BSM Group, a commodity importer based in Chattogram.

An importer could bring 20,000 tonnes of imported items in a vessel with up to an 8.5-metre draught. Now, businesses will able to bring about 10,000 tonnes more goods in a single ship.

“This will give more comfort to shipping companies and help save time as importers will not need to use smaller vehicles to bring cargoes to the port jetty.

The risk of pilferage will also decline. Overall, the efficiency will improve,” Chowdhury said.

BSAA Chairman Arif, however, said initially bulk vessels may not reap the benefit since six jetties dedicated to such ships are having as high as 8.5 metres draught.

BGMEA’s Hassan, also the managing director of Giant Textiles Ltd, said the authorities should speed up the construction of the Bay Terminal and other projects to allow much bigger ships to come.

State Minister for Shipping Khalid Mahmud Chowdhury is scheduled to inaugurate the berthing of the 10-metre-draught vessel today.

The process to install scanners at all the entry and exit points of the port is underway. Mongla Port and all land ports will also be installed with scanners to ensure free flow of exim goods.

State Minister for Shipping Khalid Mahmud Chowdhury has said that the Chittagong Port is the “lifeline” of Bangladesh’s economy.

The process to install scanners, at all the entry and exit points of the port, is underway to ensure top-notch security, he added.

“Scanners will be installed at each of the port’s gates for smooth import and export,” the state minister said during his visit to the New Mooring Container Terminal of the Chittagong Port on Sunday.

“The Mongla Port is getting scanners. Besides, scanners are also being installed in all land ports of the country.” 

The state minister also said that according to the agreement with India, their ships can use Chittagong Port and from where goods can be delivered to the neighbouring country’s other states via Bangladesh.

“For this, trial runs of Indian ships have taken place at the Chittagong Port. There will be more trials. The port is being further developed. Patenga Container Terminal and an overflow yard have been constructed.

He also said that Chittagong port is ready to handle the pressure of more ships. Indian ships will start arriving on a regular basis once the National Board of Revenue (NBR) issues Statutory Regulatory Orders (SROs).

Chittagong Port Authority (CPA) Chairman Rear Admiral M Shahjahan, Member (Administration and Planning) Md Zafar Alam, Member (Engineering) Captain Md Mahbubur Rahman received the state minister at port among others.

According to officials, out of the 12 gates of the port, there are currently seven scanning machines in operation in six gates.

Asia’s imports of crude oil reached a record high in January, but the strength wasn’t driven by China, with the world’s biggest buyer actually recording a decline.

Asia’s total imports were 29.13 million barrels per day (bpd), up 11.1% from December’s 26.22 million bpd and eclipsing the previous all-time high of 29.10 million bpd from November, according to data compiled by Refinitiv Oil Research.

Much of the recent market narrative has been how China’s re-opening from COVID-19 lockdowns will drive up crude oil demand, but the data shows this story has yet to play out in reality.

China’s imports were assessed at 10.98 million bpd in January, down from December’s 11.37 million bpd and November’s 11.42 million bpd.

The relatively small decline may be related to the early Lunar New Year holidays, which fell entirely in January this year.

This may have led to some pulling forward of cargoes into December and some pushing back into February.

However, the overall message from China’s crude oil imports is that while they are solid, they have yet to accelerate as expected by the bullish China economic narrative.

This isn’t too surprising as physical demand tends to lag market sentiment, given that cargoes are arranged several months in advance.

This means that any acceleration in China’s crude imports is likely only from March onwards, and even then there are several other factors to consider.

The first is whether the boost to travel, and thus fuel demand, seen over the Lunar New Year is maintained, or whether large parts of China’s population continue to hunker down at home now that the holidays have passed.

It’s likely that COVID-19 will largely fade as a factor in China, just as it has in other countries that have fully re-opened, but how quickly fuel demand recovers and exceeds pre-pandemic levels is still uncertain.

FUEL EXPORTS

Another factor is the price of crude oil and the interplay between China’s inventories and its exports of refined products.

China has ramped up exports of fuels such as diesel and gasoline as Beijing granted export quotas to refiners, a move that boosts economic activity and the refiners’ profitability as they can grab a share of the strong margins for fuel currently available in Asia.

As long as China can secure crude at a price low enough to make fuel exports compelling, it’s likely that refiners will continue to seek to maximise shipments of products.

China has increasingly turned to Russian crude, which is being sold at steep discounts as Moscow seeks to find new markets for its oil after Western countries stopped buying as a result of sanctions and other measures imposed after Russia’s invasion of Ukraine on Feb. 24 last year.

