”It will probably be positive for the share if DSV lands the deal. But how much the share price would rise depends on the price,” says one senior strategist.

Danish logistics company DSV is among the final contenders in the acquisition race for German DB Schenker. And a possible takeover could have a big impact on DSV’s share price, according to investors and strategists, reports the business daily Børsen.

”The acquisition is the big joker in relation to the DSV share. They will be able to achieve significant synergy effects, and it will probably be positive for the share if DSV lands the deal. But how much the share price would rise depends on the price,” says Michelle Nørgaard, senior strategist at Jyske Bank, to Børsen.

She is backed by Johnny Madsen, chief investment officer and partner at Formue- & Investeringspleje, who predicts a possible price gain of up to 15% if DSV succeeds in buying DB Schenker or another major company. However, he emphasizes that it must be done at an attractive price. If you buy at too high a price, investors may lose confidence that acquisitions are made with shareholder value in mind.

From ShippingWatch (English edit by Kristoffer Grønbæk)

We are involved in export and import worldwide, with a primary focus on cross-stuffing in transit.

The looming FuelEU Maritime regulation will pose significant challenges and extra costs for the shipping industry, and ways to mitigate this won’t come cheap.  

The regulation, coming into force on 1 January, sets targets for the greenhouse gas (GHG) intensity of the energy used on a ship, with targets getting stricter every five years.

The GHG intensity requirement applies to 100% of energy used on voyages and port calls within the EU, and 50% of voyages in and out.  

To become compliant, companies will need to either pay a FuelEU penalty or take action to bring the GHG intensity within FuelEU limits.  

According to data from Hamburg-based maritime technology firm OceanScore, the shipping sector will rack up FuelEU penalties of €1.35bn ($1.5bn) in 2025. 

It noted that vessels will be hit with a penalty of €2,400 per tonne of VLSFO-equivalent [very-low-sulphur fuel oil] for failing to meet the initial 2% reduction target, relative to a 2020 baseline for average well-to-wake GHG intensity. 

OceanScore MD Albrecht Grell warned: “As with the EU ETS, it is the container segment that will bear the brunt of FuelEU costs, accounting for 29% of gross penalties, followed by ro-pax on 14% and tankers and bulkers each on 13%.” 

And co-founder and MD of maritime carbon solutions software platform zero44 Friederike Hesse added: “With targets getting stricter every five years and additional sub targets entering into force in later years, these costs will rapidly increase.” 

Mr Grell urged: “It is critical for shipping companies to determine a baseline for expected FuelEU costs to secure proper planning and budgeting processes to compare different mitigation options, as well as to decide what to do with outstanding compliance balances. 

“This will require, to a higher degree than the EU ETS, a corporate strategy to determine how to reduce the compliance balance/deficit, how to commercialise a surplus and deal with deficits that remain.” 

But while costs associated with FuelEu Maritime targets are set to pack a punch, efforts to reduce GHG intensity and evade penalties “will come at their own costs”, due to “a significant amount of workload and therefore administrative costs”, warned Ms Hesse. 

Mitigation tactics include increasing the share of more expensive biofuels in the fuel mix, or pooling with another company’s vessels.  

And, according to Oceanscore, “pooling of vessels can roughly halve the gross burden for the industry”.

This is because, while penalties will arise for vessels using conventional fuels, surpluses of some €669m will be generated by vessels with significantly lower carbon intensity, mainly fuelled by LNG and LPG. 

“Taking into account this estimated compliance surplus, the net cost of FuelEU penalties for shipping from 2025 would be €680m, which indicates that pooling vessels can roughly halve the gross burden for the industry,” said Mr Grell.  

“It is therefore incumbent on shipowners to define their strategies, not only towards fuel choices and the use of onshore power, but also towards handling of residual compliance balances, such as pooling, banking and borrowing of balances, to mitigate the financial impact of FuelEU.  

“However, pooling will also come at a cost, while banking and borrowing will incur interest costs and only push liabilities into the future.” 

The FuelEU Maritime regulation doesn’t come into force until 1 January, but responsible parties must prepare and submit a monitoring plan to the verifier before 31 August. 

MSC's share of the global container shipping market has reached 20%. Since 2018, it is the first container line to capture a fifth of the market. Six years ago, this share belonged to Maersk, which was able to hold it for only a few months, Splash reports, citing Alphaliner data.

