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Insights 📈

Oil

• The 9 Million Barrel Question (link)

• Could Venezuela’s forthcoming imports of Russian oil be a gesture of goodwill toward Washington? (link)

• Price cap ‘phase II’ was spurred by Russia selling ‘large amounts of oil’ above the cap (link)

• How the Russian invasion of Ukraine changed tanker markets (link)

• Urals fleet constraints more likely as sanctions enforcement ramps up (link)

Dry Bulk

• Rates reaching new highs since the year's outset (link)

• A Minor Rebound in Demand for Seaborne Transportation of Coal (link)

Other

• Maritime Global Trade Roundup (link)

Red Sea 🌊

Red Sea Update: Number Of Crude Tankers Transiting Bab El Mandeb Rebounds To ‘Normal’ Level Lloyd’s List Intelligence

Nearly 300 Less Ships Per Week Through Suez Canal Due To Red Sea Crisis AXSMarine

Searching for Alternative Markets to Avoid Red Sea Disruptions Dun and Bradstreet

Red Sea Subsea cables disrupted Geollect

Maritime Data 2024 Prediction Series 🔮

Fraser Robinson, CEO and Co-Founder of Beacon discusses the broader geopolitical and macroeconomic environment to which supply chains are inexorably linked, explains why he believes collaboration will be a key theme in 2024 for businesses involved in supply chains, and evaluates the impact he anticipates AI will have in 2024 and beyond.

Ulf Bergman, Senior Economist at ShipFix gives us his take on why he thinks there will e continued headwinds for the Chinese Economy.

Red Sea Update: Number Of Crude Tankers Transiting Bab El Mandeb Rebounds To ‘Normal’ Level Lloyd’s List Intelligence

Key data for the week ending February 25, 2024

Numbers reflect cargo-carrying vessels of 10,000dwt+. Pre-Houthi attack ‘normal’ average taken for the period November 6 - December 3, 2023.

• Vessels transiting the Bab el Mandeb strait increased by 2% week on week but in deadweight tonnage terms, it grew by 17%. The number of crude oil tankers leaped 65% week on week, returning to ‘normal’ levels

• The number of active vessels in the Red Sea was up 12% compared with the previous week, but remains 36% fewer than in the same period last year

• Suez Canal transits jumped by 24% in vessel terms and 25% in dwt terms in the most recent week

• Cape of Good Hope passings fell by 1% in vessel terms compared with the previous week but the total number is still up 78% against the normal average

Despite the increasing frequency of Houthi attacks on commercial shipping in the Red Sea in recent weeks, the number of cargo-carrying vessels over 10,000dwt increased to a daily average of 240 in the week ending February 25, up from 213 vessels in the previous week.

The number is considerably down on the 380-vessel average recorded in the same week of 2023 but may be a sign that trade in the region is reaching a degree of stability that is encouraging the return of some carriers.

Earlier this week, Lloyd’s List reported that CMA CGM sent at least one and most likely two of its vessels through the Bab el Mandeb strait last week, despite public statements that it would no longer use the route.

Total Bab el Mandeb transits increased to at least 261 vessels in the most recent week, up by around 2% from the previous seven days, with the dwt total increasing 17% to 21.9m dwt.

The increases were largely driven by crude oil tankers, with 79 vessels transiting in the week ending February 25, up from 48 the week before and above the ‘normal’ average of 78 in the weeks prior to the Houthi attacks.

However, there were significant drops for boxship traffic, down to 29 from 43 week on week, and bulk carriers – down to 97 from 113.

Weekly Bab el Mandeb transits by crude oil tankers (2023/2024):

Note: Week 45 starts 6 November 2023. Latest figures may be revised upwards as more AIS gap data becomes available. Only cargo-carrying vessels over 10,000 dwt (those most likely to be internationally trading) were considered

Nearly 300 Less Ships Per Week Through Suez Canal Due To Red Sea Crisis AXSMarine

Four months after what is officially considered to be the start of the Red Sea crisis, overall merchant vessel traffic through the Suez Canal has dropped by about 55% on a weekly basis. At the same time Dry Bulkers, Tankers (including Gas Carriers) and Container Ships passing via the Cape of Good Hope increased in count by up to 98%. AXSInsights data shows the different effects the crisis has had on the three main vessel markets. While Liner vessel traffic reflected the events in the Bab al-Mandab Strait as early as November last year, Dry Bulker and Tanker vessel counts through the Suez Canal were affected a couple of weeks later.

