What the Ship is Going on In the Red Sea and With Global Shipping (Ep 96)

What the Ship is Going on in the Red Sea and with Global Shipping (Ep96) | Updated on Houthi Attacks | Situation in and around the Red Sea, Bab el-Mandeb & Gulf of Aden | Diversion of Shipping | Suez & Panama Canals | Shipping Costs | What Other Issues?

What’s Going on With Shipping?
Dec 23, 2023

In this episode, Sal Mercogliano – maritime historian @campbelledu – discusses the Top 5 Maritime Stories as of Dec 23, 2023, relating to the situation in the Red Sea, Bab el-Mandeb, and Gulf of Aden due to Houthi attacks on shipping.

#houthi #redsea #shipping #supplychain #babelmandeb #redsea #suezcanal #tankers #bulkers #containerships #chokepoints

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00:00 Global Shipping Picture
Marine Traffic
www.marinetraffic.com

06:38 1. Houthi Attacks Update
Israeli-Linked Ship Struck By Drone in Arabian Sea

Israeli-Linked Ship Struck By Drone in Arabian Sea

White House Accuses Iran of Helping Houthi Target Ships

White House Accuses Iran of Helping Houthi Target Ships

Red Sea security in limbo as shipping awaits detail of naval operations
https://www.lloydslist.com/LL1147675/Red-Sea-security-in-limbo-as-shipping-awaits-detail-of-naval-operations

Spain, Italy, France Decline US Command Of Red Sea Operation Prosperity Guardian

Spain, Italy, France Decline US Command Of Red Sea Operation Prosperity Guardian

French Navy Escorts CMA CGM Ships While US Ships Remain Stranded

French Navy Escorts CMA CGM Ships While US Ships Remain Stranded

US-led forces in Red Sea will be defensive ‘highway patrol’
https://www.freightwaves.com/news/us-led-forces-in-red-sea-will-be-defensive-highway-patrol

Shipping’s protectors face ‘exquisite dilemma’ in the Red Sea
https://www.lloydslist.com/LL1147678/Shippings-protectors-face-exquisite-dilemma-in-the-Red-Sea

18:23 2. Diversions
Carriers still sending ships via Suez

Carriers still sending ships via Suez

Red Sea Ripples: Prolonged Voyages, Soaring Fuel Costs, and Escalating Carbon Emissions Concerns

Red Sea Ripples: Prolonged Voyages, Soaring Fuel Costs, and Escalating Carbon Emissions Concerns

Extended Detours: Maersk Reroutes Services Around Cape of Good Hope

Extended Detours: Maersk Reroutes Services Around Cape of Good Hope

24:22 3. Suez and Panama Canals
How Houthi attacks in the Red Sea impact shipping in the Suez Canal
https://www.reuters.com/markets/commodities/how-are-red-sea-attacks-impacting-shipping-suez-canal-2023-12-18/

Panama Canal transits plunge as larger ships are turned away
https://www.freightwaves.com/news/panama-canal-transits-plunge-as-larger-ships-are-turned-away

Panama Canal to increase daily transits to 24 starting in January

Panama Canal to increase daily transits to 24 starting in January

CMA CGM announces new Panama Canal surcharges

CMA CGM announces new Panama Canal surcharges

November 2023 The McCown Report
https://capitallinkshipping.com/wp-content/uploads/2023/12/Monthly-Container-Volume-November-2023_compressed.pdf

33:11 4. What Are the Cost of Diversions?
Red Sea fallout much greater for containers than tankers, bulkers
https://www.freightwaves.com/news/red-sea-fallout-much-greater-for-containers-than-tankers-bulkers

Red Sea war risk rates ‘still rising’ after doubling in past week
https://www.lloydslist.com/LL1147660/Red-Sea-war-risk-rates-still-rising-after-doubling-in-past-week