To reach the 6 million TEU mark, MSC lacks just one container ship of the Megamax series, that is, a 24,000-tonne vessel. According to analysts' forecasts, MSC's carrying capacity in 2025 will be equal in capacity to the fleet of the Gemini alliance created by Maersk and Hapag-Lloyd, which will officially start operating in February next year.

Since its founding in 1970, it has taken MSC 37 years to increase its fleet capacity to 1 million TEU. After another four years, MSC surpassed the 2 million TEU mark. By early 2022, the line had surpassed Maersk, thanks to record orders and the purchase of container ships on the secondary market.

Consulting firm Sea-Intelligence recently forecast what the top 10 lines would look like in 2026, taking into account a variety of aspects including order backlog and aftermarket vessel sales. According to this forecast, MSC will significantly increase its tonnage gap with the second largest carrier, CMA CGM. Maersk will be in third place.

A union proposal seeking to blunt China’s growing dominance in the maritime, logistics and shipbuilding sectors is finding bipartisan support among U.S. Congressional lawmakers, based on remarks made at a recent U.S. House of Representatives committee hearing.

The Congressional hearing, as well as the unions’ petition before the U.S. Trade Representative (USTR), reflect a growing concern among lawmakers and the private sector that China’s exponential growth in shipbuilding and in producing ship-to-shore cranes and shipping containers ultimately threatens U.S. national security.

Unions had petitioned USTR in March, arguing that the Chinese government “has funneled hundreds of billions of dollars” toward bolstering its shipbuilding industry so that now China dominates the world’s production of commercial vessels while the U.S.’s share is only 1%. The unions are pressing the USTR to take action against China’s practices under Section 301 of the U.S. Trade Act of 1974 by enforcing measures such as assessing a port fee on Chinese-built ships that dock at a U.S. port and creating a shipbuilding revitalization fund.

Congressional lawmakers affirmed the unions’ request at the June 26 hearing held by the House Select Committee on the Chinese Communist Party and entitled “From High Tech to Heavy Steel: Combatting the PRC’s Strategy to Dominate Semiconductors, Shipbuilding and Drones.”

“This committee should support unequivocally [the unions’] petition and demand that the USTR have remedies. I mean, it is unconscionable what we've allowed as a country,” said Rep. Ro Khanna, D-Calif. 

“China started with 5% of the global market in shipbuilding in 1999. They're up to 50%. They're producing 1,000 ships every year. The United States, which used to lead, is producing 10 ships every year. This committee is for American leadership. We should be for ensuring that we're not losing 100 to one on shipbuilding to China,” Khanna said. “The request for a docking fee of about US$1 million would translate into about less than US$50 per container.“

In response to Khanna’s statements, Rep. Andy Barr, R-Ky., said at the hearing, “I’m open to what [Khanna is] saying about a fee because I think China is an exception case… I do not think we should try to counter China by imitating Chinese industrial policy. … I think it would be a mistake to try to copy Chinese industrial policies because that’s actually the best way to misallocate resources. Free markets are the best answer in our competition with China, generally.”

Scott Paul, president of the Alliance for American Manufacturing, testified at the hearing that existing policy measures are not enough to address China’s “predatory market distortions,” adding that his trade association supports the counteracting measures that the unions proposed under Section 301 of the Trade Act. 

Paul said that China controls over half the world’s shipbuilding today, beginning construction on nearly 1,800 large ocean-going vessels in 2022. The United States, in contrast, was constructing five vessels that year, he said. The decline in U.S. shipbuilding since the 1970s and the rising dominance in China’s shipbuilding efforts have also led to a situation where the U.S. Navy relies on Chinese-made dry docks in certain circumstances.

“We currently have a tonnage advantage, but it’s not sustainable. We don’t have a surge capacity,” pointed out Paul.

As congressional leaders debated what actions Congress should take to bolster U.S. shipbuilding capacity, USTR has been undergoing its four-year review of Section 301 of the Trade Act.

In addition to receiving the March petition from the unions, USTR said in May that it plans to raise the tariff rate on ship-to-shore cranes from China from zero percent to 25% in 2024.

However, that plan is getting pushback from U.S. port interests, who argue that the tariff could cost at least US$131 million for seven U.S. ports that have preexisting orders with Chinese manufacturers for 35 ship-to-shore cranes.

