June Industry Update

Australia

• 9 News, a major Australian news provider, recently reported on the recent spot rate increases and the supply chain disruptions, largely attributed to global events, such as Red Sea vessel attacks by Houthis, Singapore port congestion, and high demand to ship from China to the US before tariff increases. Watch the coverage.
• The Australian government's 2024-2025 budget focuses on boosting export opportunities through key initiatives. These include allocating $4.8 million to enhance technology service exports to Southeast Asian countries, and $14.4 million to expand the Australia-India Business Exchange program, facilitating diversification into India and neighboring markets like Bangladesh and Sri Lanka. Additionally, the budget includes support measures aimed at helping agricultural exporters navigate challenges in China and exploring alternative markets.
• The Australian Minister Anthony Albanese met Chinese Premier Li Qiang in Canberra on 17 June. In the meeting, several agreements were made to enhance Australia-China cooperation. Key among these were efforts to reinforce the China-Australia Free Trade Agreement, as well as Memorandum of Understanding, which were signed by both nations to advance economic dialogue, climate change initiatives, and educational partnerships.
• Western Australia Premier Roger Cook also greeted the Chinese Premier on 18 June, highlighting increased trade opportunities and the energy transition. Cook emphasised the partnership in critical minerals like lithium during their visit to Tianqi Lithium Energy Australia’s facility in Kwinana, where WA's exports to China surged 42-fold in two years, reaching $19.8 billion. With China as WA’s largest trading partner, accounting for 58% of goods exports, both leaders explored new economic initiatives including direct flights.

Asia

• Singapore is seeking compensation for expenses resulting from a recent oil spill caused by the owners of Marine Honour, who are responsible for the discharge after their vessel was struck by another dredger ship. The spill occurred when the dredger lost engine and steering control, colliding with Marine Honour and rupturing one of its oil cargo tanks. This incident released fuel oil into Singaporean waters, impacting beaches, parks, and Sentosa Island. Singapore promptly deployed booms, predictive technology, and aerial surveillance for cleanup efforts.

• Yemen’s Houthis, along with the Iranian-backed Iraqi militia Islamic Resistance in Iraq, claimed responsibility for a coordinated military operation targeting vessels at Israel’s Haifa port. They attacked two cement tankers and two cargo ships using more sophisticated weapons, citing noncompliance with their ban on entering "ports of occupied Palestine". Despite recent efforts by the U.S. Navy to ease tensions in the Red Sea region, the situation continues to escalate.
• The high risks associated with the Red Sea make taking a detour the more cost-effective choice, even with added expenses. Shipping companies face a tenfold increase in crew bonuses, war-risk insurance premiums, and Suez transit fees compared to pre-Red Sea crisis levels, adding substantial financial strain. In addition, they incur an extra $1 million in fuel costs due to the additional 11,000 nautical miles of travel. According to reports, attacks on shipping in the Red Sea have led to a 90% reduction in box throughput in the region, impacting 65 countries.
• Piracy incidents have been increasing in Bangladesh, with nine reported from January to May. Ships in Bangladesh waters are advised to maintain vigilance and communication with port authorities. The country's navy and coast guard have increased patrols, and the Chittagong Port Authority has installed a tracking system for small boats.
• Asian shipyards are facing a surge in demand for LNG carriers and containerships, causing delivery schedules to stretch out to 2029. Leading container companies like CMA CGM are driving substantial orders, while Chinese shipyards are also in high demand for mid-sized container vessels. Since late 2020, the global shipyard orderbook has grown by 56 million compensated gross tonnes, primarily due to LNG and containerships. LNG newbuilding orders have more than doubled in the first five months of 2024 compared to last year, indicating sustained growth.

World

• The US and EU are protecting their own car manufacturers by imposing huge tariffs on EVs made in China. Starting August 1, 2024, the US government will impose drastic tariff hikes on Chinese imports, including electric vehicles (EVs), raising duties from 25% to 100%. This move is part of broader tariff increases affecting over 380 product categories, including steel and aluminum, computer chips, and medical items. The escalation in US-China trade tensions has prompted Chinese EV exporters to seek new markets in Southeast Asia—such as Thailand, Vietnam, Indonesia, and Malaysia—to offset the impact of these protective measures.

• E-commerce now constitutes about 20% of global air cargo volumes, soaring to 60% to 70% in the trans-Pacific region, with expectations for further growth. Despite initial projections of 3.5% to 4.5% annual growth in 2024, air cargo has seen double-digit increases in chargeable weight for six consecutive months since January. Global demand surged by 12% in May 2024 compared to the previous year, with spot rates climbing 9% to $2.58/kg, according to FreightWaves. E-commerce platforms anticipate substantial capacity needs in Q3 and are targeting new markets, underscoring the sector's dynamic growth and evolving logistics strategies.
• The World Shipping Council (WSC) has applauded recent amendments by the International Maritime Organization (IMO) requiring mandatory reporting of all containers lost at sea starting January 1, 2026. Under the amended SOLAS regulations, ship masters must swiftly report lost container specifics to nearby ships, coastal states, and flag states through the Global Integrated Shipping Information System (GISIS). These measures will elevate maritime safety, facilitate rapid response actions, and strengthen environmental safeguards.
• The European summer holiday is approaching, typically spanning from July to October. For example, Italy observes 'Ferragosto' from August 15 to August 29, during which many manufacturers and suppliers in Italy take scheduled leave. This holiday period usually results in increased demand and higher freight prices, prompting shipping companies to impose General Rate Increases (GRI) and Peak Season Surcharges (PSS). With port workers also on scheduled leave, delays and container shortages are expected to escalate. Shippers are strongly advised to place orders well in advance to mitigate these challenges.

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