Policy & Compliance
remains open but risk, commercial and insurance considerations are factors leading to many shipping lines not using the route. In addition, significant problems with port congestion in Europe are anticipated when container lines decide to route their vessels through the Suez Canal. The danger is that those transiting via the Suez Canal would catch up with those using the Cape and arrive at the same time in Europe. Growing tensions One other geographical area that is not attracting the attention it should in Europe is the growing tension in the South China Seas, as highlighted by the Institute of Chartered Shipbrokers during the October BIFA Business Leaders Forum, which could significantly disrupt trade flows in the region. The planned realignment of shipping alliances in 2025 is expected to cause some issues with teething problems almost inevitable as new partners get used to one another. In particular, the spotlight will be on the Gemini
Alliance of Maersk and Hapag Lloyd. This Alliance is relying on a ‘hub and spoke’ model. Recent events have highlighted that in disrupted markets this approach can cause particular problems, as recently reported, for example, at Barcelona and Singapore. Vessels were diverted to these destinations to unload cargo for transhipment by feeder vessel to a final destination, rather than the original vessel sailing to the correct destination. As congestion built up at the two aforementioned ports, delays and missed connections ensued. All these factors and more, including attacks by the Russians in the Black Sea on vessels carrying grain exports from Ukraine, increase uncertainty and will contribute to elevated freight rates. Currently, shipping lines are reporting significant profits, particularly for Q3 of 2024, but these are expected to decline in Q4. Spot rates have declined in recent months, although this trend was reversed in late October and early November 2024. These rate fluctuations will have an impact on
the contract rates being negotiated for 2025. There are potential Customs tariff changes being proposed, particularly in the US and EU, with both considering increased duties on Chinese goods, particularly electric vehicles, which may prompt shippers to bring forward export shipments. The US President elect is proposing a wide range of tariffs on US imports regardless of origin. However, the longer-term impacts are not as clear but could reduce the movement of goods and hence the demand for capacity. All of this leads to the question: what will 2025 bring for the maritime industry? The answer is that we do not know. However, there are factors outside the sector’s control which, depending on their outcome, could prove to be beneficial or not for trade and the maritime sector. After many years of stability, the maritime industry as a whole is having to adjust to a global situation where instability is prevalent and the unanswered question remains – ‘Has the golden age of trade come to an end?’
“ After many years of stability, the maritime industry as a whole is having to adjust to a global situation where instability is prevalent
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December 2024 | 11
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