President and CEO of the American Association of Port Authorities (AAPA) said the association “is confident that the tariff, if imposed, will not meet its stated objectives."

He emphasized that "it will only result in negative outcomes, including grave harm to port efficiency and capacity, strained supply chains, increased consumer prices, and a weaker U.S. economy.”

Halfway through 2024, and Statistics Netherlands (CBS) has announced that the preceding year had been less than exemplary for the country’s rail freight, recording a 12.5% year-on-year volume decline, with a little over 39.3m tonnes of goods moved in the 12-month period.

Containerised volumes dropped off 11.5% year on year, with a loss of more than 2m tonnes, from just shy of 20m tonnes in 2022 to 17.3m tonnes last year, with CBS noting that the country had particular struggles when it came to exports.

Sources within the sector said much of the decline could be attributed to the continuing post-Covid normalisation process, but the disappointing figures have coincided with a difficult period for European rail freight as it looks to sell itself as the green alternative to trucking.

Over the past year, sources have made clear that rail and barge offers one of the quickest and easiest routes to transitioning from carbon-fuelled road fleets – with others stressing that, amid the global truck driver shortage, it should be something of an easy win.

But there appear signs of government resistance to rail freight superseding road: Angela Merkel’s former party, the German Christian Democrats, having stated that road will remain the main freight mode in Germany.

One pro-rail and -barge source told The Loadstar governments needed to be moving more onto alternative modes, but stressed that the messaging needed to make clear there was not an agenda to remove road haulage – “road will be pivotal for final mile”.

The average container prices in China have reached their highest in two years, at US$3,600 this week for 40 ft high cube cargo-worthy containers in China.

These prices were somewhere around US$1,700 in March – April 2024. This is a 112% increase in a span of two months.

While the average container prices (for purchasing containers) are on a significantly upward trend, the average one-way pick-up charges (for leasing containers) continue to develop at a staggering rate so far in June.

“While prices and rates are significantly up, trading volumes have decreased as buyers

are becoming more cautious. This trend potentially indicates a potential reversal of

prices in the near future, as the market adjusts to the current disruptions and the high

levels of volatility.” shared Christian Roeloffs, cofounder and CEO of Container xChange.

Encouraging growth in China’s container throughput

China's ports recorded a 9% YoY increase in container throughput in the first four

months of 2024, handling 104.03 million TEUs. Foreign trade cargo throughput

increased by 9.1% YoY

Total cargo throughput reached 5.55 billion tonnes; a 5.2% rise compared to the same period last year.

Sanctions and Tariffs to Impact Euro-China Trade

The European Commission has proposed tariffs of up to 38% on Chinese electric vehicles, in addition to the existing 10% tariff, citing concerns over state subsidies. While the Container shipping sector is not directly impacted by these EV tariffs, we view this development as an early signal of potential broader trade tensions. If the proposed tariffs are implemented, the cost of exporting Chinese EVs to Europe will rise, possibly leading to a tariff war. This escalation could result in increased tariffs on a wider range of goods, impacting global supply chains. Higher tariffs and trade barriers could lead to delays and additional costs in the supply chain, causing inefficiencies in container utilization and higher operational costs for shipping companies.

Market Outlook

“Despite the current tariff dispute, the long-term outlook for China's container market remains cautiously optimistic. The positive trends in US retail demand and robust growth in China's port throughput suggest sustained demand for container shipping services. However, the resolution of the EU-China tariff dispute will be crucial in shaping the short-to-medium-term market dynamics,” commented Christian Roeloffs, cofounder and CEO of Container xChange.

"Container shipping companies should prepare for potential shifts in trade patterns by

diversifying their routes and enhancing logistics capabilities in other growing markets, such

as Southeast Asia and South America. Investing in technology and infrastructure to improve efficiency and reduce costs will be critical in navigating the potential market volatility and maintaining competitiveness," Roeloffs added.

Supply in container shipping has become “febrile and extreme”, according to analysts at Transport Intelligence (Ti), as the sector lurches between a surge in the requirement for capacity and a large increase in the supply of new vessels.

Stanley Smulders, director of marketing and commercial for ocean carrier ONE, told that the Red Sea crisis had upset the balance of supply and demand in ocean shipping.