Shipping Lines Impose Surcharges as Red Sea Attack Hit Global Trade

Shipping Lines Impose Surcharges as Red Sea Attack Hit Global Trade

Higher Freight Rates to Offset Costs from Red Sea Diversions -Fitch

Higher Freight Rates to Offset Costs from Red Sea Diversions -Fitch

Carriers are ‘price gouging’, claim shippers as FAK rates skyrocket

Carriers are ‘price gouging’, claim shippers as FAK rates skyrocket

Red Sea crisis: Markets spike, consumers will pay the price

Red Sea crisis: Markets spike, consumers will pay the price

Box ship owners may benefit from Red Sea and Suez diversions

Box ship owners may benefit from Red Sea and Suez diversions

39:24 5. Other Issues
Empty boxes will be stuck in all the wrong places for new year peak

Empty boxes will be stuck in all the wrong places for new year peak

African Ports Overwhelmed By Red Sea Reroutings

African Ports Overwhelmed By Red Sea Reroutings

Cargo owners consider airfreight alternative to Red Sea shipping delays
https://www.freightwaves.com/news/cargo-owners-consider-airfreight-alternative-to-red-sea-shipping-delays

45:32 Conclusion

On this episode of what’s going on with shipping what the ship is going on in the Red Sea I’m your host Sal M kagano so about every week or two we do a long form episode where we look at five stories entitled what the ship and this

Week I figured we would sit here and focus on what is happening not just in the Red Sea but let’s get out of the Red Sea a bit and look at the global implications of the situation one of the things we do in this channel is talk about how shipping impacts you the

Consumer the shipper basically anyone who deals with global Shipping and by the way that’s every single person on the planet So today we’re going to look at five stories about this we’re going to recap the situation going on in the Red Sea we’re going to talk about the diversions what’s happening with ships

That are avoiding this region we’re going to talk about the Panama Canal and the role it plays in this event we’re going to talk about the cost associated with this and a myriad of smaller issues all of them are impacting global Shipping today if you’re new to the

Channel hey take a moment subscribe to the channel and hit the Bell so you be learned about new videos as they come out all right we’re going to use our buddies over at Marine traffics app here to give you a picture of ocean shipping now every ship broadcasts what’s called

An AIS an automated information system transponder I have cleaned up this map so this is showing you all cargo ships in green and tankers in red over 10,000 gross tons that’s a fairly good oceangoing Commerce siiz vessel and you will see a couple of things that really

Should stand out for you so number one is the amount of ships and and the movement of them around the world obviously East Asia you see that massive kind of grouping of ships over here they come through the South China Sea through the St Singapore Straits out of The

Straits of Mala and then they Branch uh you’ll see a solid Branch coming down here the South Africa this is a much larger Branch than usual because of the diversions you’ll notice it’s mainly green and cargo ships these are usually bulk tankers uh bulk carriers coming

Down uh you don’t typically see a lot of container Ships coming down this route but right now that’s exactly what we’re seeing and notice how the red branches off here with the red going either up into the Persian Gulf or heading here into the Gulf of Aiden through the Bob

Elman dab this is the region right here where the houthi are attacking and then up here to the Suez Canal out into the Mediterranean up either into the Black Sea or through the straights of jalter up to Northern Europe but you’ll also notice this Branch down here the

Southern tip of South Africa and then you see all this trade coming into that region and then it branches itself with a large group heading to the east coast of Brazil another Branch heading to the northern coast of South America heading up toward uh the United States

Particularly the Gulf of Mexico and then another Branch heading northward at this time so this gives you a good overview of what is what is exactly happing with shipping this is zooming into the babal man dab you’ll see right here this is the Red Sea here’s the bab Al manab this

Is the narrow little straight between Yemen here and Djibouti and arria the houthi are stationed right here they have their foothold on the western side of Yemen so we’ve seen lots of attacks up and and down this area uh notice there is traffic still going through uh trade has not been entirely disrupted

But you’ll see exactly what trade has been disrupted here in a moment so I now reset marine traffic to just show you container ships over 8,000 teus teus is 20 foot equivalent units and you’ll see that the vast majority of container ships now are heading on this

Southern route you don’t see but just a handful here coming into the Gulf of Aiden and then right here into the area of the Red Sea and there’s a reason for that and we’ll talk about why we’re seeing ships starting to come back into this region right now but the vast

