Top 10 International Shipping Stories of 2016
This is it! Universal Cargo’s last blog of 2016. What better way to close out the year than with a look back on the top international shipping stories of 2016.
Below you’ll find a list of the top stories with a short recap and links to blogs on the topic.
You know how we like to count them down David Letterman style, so here are the biggest international shipping news stories from 10 to 1.
Drum roll please…
#10 – Record Low Freight Rates
2016 saw record low freight rates for shippers importing and exporting goods.
This might have made it higher on the list if carriers in the international shipping industry hadn’t already been struggling with low freight rates, caused largely by overcapacity, for the last several years. Still, the impact of these low freight rates is significant.
Of course, low freight rates seem like good news to shippers, but the competition pool where carriers are struggling to swim is shrinking. The international shipping market is changing before our very eyes. Playing a key role in that are these low freight rates.
RECORD LOW FREIGHT RATES FOR SHIPPERS
ARE LOW FREIGHT RATES BAD FOR SHIPPERS IN LONG RUN?
#9 – China Lifting Ban on U.S. Beef Imports
This news item flies under the radar of many, but it is big, big news when it comes to U.S. agricultural exports.
China has had a ban on importing U.S. beef for 13 years because of a Mad Cow Disease scare. In 2017, U.S. exporters should be shipping beef to China again. As Donald Trump would describe that market, it’s HUGE.
CHINA ABOUT TO HAVE BEEF WITH U.S. EXPORTS, & THAT’S A GOOD THING!
#8 – MOL, NYK, and K Line Plan Merger
I mentioned above that the competition pool is shrinking when it comes to carriers in the international shipping industry. Here’s a big example:
Japan’s three major carriers announced plans to merge.
This is only the first three examples of shrinking carrier competition to make this list. However, there are more examples than three that could be pointed to from 2016 international shipping news headlines.
SHRINKING CARRIER COMPETITION: JAPAN’S 3 BIG CARRIERS MERGING
#7 – El Faro’s Black Box Found
It was 2015 when tragedy struck. The container ship El Faro, along with its crew, was lost in Hurricane Joaquin. In 2016, the remains of the ship and its black box were found.
This was the biggest international shipping biggest involving a U.S. ship in decades. The loss of the 33 crew members is devastating.
The black box offers audio that helps understand exactly what happened leading up to the loss of the ship. A transcript of the audio was recently released. A link of the 52 page document can be found on the National Transportation Safety Board website. Sebastian Kitchen does an excellent job of highlighting key moments from the heart wrenching document in an article on Jacksonville.com.
Hopefully, lessons will be learned from the El Faro and changes will be made to keep a tragedy like this from ever happening again.
EL FARO’S BLACK BOX FOUND
#6 – New Verified Gross Mass Rule
A new, and long awaited, verified gross mass (VGM) rule went into effect in 2016 that required shippers to provide certified weights of loaded shipping containers before they could be loaded onto a cargo ship.
With the panic about procedure changes, enforcement, and interpretation of the rule, you would have thought the sky was falling. For a while, it seemed every story in international shipping was about VGM.
Things really got hairy when controversy hit over the Coast Guard’s position on the rule.
VGM would make it even higher on the list, except for the most part all the panic was much ado about nothing. Still, this VGM rule has had an effect on some procedures and produced some controversial fees.
COAST GUARD RAISES CONTROVERSY ON NEW CONTAINER WEIGHT RULE
HOW PORTS TAKE ADVANTAGE OF SOLAS VGM RULE CHANGE
COAST GUARD SAYS U.S. LAWS EQUIVALENT TO NEW VGM RULE
ARE YOU READY FOR VGM RULE GOING INTO EFFECT NEXT MONTH, SHIPPERS?
SHOULD IMPORTERS WORRY ABOUT VGM RULE TAKING EFFECT TOMORROW?
MUCH ADO ABOUT VGM
#5 – China Cosco Shipping Formed
Here’s another big example of that shrinking carrier competition pool.
China’s two big shipping companies, China Cosco Group and China Shipping Group, merged into one giant carrier called China Cosco Shipping Corporation Limited that shook up the carrier alliances.
You’ll get more about that shakeup later in the list…
HERE COMES CHINA COSCO SHIPPING CORPORATION, SHIPPING LEVIATHAN
BIG CARRIER ALLIANCE SHAKE-UP IS COMING!
#4 – Panama Canal Expansion Completed
It finally happened! The Panama Canal expansion was completed in 2016.
The newly enlarged version of the Panama Canal made the old Panamax ships obsolete, swung shipping traffic from the Suez Canal back to Panama, but also makes shippers and carriers nervous as ships keep hitting its hard to navigate walls.
This project fell years behind schedule, costing more than initially planned while seeing scary things like water leaking through its locks.
However, the Panama Canal has the potential to shift a significant amount of cargo traffic from West Coast ports to East and Gulf Coast ports in the U.S.
TOP 3 NEWS STORIES HIGHLIGHT BIGGER IS BETTER TREND IN INTERNATIONAL SHIPPING
5 REASONS THE EXPANDED PANAMA CANAL MAY BE TOO RISKY FOR SHIPPERS
PANAMA CANAL MAKES COMEBACK ON SUEZ CANAL
SHIPS KEEP HITTING WALLS OF NEWLY EXPANDED PANAMA CANAL
#3 – 3 Carrier Alliances to Rule Shipping
I promised that carrier alliance shakeup would be talked about more in this list. Alliances had to change with the formation of China Cosco Shipping because the companies that merged to form it belonged to two separate but major carrier alliances.
Boy, did that shakeup come.
All the major carriers have now consolidated to three major alliances: 2M, Ocean Alliance, and THE Alliance.
Many 2017 news stories will focus on these alliances, especially as shifting and changing among them can still be expected. Just recently, for example, 2M brought Hyundai Merchant Marine onboard and the only major carrier not in one of these alliances, Zim, just entered into a limited cooperation deal with THE Alliance.
What you need to know is that when all is said and done, these three alliances are dominating the waters of international shipping.
AND THEN THERE WERE 3… CARRIER ALLIANCES
THE ALLIANCE TEAMS UP WITH ZIM
#2 – Maersk Goes After Competition
Maersk’s moves are always worth a headline. But this one climbs all the way to the number two position of top stories of 2016.
Maersk split into two divisions, with its shipping division focused on acquiring other carriers in the international shipping industry. The first big acquisition announced is that of Hamburg Süd. I certainly do not expect that to be the last.
Maersk is the biggest carrier in the industry, and as it does, the rest of the carriers follow. When Maersk started ordering megaships, it quickly became a trend amongst carriers and drove overcapacity to out of control levels. Now that Maersk is acquiring competing carriers, expect more carriers to try to do the same.
It’s a dog eat dog world in international shipping. And Maersk is the biggest dog.
DIVIDE & CONQUER: MAERSK SPLITS TO GO AFTER COMPETITION
MAERSK ACQUIRING HAMBURG SÜD!
#1 – Hanjin Bankruptcy
Finally, the top story of 2016 could only be the collapse of Hanjin Shipping.
The world was shocked when a major carrier actually failed. It shouldn’t have been that much of a shock, but somehow the general belief was that these carriers were too big to fail despite years of billion dollar losses.
Hanjin’s bankruptcy has rippled through the international shipping industry. Hanjin was a counted on carrier alliance member whose collapse caused its partners to scramble. Congestion, delays, and fees hit shippers. Some shippers still have cargo stranded out there!
But ultimately, Hanjin’s collapse weakened shippers’ trust in carriers’ stability as a whole and underscores just how difficult this industry has been for major shipping companies in recent years.