“In our industry, the market prices are normally set by supply and demand. Demand is easy – either it is up, or it is down. But the supply side is different.

“Pre-Red Sea closure, you needed 12 ships to sail weekly from Asia to Europe, you now need 15 to provide customers with a weekly sailing. So, the tonnage capacity has been reduced as a consequence, and that has upset the balance between supply and demand in favour of the supply side,” he said.

He added that additional tonnage wouldn’t come cheap.

“What you also see is if the spot rates are going up because of the supply and demand situation, charter rates of vessels have gone up – this means that carriers face a significantly higher cost base. But shipping lines will pay these rates, because they know they can get a higher revenue. Otherwise, they wouldn’t charter them.

“We want every single ship to sail,” he concluded.

According to Alphaliner data, MSC charters 50.3% of its fleet, Maersk 41.1% and ONE 58.6%. Hapag-Lloyd charters the fewest of the ten major carriers, at 40% of its fleet, whereas Zim comes in at the other end of the spectrum, with 94.6% of its fleet chartered.

Indian importers and exporters are dealing with considerable cargo delays at Mundra Port, which leads the country’s containerised trade.

Local trade sources have raised serious concerns over the congestion plaguing Mundra’s container terminals over the past few weeks.

“The terminals at Mundra now seem to be hugely congested and the pendency (backlog) has increased to levels, which is affecting normal movement of boxes between CFSs [container freight stations] and terminals,” the Container Freight Station Association Mundra said in a complaint.

The association also noted: “All the efforts put in by CFSs are not witnessing any improvement, but are rather finding that the situation is deteriorating further.”

A change in the process of issuing port entry permits for freight vehicles by the port authority appears to be the major source of frustration for freight station owners.

According to them, truckers are facing longer waits to move in and out containers due to their inability to secure entry permits promptly.

The CFS association explained: “Vehicles are stranded on the road for hours together because of this. A corrective measure needs to be discussed with our members and worked out so as to ensure that movement continues without any hassles.”

The congestion has also left container rail operators piqued, as ICD (inland container depot) volumes represent a significant portion of Mundra’s box trade.

“There has been increased congestion at Mundra Port on account of delays at the port in terms of ability to effectively evacuate import containers in FIFO (first-in, first-out) sequence and on time, despite trains being provided for clearance by container train operators (CTOs),” Association of Container Train Operators (ACTO) said in a trade advisory.

According to ACTO: “This has led to restrictions being placed by Indian Railways on double-stack loading in order to speed up train evacuation from the port.”

The group added: “It is clearly informed to trade, port and shipping lines that the resultant levy of ground rent charges is not a result of any fault of the CTOs.”

As East Asia's container shipping industry sails into uncharted waters, it faces a shifting tide of customer demand reshaping the very foundations of maritime trade. Amidst emerging trends and evolving preferences, stakeholders must adapt, innovate, and collaborate to stay ahead in this dynamic and competitive arena.

In the dynamic landscape of global trade, East Asia stands as a pivotal hub for container shipping, facilitating the movement of goods across continents and powering the engines of commerce. With its strategic location, robust infrastructure, and rapidly expanding economies, the region's container shipping industry plays a crucial role in connecting markets, driving economic growth, and shaping the future of maritime trade.

East Asia's ports are witnessing a surge in vessel sizes and container throughput,

necessitating investments in infrastructure and efficiency enhancements to accommodate larger ships and handle growing cargo volumes.

Changing landscape of customer demand

The geopolitical landscape is undergoing profound changes, with geopolitical tensions, trade disputes, and economic uncertainties reshaping global trade patterns and supply chain dynamics. As a result, customer demand in the container shipping industry is influenced by shifting trade routes, emerging markets, and geopolitical developments.

Amidst emerging trends and evolving preferences, stakeholders must adapt, innovate, and collaborate to stay ahead in this dynamic and competitive arena.

Along with sustainable technologies, shippers are more attentive throughout the entire

process, unlike in the past, when receiving a consignment meant the end of their

involvement. Currently, shippers understand that competition is intensifying, and any issues during the voyage could affect their profitability. This shift in mindset emphasizes the need to re-evaluate the quality of service provided. Hence, it is key to ensure all customers are well-informed and regularly updated about their operations to enable a close working relationship to cater to meeting the dynamic demands required.