Majority of container ships have diverted you’ll see them coming through here through the mosm beak Channel these are ones that were heading for the uh Suez Canal and the Red Sea they diverted down most of the ships now are taking that left coming out of the very top end

Here of the straights Mala and are heading for the southern tip here of South Africa and then you’ll see a vast Fleet of vessels a a lot of them coming out of the Mediterranean now heading down along the western side of Africa heading for the southern tip of Africa

This image shows you bulk carriers these are ships that carry coal grain ore of any type you’ll see the vast majority of bulk carriers are on this route heading around the southern tip of South Africa that was the norm beforehand but you still have a lot of bull carriers that

Are coming through the Bob Elman dab into the Red Sea and the Gulf of Aiden so that trade has not been disrupted terribly by the attacks by the houthi this shows you crude oil tankers and again you’re still seeing that pretty dense crude oil tanker routes uh fairly

Solid coming out of the Persian Gulf heading either to Asia or branching off and heading towards Europe through the Suz so we haven’t seen the big diversion coming of crude oil and if you look coming out of the Mediterranean here in the Black Sea this is that Russian crude

Oil that’s coming out here and you can see it’s still flowing pretty well at this time through the region hav been a lot of disruptions in that area if you look at product tankers these are tankers that carry gasoline and Diesel basically refined clean product you’ll

See pretty Barren in the Red Sea and this and the Suz at this time so a lot of shippers are not taking their clean product tankers through this region last I’ll show you is LNG liquefied natural gas and liquefied petroleum gas tankers still see some coming through not as

Many as usual a lot of them are heading for that southern Africa route and the real big thing you’re seeing here is a shift in pattern so a lot of LPG LG tankers coming out of the gulf coast of the United States heading either through the Panama Canal we’ll talk about that

Or heading Eastward across the Atlantic to supply Europe LNG LPG G tankers also come out of Qatar in uh the Middle East and from Australia and you’ll see a lot of those routes going that way so let’s jump into Story number one the update on what is happening right now so the

Latest as of December 23rd 2023 is an Israeli linked vessel was struck by a drone out in the middle of the Arabian Sea now this is far away from the Bob El mandab and even uh the areas where we saw some previous you have to basically

Bally go out pretty far here so this is an area between the southern tip of the Arabian Peninsula and India now this ship is linked to Israel we know it got struck by a drone however there is no significant damage that we know of to

The ship and no one in the crew has been hurt however it is significant that this ship was hit way back at the beginning of this there was an Israeli link ship the CMA CGM Spinx that was hit by what was believed to be an Iranian drone at

The time remember there was a Bull carrier flag Bulgarian owned Ruan that is now sitting there off the coast of Somalia and I tend to think the reason for a strike like this is to try to distract from the ongoing military presence that is off the coast of Yemen

Right now by striking a ship this far out you’re trying to pull Naval forces away from the area in and around the babam MB and so this I think is a significant move right now it is probably being done by Iran uh hard to believe the houthi are out there doing

This far but to grab that Bulgarian owned uh bulker you probably needed a mother ship out there and you can launch these types of drones from mother ships so definitely a big escalation that we’re seeing right now in the scope and scale of the events this story from Reuters White

House accuses Iran of helping houy Target ships well in the most obvious statement coming from a White House in a long time can I just say duh no fooling this is this is not surprising we know Iran has been supporting the houthi there’s no question about that the stuff

They’re using is is from Iran I mean we know there’s Iranian ships and planes flying into houi territory they’re using Iranian equipment yeah yeah the Iranians are helping the houthi we know this I’m not exactly sure why this is a huge Revelation this one from Lloyd’s list

Red Sea Security in limbo as shipping awaits detail of Naval operations now this is starting to clear up I’m going to talk about this this is kind of been unfolding this is from two days ago this is Richard me talking about the fact that the details of operation Prosperity

Guardian that the plan of how to execute this operation has been unfolding and this has been a very interesting story of how this operation is being done so you get this story from Reuters Spain Italy France decline us command of Red Sea operation Prosperity Guardian so you had the announcement from the United

