CONFLICT IN THE MIDDLE EAST SOWS NEW DOUBTS ABOUT THIS TREND
The Panama Canal is looking optimistically towards the future, hopeful that the forecasted rains will gradually alleviate transit restrictions, allowing operations to return to normal by 2025. This aspiration provides a ray of hope for global maritime transportation, as the Panama Canal represents one of the most critical chokepoints in the maritime industry and global trade.
However, the situation in the Suez Canal and the Middle East at large is bleak.
Recently, the Islamic Revolutionary Guard Corps of Iran carried out an operation that culminated in the boarding and seizure of the 15,000 TEUs container ship "MSC Aries" while navigating through the Strait of Hormuz, gateway to the Persian Gulf. This act has heightened the risk level for commercial navigation in the waters of the Persian Gulf and Iran, which now join the Red Sea as hazardous zones.
Additionally, the region is grappling with additional tensions, such as the massive drone and missile attack launched by Iran towards Israel on April 13. Uncertainty remains regarding Israel's potential military response. Despite these challenges, navigation through the Cape of Good Hope has solidified as an essential route for 13% of global maritime trade. The shipping industry has managed to absorb the impact by using this route, although it is 10% longer and more costly to connect Asia with Europe and the East Coast of the United States.
The excess capacity in the shipping industry has been crucial in mitigating the effects of this situation. Ship supply is expected to grow by 9.1% this year and 4.1% next year, according to Bimco, which will help maintain stability.
Furthermore, shipowners are extending the lifespan of their older vessels, as evidenced by the low ship scrappage rate in the last two years (0.1% of the merchant fleet, the lowest level in 20 years). This strategy has contributed to maintaining a balance in supply and demand in the shipping industry.
Regarding freight rates, excess capacity and the low season in maritime transportation have led to a downward trend. For example, spot freight rates from Asia to North America and Europe have significantly decreased in recent months, although they remain higher than in 2019. However, challenges persist in supply chains, especially in the Persian Gulf and surrounding regions. Congestion at key ports such as Salalah, Sri Lanka, Singapore, Tanjung Pelepas, and Port Klang could further complicate logistical operations.
In summary, the current outlook for maritime transportation is characterized by uncertainty in the Middle East, strategic use of the Panama Canal and the Cape of Good Hope, and a downward trend in rates due to excess capacity. These dynamics will continue to impact the maritime industry and global trade in the coming years, especially if tensions in the region persist or escalate.
Original article source: https://www.mundomaritimo.cl/