This week:

• Houthi rebel attacks in the Red Sea prompt global shipping to reroute.
• January’s global maritime reliability hits a new low since September 2022 due to Red Sea disruptions.
• The Federal Maritime Commission has implemented new rules to protect port truckers against unfair charges.
• Retailers boosting their stock levels in anticipation of the Lunar New Year contributed to a significant rise in January’s cargo flow at the Port of Long Beach.
• Major aerospace organizations have collaborated to establish the Aeronautical Supply Chain Safety Alliance.

Impact of Red Sea Disruptions on Global Trade and Shipping

Container spot rates surged due to the longer shipping routes. However, this did not translate into significant inflationary pressure, as global production and consumer prices have remained relatively stable. Data from S&P Global indicates minor delays in supplier delivery times. However, broader economic indicators, such as consumer price disinflation, have not changed much.

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Widespread Impact of Red Sea Diversions on Global Shipping Reliability

This figure is a stark contrast with the pre-pandemic standards. Then, reliability was typically 70% to 80%. The unexpected global impact of the Red Sea diversions was highlighted by Lars Jensen, CEO of Vespucci Maritime. He said that the Asia-Europe and Asia-US East Coast routes were affected. However, unrelated trade lanes also had significant schedule reliability problems.

The disruptions caused by rerouting around southern Africa had anticipated effects on directly impacted trade lanes. However, the broader impact on global shipping efficiency was somewhat surprising.

For example, on-time performance fell for the Asia-US West Coast and trans-Atlantic trade lanes. This suggests a contagion effect. Disruptions in some areas hurt unrelated trade routes. This was likely due to the need to adjust schedules to accommodate cargo requiring new routing or because of port-related issues.

In particular, the Asia-Mediterranean trade lane was hit hard. Delays for late ships there increased signficantly. Carriers had to offload cargo for the East Mediterranean at other ports. This extended transit times and disrupted schedules. The Asia-North Europe and trans-Atlantic routes also witnessed increased delays.

FMC Unveils Revolutionary Detention and Demurrage Fee Regulations

The Federal Maritime Commission (FMC) has announced new regulations. They are aimed at reforming the detention and demurrage fee structure in the maritime industry.

The initiative aims to protect port truckers from unfair fees. It is the result of a three-year effort by the FMC to make billing fair. These measures give port truckers relief from these charges.

The new rules will take effect 90 days after being published in the Federal Register. They respond directly to the guidelines of the Ocean Shipping Reform Act of 2022. The guidelines clarify who must pay these fees. Before, it was unclear who had to pay.

The new guidelines direct billing for detention and demurrage towards the shipper or the consignee. This ensures that charges are levied fairly. The rules also make billing simpler. They set a 30-day deadline to send detention and demurrage invoices to the right party.

The shipping community widely endorsed this change. Motor carriers and shippers have long pushed for clearer and fairer billing.

Surge in Cargo Volume at Long Beach Port

January witnessed a significant boost in cargo throughput at the Port of Long Beach, as it handled 674,015 TEUs, an 18% growth over the same month last year.

This notable increase was primarily attributed to the forward-looking measures taken by retailers. Retailers increased their stock levels. They did this to prepare for the usual drop in imports during the Lunar New Year due to factory shutdowns.

In a February 14th press release, Port CEO Mario Cordero highlighted the preemptive stockpiling strategy used by retailers. It helps them navigate the seasonal slowdown well. Cordero also shared his positive outlook on the port’s potential to increase its cargo volumes. The port’s strategy is to keep growing into 2024. They aim to reclaim lost market share.

Introduction of the Aeronautical Supply Chain Safety Alliance

AOG Technics is alleged to have distributed thousands of uncertified engine components with falsified documentation into the market.

The coalition underscores the importance of industry-wide vigilance and collaboration to prevent future breaches.