States Secretary of Defense Lloyd Austin while he’s in the mid East made the announcement of operation Prosperity Guardian this was going to be done under the aaces of combin task force 153 part of the combined Maritime forces of the US fifth Fleet under Central Command in Bahrain however as this story unfolded

What we started to hear was man there is not a lot of support coming in you know nations were offering staff uh some countries were offering ships but then we heard specifically that some Nations were upset with how long it was taking for the US to initiate this operation

And therefore what we heard and what was reported by both me and other sources Reuters G captain and a few others was that nations were basically saying listen we’re going to do this on our own and and we’re going to talk about the French here in a second uh this has been

Evolving I should say in this story by John Conrad kind of follow suit with this the French navy began an escort operation of their own ships because they were not waiting for this I reported this in an earlier video and we discussed this that the French initiated

Escorts through the uh Babel MB they took the CMA CGM aaba through they escorted the CMA CGM Pegasus out of jouti and now they’re in the process of escorting two vessels through the Straits uh as we’re speaking and what we seen now is a follow-up to this so the

First update that they had in the story France has agreed to remain but under under the condition they do not have to follow American orders they declin to comment on deploying more Naval forces Spain and Italy both left so France is back but France has the right to not

Listen to the United States and to leave when they want okay doesn’t sound like they’re really 100% back in but they’re there second uh there’s an update on a possible movement of us flagships behind a French Naval Convoy okay I am not going to give you information right now

Because this is ongoing I am not going to danger Merchant Mariners with giving you real-time data I will provide a video later on once everybody’s through and talk about this but I have been talking about the fact that us ships have been sitting in the Red Sea in the

Gulf of Oman for a while it is the French who using a FR frigate this is the same type of frig by the way that we’re building right now up in Wisconsin but it’s going to take years for us to get this thing up and running the constellation class they’re using this

Frig to escort their vessels through through now the US is just starting this operation as we speak and this goes to the issue of the you know the choices that the two sides are taking uh the US is leading this operation Operation Prosperity Guardian but everybody is

Kind of concerned with being attached to the United States and how the United States will react to this because understand the backdrop of this entire event and I don’t say this enough and I understand that and it comes up in the comments all the time the reason the houthi are attacking commercial ships

Has to do with their support with the Palestinians in Gaza where they’re being you know where where the invasion is going on by the Israelis after Hamas executed a series of brutal attacks against civilians and seized people and killed innocent people so there’s this brutal attack going on between Israel

And and and Hamas right now in the Gaza Strip the houthi have come out on the side of the the Palestinians and Hamas and they can’t really directly help them so they’re targeting commercial ships initially the houthi said they were targeting Israeli ships uh but then they started attacking ships that had nothing

To do with Israel and I can prove it over and over again how many ships they’ve hit that are not connected to Israel either through ownership or sailing to them they just basically started firing at any ship sailing by and that was what triggered this response however the fear that a lot of

The Allies have is that the way you end the houthi attacks is by hitting the houthi and I don’t think anybody wants to get attached to strikes in the region that’s why you heard General uh Pat Ryder uh Major General Pat Ryder US Air Force the Pentagon spokesman came

Out Greg Miller talks about in this story that the US Le force in the Red Sea will be defensive it will be a highway patrol kind of patrolling up and down off the coast uh highway patrol is kind of defens you’re you’re you’re not really trying to stop things from

Happening you’re reacting to incidents happening and that’s the problem here is that the US force is going to be a reactive force and it’s been reactive the whole time you saw that with the Carney and with all the shootdowns that were taking place they’re not being

Proactive however I I do want to raise this issue just a little bit because over in Lloyd’s list uh Dean Bush wrote this piece shipping protectors face Exquisite dilemma in the Red Sea shooting back at the houthi could make it worse so a lot of people when I put

Up these videos and the posts will say we should slam the houth we should you know do what we did to the barbery Pirates well if you study the barbery Pirates initially what we did was very defensive against the barbery Pirates uh it wasn’t until much later in the

