International Shipping News Roundup: Bridge Collapse Update, Russia & China Deal with Houthis, Pirates, & OSRA 2.0

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There’s a lot happening in international shipping right now. Rather than make shippers scramble from news site to news site to see what all is going on, we’ve rounded up the top stories to give them to you in one place: here in Universal Cargo’s blog.

No reason to waste time, let’s get into the news…

Baltimore Francis Scott Key Bridge Collapse Updates

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The worst part of the Francis Scott Key Bridge collapse is the loss of lives. As we talked about in Tuesday’s post, a search was underway for six people who fell into the water. Two people were initially rescued. NBC News reported yesterday that the remains of two who were killed were recovered. The remaining four are presumed dead, and the recovery mission has ended as “it is no longer safe for divers to navigate or operate around the debris and concrete in the port” and “responding officers have ‘exhausted all search efforts’ to recover the victims.”

The Port of Baltimore remains closed to ships indefinitely as there are no clear answers to how long it will take to clear the debris in the Patapsco River. The debris blocks much of the channel leading to Baltimore’s harbor. That means carriers and shippers are diverting ships and cargo to other ports on the East Coast. Large disruptions like this tend to ripple throughout international shipping supply chains. There will likely be at least some surge in freight rates for international shipping going to, from, or through the East Coast. And its possible that surge will go wider than that.

Baltimore and Maryland’s economies will take significant hits from the port closure. Noi Mahoney writes about that in a FreightWaves article titled “Port of Baltimore’s indefinite closure deals blow to city, state economy.” Other headlines emphasize the possibility that the bridge collapse could cost billions in economic costs. Time will tell just how costly this tragedy is.

Russia and China Make Deal with Houthi Rebels

The Iran-backed Houthi rebels continue to attack ships in the Red Sea and Gulf of Aden. This is effectively keeping most of international shipping away from the Suez Canal. Well, apparently that won’t be as much of a problem for Russia and China as it is for almost everyone else. Sam Dagher and Mohammed Hatem reported in a Reuters article that the Houthis have agreed to grant Russia and China safe passage.

What is Russia and China giving the Houthis in return? That’s rather vague, but it seemingly amounts to some kind of political support.

Dagher and Hatem weren’t able to give specifics because they are unclear. The most specific thing they were able to write is that the political support might be before the United Nations Security Council.

Speaking of security, the Houthis have made attacks on ships they mistakenly thought to be connected to Israel or the United States, apparently because of outdated information. Russia and China will need to make extra clear which ships belong to them in order to ensure they are not mistakenly fired upon.

Meanwhile, the Biden Administration has been leading strikes against the Houthis in direct response to the rebels’ attacks on ships. Operation Prosperity Guardian – as the administration named the strikes that are in coalition with other nations – though chiefly the United Kingdom, have been so far unsuccessful in slowing, let alone stopping, Houthi attacks on ships.

Somali Pirates Are Back

The Houthi attacks have created a distraction, allowing Somali pirates to return to the scene, attacking and boarding ships and taking their captains and crew captive. Somali pirates were a serious problem about a decade ago, but over the last ten years, international navies seemed to have quelled their threat to shipping routes, crews, and the importing and exporting industry.

International navy forces have reduced their operations off the Somali coast largely because of the nearby Houthi attacks and perhaps overconfidence in their success of making the Somali piracy go dormant. Now, the piracy threat is back and in force.

Giulia Paravicini, Jonathan Saul and Abdiqani Hassan report in a Reuters article:

More than 20 attempted hijackings since November have driven up prices for armed security guards and insurance coverage and raised the spectre of possible ransom payments, according to five industry representatives.

Yes, those costs are yet another upward pressure to factor into the freight rate market.

House Passes “OSRA 2.0”

We’re still only beginning to see the effects the Ocean Shipping Reform Act of 2022 (OSRA) is and will have on U.S. maritime as well as broader international shipping. In fact, we’re still creating installments of our Decoding OSRA blog series, where we go through the bill section by section. However, since reforming supply chain and international shipping laws is one of seemingly only a few things Democrats and Republicans can agree on, they keep introducing more legislation on the industry.

Michael Angell reported in the Journal of Commerce (JOC) last week that the House of Representatives “approved further amendments to federal maritime law that include enhanced oversight of China-based carriers and freight exchanges, along with establishing new committees to study ports and liner services.”

The bill is called the Ocean Shipping Reform Implementation Act; however, it is being hailed as “OSRA 2.0.”

The main target of OSRA 2.0 is unfair shipping practices from China. The bill reportedly establishes more committees and has widespread support from shipper groups, according to Angell. Of course, you can be sure we here at Universal Cargo will be looking more into the shipping law changes the new bill makes, should the Senate approve it, as I expect it will.

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