Service updates - Keeping business running
Disruptions still stress global supply chains. Delays are caused by various factors: Stringent biosecurity measures in Australia, security threats to vessels transiting the Red Sea and drought causing low water levels that is reducing the number of sailings through the Panama Canal. We are committed to minimizing these effects, re-routing where possible, and engaging in dialogs with our customers to find viable solutions. Stay updated with us!
EUKOR reroutes all Red Sea transits until further notice
Updated as of Jan. 8, 2024
With the situation along the coast of Yemen escalating, there is now an increased threat to all vessels transiting the Red Sea.
Consequently, we are rerouting all vessels planned for Red Sea transit via the Cape of Good Hope, until further notice. Several vessels due to transit the Red Sea have been successfully diverted, and we now has no vessels in or on the way to the area. We anticipate that rerouting vessels around the Cape of Good Hope will typically add an estimated 10–14 days extra sailing time.
Details on the consequences of extended sailing routes and other operational implications are being mapped as we speak. Customers potentially affected will be contacted directly by our customer service teams.
One development that is having an impact is the shift in global sourcing of vehicles with China becoming a net exporter, and the largest exporter of cars. Supply chain optimization has also seen increased concentration on US West Coast ports as a gateway into the region, stretching inland capacities and ultimately leading to prolonged waiting times for vessels.
In addition, biosecurity is back on the agenda in Australia, but this time it is seed contamination rather than stink bugs. All ocean carriers have been experiencing significant delays since the beginning of the year because of high ‘seed contaminated’ import volumes which are subsequently quarantine held at ports. With limited to no off-wharf treatment capacity, and an inability to move such large numbers of cars off-wharf due to the lack of enclosed truck trailers in the market, ports are experiencing extreme congestion. The on-port treatment capacity is not sufficient to allow for a smooth flow of volumes out of the port, in turn creating an unprecedented situation in Australia with significant operational inefficiencies and extremely long waiting times.
The global picture
The current global trade capacity constraints are caused by three main factors:
1. Demand for RoRo ocean transport outweighing supply - The demand for RoRo capacity continues to outweigh supply. This is particularly true for High and Heavy where we are seeing strong Agricultural, Mining and Truck segments. Whilst global LV/car sales have not yet returned to pre-COVID levels, ocean capacity constraints are also prevalent in this segment due to the lost capacity that is driven by port congestion, and changes in global sourcing of finished vehicles, such as China recently becoming a net exporter of cars, and more, the world’s largest exporter of cars.
2. Port Congestion - Waiting times and delays in ports continue to have a materially negative impact on capacity. As waiting times in ports increase or remain consistently high, capacity shrinks. The underlying reasons for the congestion are changing, ranging from pent-up post COVID demand to COVID related labor shortages, the impact of the Russia-Ukraine conflict, stretched inland capabilities unable to absorb new/increased flows of inbound cargoes, and new biosecurity risks. The constant that remains is that port congestion and vessel delays are continuing to impact our industry and will keep doing so in the foreseeable future. Solving and/or reducing port congestion will help to better balance global supply and demand and currently remains one of the key challenges for the RoRo industry.
3. Environmental regulations and newbuilding programs - new carbon intensity measures introduced by the IMO will further challenge overall capacity, as existing RoRo vessels may be impacted. Action is needed to ensure that vessels that don’t meet the set standards are compliant, which will either be met by using biofuels (additional premium over HFO/VLSFO) and/or reduction in speed (impact on capacity). The current orderbook for new vessels is at 27 percent of the existing global fleet. New vessels which are due for delivery in late 2024 and into 2025 will meet the new environmental regulation, but for the market to see their full impact, port congestion will need to return to sustainable levels.
To ensure safety for our employees we are taking every precaution to ensure safe working environments and social distancing through adjusting the work environment and processes following governmental guidance and best practices.