Conflict that we got offensive years in as a matter of fact but in this case one of the things that you have to be careful about is if you start going kinetic if you start using weapons and warheads and hitting the houi that’s going to open up a can

Of worms and I think that’s one of the reasons why a lot of the Europeans in particularly are backing away understand Europeans have a big Arab Palestinian population in their countries and they’re very worried about choosing sides between Israel and and the Palestinians no one likes Hamas because

Of the terrorism that they’ve executed but there’s a lot of Sympathy for the Palestinians who are being targeted in these attacks with the civilians being killed and so this creates the big dilemma the way the US has done this and this is from skits Intel over on Twitter

Great updates he does there’s a whole batch of people over on Twitter doing fantastic jobs with updating he’s got this map he updates fairly daily showing military presence and the thing to note is right down here right in the Gulf of Aiden is the USS Eisenhower battle group

Now we know it’s there because it’s been caught on satellite it is sitting right here it’s got the USS Philippine Sea a cruiser between Yemen and it as a safeguard and it has about half a dozen destroyers in and around this area patrolling and one of the things that

Was noted in general Ryder’s speech or his press conference was there’s been no attacks since the US initiated operation Prosperity Guardian what Prosperity Guardian really appears to be is a show of force they’ve moved one of two aircraft carriers the other being the Ford up here in the Mediterranean into

The area and I am going to imagine I can’t prove this cuz I don’t know this but they’re flying huge air operations in and around this area so that if any houthi fires a missile they’re going to be identified almost immediately and I would imagine they would be terrified

For an F-18 coming down on top of them and blowing up their launcher and themselves in the process and that’s probably why we haven’t seen any attacks it’s also probably why the US Navy hadn’t moved those commercial us flagships that were sitting here in the

Red Sea or the Gulf of Oman they were waiting for an overwhelming display of force to move them the problem with that which is great don’t me wrong it’s fantastic it’s it’s great the problem with that is you’re not going to be able to maintain this overwhelming level of

Force for a long period of time this carrier is going to eventually have to leave and matter of fact it was scheduled to replace the Ford up in the Mediterranean and the eisenh is going to have to be in three different areas it’s going to have to be in the Persian Gulf

Over here in the Gulf of Aiden and the bab Elman or over in the Eastern Med this is hard for the us to do the US cannot maintain carrier presence 24/7 in specific areas takes at least three carriers to do that and if you don’t have three carriers to

Do it that’s a problem so it appears right now they’re trying to use the overwhelming appearance of force to kind of call the houthi back down resume trade through it and what we see right now going on as we speak is a Convoy by the French of French owned vessels

And at the same time the US is moving forces or moving us flagships through the area but let’s be clear some us ships have turned around the Liberty went back through the Suz mayor Chicago is heading around down the southern tip of Africa right now so it is taking time

For the us to do this and this is a level of force that I don’t think can be maintained for a very long period of time all right Story number two let’s talk about diversions and what is happening now understand there are still container ships moving through the Suz

Uh when you went back to that marine traffic map I had you’ll notice that there were ships sitting up here in the Red Sea and some here in the AR in Arabian Sea and what is seems to be happening is this that some carriers are going to send some vessels through this

Region still but probably high priority vessels we’re going to come to cost and what this means in the future but right now they’re just trying to prove it so you’re seeing right now the fren bringing a pair of their vessels through you’re seeing the us bringing some of

These vessels of Marines limited of waterman steamship through the region and we still are seeing vessels now some of these vessels I should note are coming through the Suez Landing here along the east coast excuse me the west coast of Saudi Arabia at Jetta uh and a

Few other ports here offloading and then going back through the Suez and what we’re seeing is search charges for this additional Suez Canal voyage happening and then from there Overland either to the Persian Gulf or down over to the Gulf States so we are still seeing carriers coming through but at a much

Lower number there are Regional feeder ships these are ships smaller than 8,000 teus a lot of these are owned by uh shipping firms within the area the UAE and a few other countries uh they are still moving cargo through here but the big thing here as John Conrad notes over

Gap we’re seeing those Red Sea ripples prolonged voyages soaring fuel costs and escalating carbon emissions all creating concern understand all three of those I think are really important because uh they have issues so the prolonged voyages we’ll talk a little bit more about costs here in a minute but suffice

