WEEK 30 TOP 5: DISRUPTION TO SUPPLY CHAIN WATCHLIST No.196

- (Following No.195) Israel conducted airstrikes on Yemen’s Red Sea Hodeida Port on July 20, targeting approximately 20 oil storage tanks and crucial port equipment, thereby halting the port's operations. Operations resumed on July 24. In response, the Houthis, aligned with other members in the Axis of Resistance—a coalition of Iran-backed paramilitary groups in Lebanon, Iraq, Syria, and Yemen itself—declared their intent to strike Israeli ports in the Mediterranean cities of Ashdod, Ashkelon, and Haifa, along with the Red Sea port of Eilat.?

A Liberia-Flagged container vessel, PUMBA, was attacked multiple times on July 20 while transiting the Southern Red Sea. The incident involved three skiffs—two manned and one unmanned USV—and two missiles. As per UKMTO report, all crew members remained safe with only minor damage on the vessel , which continued on to its next port of call.?

The Shanghai Containerized Freight Index(SCFI) continued its third week of decline, dropping by 2.7% this week. Meanwhile, Drewry’s World Container Index (WCI) fell by 2% to $5,806 per 40ft container. Despite the recent decreases, the index still remains up 268% compared to the same week last year.??

Disruption: Potential attacks on Israeli ports; no signs of a ceasefire in the short term.?

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- (Following No.195) Cargo flows in Bangladesh have resumed after the government reinstated limited internet connections for critical infrastructure including airports, emergency services, hospitals, and port operators on the evening of July 23.

The nation's imports and exports had suffered significantly after internet services were disrupted starting July 18, and a curfew was enforced on July 19. This disruption created extensive backlogs at customs, ports, yards, and warehouses, which may take weeks to clear. Similar congestion has occurred at the cargo village of Dhaka Airport, which has also become overwhelmed with backlogged goods.?

A partial curfew is still in effect indefinitely, with continued internet restrictions. Curfew hours are now set from 10 a.m. to 5 p.m., with offices allowed to operate from 11 a.m. to 3 p.m., and internet access limited to office use. All social media channels remain blocked.?

Disruption: There are severe congestions and delays for goods moving in and out of Bangladesh. Further protests is still possible, which may lead to intermittent enforcement of curfews.?

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- Typhoon Gaemi moved northwestward across Fujian Province and into Jiangxi Province in China on July 26. According to forecasts from the China Meteorological Observatory, the system is expected to gradually weaken as it moves over land.?

Typhoon Gaemi initially made landfall in Taiwan on the evening of July 24, affecting various parts of the region. Vessel operations both in and out of Kaohsiung and Keelung ports were suspended on July 24. The typhoon then made landfall in Fujian Province on July 25, impacting Fuzhou and Xiamen ports and resulting in further suspension of port operations.?

Disruption: Anticipated heavy rains in Hubei and Jiangxi provinces may cause localized flooding and disrupt road transportation. Additionally, strong wind gusts could impact operations at the Ningbo and Shanghai ports over the weekend.?

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-? Severe weather is expected to persist in the Western Cape and Northern Cape provinces of South Africa through at least July 29. The South African Weather Service issued severe weather warnings on July 27, highlighting the risks of disruptive rain, damaging winds, and significant wave activity for these regions.?

Disruption:?a potential impact on vessel navigation around the Cape of Good Hope, and localized flooding could affect road transportation in the affected areas.?

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-? On July 22, the U.S. Federal Maritime Commission (FMC) published its final rule defining "unreasonable refusal to deal or negotiate with respect to vessel space accommodations." This rule clarifies how the FMC will assess and enforce regulations against ocean shipping companies that deny cargo and vessel space unfairly.?

The regulation distinguishes between refusals during negotiation and execution phases, outlining the standards for determining whether a carrier's actions are unreasonable. It ensures that each case brought to the FMC will be evaluated based on its unique facts and circumstances. Not all refusals will be considered violations; carriers with justifiable reasons for their decisions will not be penalized.?

To aid in the assessment of these cases, the rule provides non-binding examples and suggests factors to consider when evaluating a carrier's conduct. Additionally, it requires ocean common carriers (VOCCs) to submit a detailed, confidential export policy annually to the FMC, covering pricing, services, and market strategies, though this requirement will be enacted later, pending further approvals.?

The regulation, effective 60 days after its publication, is a direct response to the mandates of the Ocean Shipping Reform Act (OSRA) of 2022, which requires fair dealing in vessel space accommodations—a term previously undefined. This rule marks a significant development in maritime law by shifting the burden of proof to carriers, thereby promoting accountability and fairness.?

Disruption: This FMC rule is expected to foster better cooperation between carriers and shippers by clarifying what constitutes unreasonable refusals. This clarity should enhance trust and collaboration within the maritime industry, benefiting the broader supply chain ecosystem.?