China imported 2.03 million bpd from Russia in January, according to Refinitiv data, up from 1.52 million bpd in December.

This made Russia the top supplier to China, overtaking Saudi Arabia, with imports of 1.77 million bpd from the kingdom.

The two heavyweights of the OPEC+ group have played tag team with each other for the position of top supplier to China since the war started in Ukraine.

A question for the crude market is whether China’s increasing imports from Russia has a price implication for global benchmarks such as Brent crude, given that Russian oil is now largely disconnected from the world system.

While the market waits to see whether China’s economic re-opening and Beijing’s stimulus measures do translate into higher imports, it’s worth looking at where there was strength in Asia.

INDIA RECORD

India, the region’s second-biggest importer, saw January arrivals hit a record high of 5.29 million bpd, up from December’s 4.78 million bpd.

The data shows that Russia maintained its position as top supplier, with January imports of 1.33 million bpd, up from 1.19 million bpd in December.

Prior to the war in Ukraine, Russia was a minor supplier to India, but the availability of cheap oil from Russia’s western ports, which used to go mainly to European refiners, has seen India ramp up imports.

Other major Asian oil buyers also saw gains in January, with South Korea importing 3.11 million bpd, up from 2.85 million bpd in December, while Singapore imported 1.65 million bpd, up from 910,000 bpd.

Japan was the exception, with January imports dropping to 2.83 million bpd from December’s 2.96 million bpd.

The question is whether Asia’s crude imports will be maintained at high levels amid signs that higher interest rates are starting to have some bite on consumer spending and on export-dependent economies such as Japan and South Korea.

On February 3, the Indian government announced its plan to invest in coastal shipping. As per the latest budget allocations, India will follow the public-private partnership or PPP model to enhance passenger and freight movements across the eastern and western coasts. 

The stress is developing low-cost, energy-efficient systems using VGF and viability gap funding.

Since coastal waterways are low on logistics costs and high on their eco-friendly nature, it’s the best

solution for domestic freight movements, said the Finance Minister while tabling the budget.

Despite having a 7500 km coastline and extensive inland waterways, India’s water-based modal transport is lower than Thailand and Bangladesh, standing at 12% and 16%, respectively. Compared to that, India is at a meagre 6%. This is highlighted in the 10-year roadmap for the Indian maritime sector called the Maritime India Vision 2030, which said that India hadn’t utilized its coast well for efficient supply chain ventures. 

Apart from this, the 2030 maritime vision calls for PPP in RoRo and ferry services through management-based contracts or operation and maintenance (O&M) contracts.

This will reduce the cost for end users and reduce pollution levels (noise and air pollution). The proposed plan will lower accidents as well. 

However, to support this, we need better last-mile and first-mile connectivity as costs and lead times become vital competition issues.

In the past, the shipping ministry had reduced tariffs for coastal cargo, given priority berthing to coastal vessels, made green channels for faster cargo clearance and vessel availability relaxed cabotage rules.

All of this will collectively aid in bettering coastal shipping facilities. 

We began offloading our equipment from the Ocean Giant right away so that we could build the pier where the ice-pier was,” said Staff Sgt. Donald Harris, 7th TB(X) pilot of the pier. The brigade’s role is causeway building and they use the U.S. Army’s modular system which is unique because it has a one-foot draft permitting it to get closer to shore. 

The brigade faced the added challenge of dealing with sheets of ice that litter the harbor and move and spin from the wind. Commanders said it was good training handling ice noting that they had to break ice twice before in 2012 and again in 2020.

The 7th TB(X) joined with the Seabees from Navy Cargo Handling Battalion One who have been working around the clock since Ocean Giant arrived to offload the 443 pieces of cargo. This year’s shipment includes containers filled with mechanical parts, vehicles, construction materials, office supplies, and electronics equipment and vehicles. The supplies will provide nearly 80 percent of the items needed for survival over the severe arctic winter when the station is cut off from the rest of the world.

The cargo handlers work with Ocean Giant’s crew, and the MSC representative, to execute the offload and backload of a variety of cargo. The Antarctic Support Contract logistics team manages the loads and stow plans for the United States Antarctic Program, as well as the New Zealand Defense Force who assist with rigging and transporting loads from the pier to designated laydown areas. Ocean Giant is being joined on this year’s mission by a second cargo ship, Ocean Gladiator (17,700 dwt), which is currently in Lyttelton, New Zealand before departing for McMurdo Station.

Upon completion of their cargo offload, Ocean Giant will load containers of retrograde as well as ice-core samples for scientific study, and return to Port Hueneme. MSC-chartered ships have made the challenging voyage to Antarctica every year since the station and its resupply missions were established in 1955.