It to say that if you don’t go through the Suz canal and you make the long prolonged trip around Africa it’s more expensive and you’re going to be paying more for that uh add to it the soaring fuel costs uh you’re going to be using more fuel more either high sulfur uh

Diesel fuel or low sulfur diesel fuel back in 2020 the international Maritime organization mandated that if your ship is not uh fitted with what’s called a scrubber it scrubs the sulfur from your exhaust you have to burn uh low sulfur fuel oil if you have a scrub scrubber

You can use the high sulfur fuel oil which is better because it’s cheaper uh but the other issue that happened starting in 2023 was you have to monitor your carbon emissions and you have to document how much carbon emissions you’re doing and you actually have a a

Chart you do on your carbon emissions and so the question here is you just can’t put the hammer down put the foot you know put your foot on the throttle and off you go faster to make things up because you’re going to be spitting out more carbon emissions one of the things

That the container lines have been doing is because they have excess ships and a lot of capacity is they have slowed down their ships they’re they’re doing what’s called slow steaming uh instead of doing 18 to 20 knots they’re doing 12 to 14 knots now if you got to sail an extra

3,500 nautical miles around Africa that’s going to take a long time at 12 knots and so we’re seeing some ships up the speed which means they’re going to have to offset that later on by slowing down or you got to put more ships on the voyage and all of that is associating

With more costs marisk has already announced their schedule for going around the Cape of Good Hope matter of fact they have put out their schedule through February through February and to me this is very significant because January 1 is when the ocean carriers renegotiate the new rates between Europe and

Asia so think about that for a second you’ve got to renegotiate new rates we’re going to talk about this when we talk about costs uh and here’s the mayor schedule through February they’re already rerouting ships so what that means is they’re putting their ships on a long-term detour around Africa whereas

If tomorrow it looks like the houthi are defeated and things are open I’m not 100% sure that ships return back to that route immediately because if you watch the interview with the CEO of marisk on uh MSNBC or was Bloomberg Bloomberg uh he talked about how the safety of his

Mariners is a priority which sounds great it’s a great it’s a great sound Biden it looks really good when you’re out there talking but Vincent clerk should you know we also know that in truth money is the key and money is the thing that’s driving a

Lot of this uh Rob Wilmington over at uh Lloyds put this more asab bound box ships U-turn in Red Sea as shippers count the cost of the Cape Hope good uh diversions uh all these ships are turning around meanwhile there are some ships sitting there o has got a couple

Of ships including the infamous o apis that lost all its containers a few years ago sitting there waiting to see which route they’re going to go and so all this means that while we’re seeing these diversions take place the uh the big issue right now is whether or not we’re

Going to see high priority diversion a high priority cargo start going through this if you remember back to the supply chain crisis when we saw those massive Freight rates go through you know and and then some of the spot rates were as high as $25,000 and that was that was an

Aberration most Freight rate was nowhere near that we’re talking about 10,000 to 15,000 was the norm but you could book your Cargo in like these Diamond routes that would get you to bump ahead of the line and it looks like that some of these shippers I will almost guarantee

You we’ll have some ships going through this area ensuring they have escort to go through the area and you’re going to pay more to avoid that long Voyage around Africa I can almost guarantee that all right let’s go ahead and jump over to Story number three story number

Three let’s talk about canals both Suez and Panama so if you’re a follower of this channel you’re you know how this channel came about and that had to do with the grounding of the everg given in the Suz way back in March of 2021 I mean if you

Look above there that’s our image here is ever given sideways in the Suez taken from the bridge of Maris Denver uh that event had huge ramifications it caused a massive disruption in the global supply chain but it was six days it was March 23rd to March 29th of 2021 and once it

Cleared the backdrop the the backlog cleared but it took months months to settle out what the disruption has caused this is worse than ever given ever was let me be clear about that even though you still have traffic going through the Suez this disruption is huge and for the Egyptians this represents a

