Greetings from SILA Global!

As we navigate the final months of 2023, it’s crucial to keep ahead of the latest developments shaping the global shipping and logistics landscape. At SILA, we are dedicated to keeping you well-informed and offering expert solutions to navigate these dynamic shifts in the shipping and logistics industry.

A General Overview of the Shipping Industry

The shipping industry is anticipating an increase in the number of idle container ships during the upcoming winter season. This shift is due to ocean carriers transitioning from their previous strategies of canceling and rescheduling trips to a more widespread practice of temporarily laying up surplus ships. Carriers are adopting longer-term “winter schedules” as a more effective method for managing their capacity, as opposed to seemingly random trip cancellations. This approach allows carriers to adjust their networks and temporarily deactivate ships that are not currently needed.

Even during periods of high demand, managing the constant influx of new, ultra-large container vessels (ULCVs) has been challenging for ocean carrier ship managers. However, the prospect of a weaker-than-normal slow season in many trade routes has increased the pressure on ship operation teams. In an effort to address these challenges, Adani Group, a prominent port terminal company in India, is seeking to replicate its successful growth strategy by partnering with MSC Group for terminal operations at Vizhinjam port, a deep-water project in southern India. The goal is to transform Vizhinjam into a regional maritime hub similar to Colombo in Sri Lanka or Singapore, ultimately boosting shipping volumes. This strategic location provides access to major international waterways and positions India as a global transshipment hub.

A significant portion of Indian containerized freight is currently transshipped through foreign hub ports due to the lack of direct connections. This reliance on transshipment increases the cost of India’s import and export trade, undermining the cost competitiveness of Indian goods. However, Vizhinjam has the potential to accommodate container ship call sizes of up to 24,000 twenty-foot equivalent units (TEU), a capability that other Indian ports lack.

Shortly after Indian Prime Minister Narendra Modi expressed India’s ambition to become one of the world’s top five shipbuilders within a decade, Chinese Premier Xi Jinping criticized recent efforts to reduce reliance on China in various industries. While China is currently the largest shipbuilder and steelmaker globally, many businesses are exploring options such as reshoring, near-shoring, or diversifying their operations elsewhere. Recent projections from the International Monetary Fund (IMF) indicate that India’s economic growth may outpace that of China. Western giants like Boeing and Apple are gradually increasing their investments in new factories in India, with the overt support of the U.S. government.

Meanwhile, a survey conducted by the European Union Chamber of Commerce in China revealed that a record 64% of respondents found their business dealings with China becoming more challenging. In another development, Samskip has contracted the Indian shipyard Cochin to design and build two 730 TEU feeder vessels powered by hydrogen. Although India’s largest shipyard facilities are smaller compared to Shanghai’s drydocks, the proximity to one of the world’s largest ship-breaking industries could potentially reduce the carbon footprint of the steel used in constructing these vessels.

Space Supply and Scheduling

Blank sailings have grown increasingly common across a spectrum of shipping routes, casting a shadow on the predictability and accessibility of transportation services. The industry grapples with the scarcity of container vessels and mounting port congestion, which, in turn, have led to escalated freight rates. These challenges necessitate proactive measures to ensure smooth logistical operations and maintain efficiency in your cargo shipments.

Local Landside Update

The ongoing industrial action at DP World Australia ports has sent ripples throughout the shipping and logistics industry, causing a series of disruptive effects. These labor disputes have resulted in significant delays and increased operational costs for businesses relying on these ports for their supply chain operations. Ships have been held up, affecting the timely delivery of goods, and the congestion in these ports has led to a backlog of containers waiting to be unloaded or loaded onto vessels.

While industrial actions are a legitimate means for workers to voice their concerns and demands, the ongoing nature of these disruptions underscores the importance of finding effective and mutually agreeable solutions for the benefit of both the labor force and the broader economy. The impact of these ongoing industrial actions serves as a reminder of the delicate balance between labor rights and the smooth functioning of the shipping and logistics industry.

Feel free to reach out for specific information or assistance – we are here to ensure that your shipments continue to flow seamlessly.

The global shipping and logistics industry remains dynamic and resilient, adapting to a continually changing landscape. We at SILA are committed to keeping you informed and offering expert solutions to address these challenges and capitalise on opportunities.

As we approach the end of the year, we extend our gratitude for your continued trust in SILA. 

Please reach out to our dedicated representatives for guidance and solutions that cater to your specific requirements and thank you for entrusting us with your shipping needs.

SILA Global Commercial Team
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