Container Ships in particular saw the heaviest drop in traffic through the Canal, with the second week of February seeing only 26 vessels crossing in either direction. This was a historic low, which during the last decade was only seen once when the MV EVER GIVEN obstructed the Suez Canal in 2021. It also represented a 76.1% year-over-year decrease, compounding the already heavy 64.4% year-over-year drop in Container Ship traffic registered throughout January.

Searching for Alternative Markets to Avoid Red Sea Disruptions Dun and Bradstreet

Continuing Evolution of Trade Patterns

The COVID-19 pandemic had a significant impact on supply chains due to lockdowns. Changes in consumer behavior almost destroyed the demand for certain products and services, and remote work trends became more widespread. The incidents currently happening in the Red Sea are contributing to disruptions in supply chains and causing Asia-Pacific exporters to shift towards new markets for goods shipped to Europe and the Middle East. The following countries have experienced a decrease in exports to Israel and other Middle Eastern countries:

The goods most impacted by the reduction in shipments from Asia-Pacific exports over the same periods of time are as follows:

Changing Trade Routes and a New Normal

By using D&B Shipping Insights to assess whether there is a shift in markets by the countries mentioned above, interesting aspects of global trade are starting to emerge regarding the listed products. Taking an approach that examines the number of shipments over the past 24 months (ending December 2023) to alternative markets, the following exceed the average shipments of the listed products from Asia-Pacific exporters.

• China has increased their exports to Brazil and Australia above and beyond historical rates.

• Indonesia is wasting no time by increasing shipments to China and Malaysia.

• The UAE is taking advantage of markets in the United States, South Africa, and Australia.

• Taiwan has bolstered exports to Bangladesh, Japan, Mexico, and India.

• Thailand has focused on the United States and China for alternatives.

• Japan’s increased shipments above and beyond historical rates rests on Thailand’s willingness to increase dependence.

Red Sea Subsea Cables Disrupted Geollect

Bottom Line Up Front: Early on the 24th February 2024, reporting began to emerge indicating that subsea cables had been damaged in the Red Sea, in close proximity to the epicentre of Houthi targeting against shipping. It is unclear how severe such disruption is, but presently it is reportedly affecting internet traffic flow between Africa and Europe. There is a realistic possibility the Houthi group are responsible, but further investigation is required.

What is being reported?

Early reporting from Cyber Security monitoring group NETBLOCKS state that three subsea cables have been damaged as of 26th February 2024. They are as follows:

SEACOM: A statement from SEACOM confirms there is disruption, but that this is limited to the segment of the cable that runs from Mombasa (Kenya) to Zafarana (Egypt). The damage appears to have occurred within the Red Sea.

AAE-1: Asia-Africa-Europe 1 (AAE-1) is a 25,000km submarine cable from South-East Asia to Europe across Egypt, connecting from Hong Kong to France. At the time of reporting, it is unclear as to the extent of the damage.

EIG: The Europe India Gateway (EIG) is a 15,000km international fibre optic submarine cable system that links 12 countries across 3 continents, Europe, Africa and Asia. It passes directly through the Bab al Mandab strait. Presently, the reported disruption to communications systems – primarily internet – is affecting the Gulf States, India and Eastern Africa.

What is the likely cause? 

Given the proximity to the incidents in vicinity of the Bab al-Mandab strait, initial reporting suggests that this is linked to a deliberate Houthi sabotage which is a realistic possibility. Yemen Telecom accused the Houthis of threatening subsea cables earlier in February, sighting a map posted on a Houthi affiliated Telegram channel and accompanying messaging seemingly implying it was a target. Whilst more investigation is required to make a solid assessment, such an attack would match the Houthi's modus operandi of targeting a high profile, asymmetric target that would cause maximum disruption. As a proxy, it cannot be discounted that this also may have had state influence from elsewhere.

Why is this significant?

1. Global impact on communications. If the disruption has been caused by deliberate sabotage, the cost of the Houthi's freedom of action will have just increased significantly, affecting many nations who were otherwise uncommitted to the conflict.

2. Demonstration of capability by non-state actor. If proven deliberate, such an act will highlight how even non-state actors can target subsea infrastructure with relatively limited capabilities.

3. Further escalation. Such an act would prove a further escalation to the crisis, despite western efforts to compel the Houthis to cease via targeted airstrikes.

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