Big problem it’s one of the reasons why you heard Egypt Jo join in on operation Prosperity Guardian is because they’re losing $500,000 per ship not coming through the Suz Canal understand they expanded the Suz canal in 2015 the plan for the Suz was to go from 50 ships a day going

Through up to 90 it generates billion dollar for Egypt every year and now all of a sudden if ships are not using the Suez at its full capacity that means lost revenue for the Egyptians so for the Egyptians opening up this region is absolutely crucial they’ve also undertake some expansion uh they were

Trying to uh widen the canal the prevent something like everg given from ever happening again and that was being funded by the tolls coming through and now all of a sudden you’re not seeing that level of tolls uh the Suz Canal was slated to increase the rate to go through the canal by

15% so you’re 500,000 you know $500,000 going through would be almost $600,000 to go through so they were looking to get more money coming through so the houthi are costing the Egyptians a lot of money at this point and it’s one of the reasons why you hear them

Participating in this the other Canal that’s really important is the Panama Canal and the Panama Canal is suffering from abnormally low water this is a story we followed ex extensively here at what’s going on with shipping we’ve been talking about this for a long time long

Before I got on to the mainstream this is an issue that has been plaguing the issue because during the Dr during the wet season Panama was not getting water and understand the way the canal works is it is fed by a freshwater lake in the middle of the locks there are three sets

Of locks on the Atlantic side there are three sets of locks on the Pacific side and basically you take water from the lake to raise the level of the canal or when you pump out the locks that water flows into the Atlantic or the Pacific the new Lane of the Panama Canal that

Opened in 2016 you reclaim about 50% of that water but for the older locks you don’t reclaim any of it and understand the Aver the yearly usage of katoon Lake about 50% of that is due to the Panama Canal you can’t use saltwater because it’s a freshwater lake it maintains the

The U uh the drinking water for Panama it’s also ecological it it provides uh irrigation it provides sustenance for everything you can’t just replace Gaton lake with a saltwater lake it doesn’t work that way you can’t pump the Atlantic and the Pacific into Gaton Lake

And the impact on the lake on the lake being low is manifested itself over the past couple of months if you look at the changes in ships going through we’ve seen a substantial change in October a th000 ships went through in November 783 that’s a 21.9% drop in the number of Ships coming

Through and that represents a substantial problem fix that alello for you to see it uh and if you look at the ships that are doing this so you have three sets a lock or three three channels going through the Suz through the Panama Canal excuse me you have the

Two original sets this is the ones built back in 1914 these are the original panamax locks and then you have the new Lane what’s called neopanamax and neopanamax is really a crucial one here you’ll see right here container ships are down 19% liquefied petroleum carriers uh down 34% and LG liquified

Natural gas carries 25% total of 27.8% the new Lane carries much bigger ship so previously if you took a container ship through the old Panama Canal locks you could could be maybe carry about 4,500 boxes the new Lane you can carry up to 15 16,000 boxes and a

Lot of these LPG LG tankers are going to Asia to South Korea the Japan and the China and if they can’t go that way and if you can’t bring your large Neo um panamax container ships through that way then what we’re seeing is a lot of the ocean carriers are diverting their ships

From not going down to the Panama Canal but sailing from the Gulf and east coast and they’re heading through the Suez Canal well now we’ve got problems to get through the Suz Canal because of the situation with the houth in the babal mandb well Panama Canal just announced that they’re actually changing things

Just a bit so we usually you have Passage through of about 36 ships a day they went down to as low as 20 ships a day the plan was actually to hit down to 18 slots in February but they recently got a little bit of rain and this is

Great because this is going to allow them to increase their transits up to 24 ships in January however you still have issues associated here with how much you can carry in the large neop panamax Lane you can’t carry all the way down to the full markings that you typically do and

What we’re seeing is the container carriers are jumping in on this so CMA CGM just announced a new Panama Canal search charge so if you want to go through the Panama Canal on a CMA CGM ship you have to pay a search charge on top of what you’re paying and again this

Is not unusual uh you’re seeing about $150 per teu 20 foot equivalent unit per day to get through and this is something that the ocean carriers will do they will pass on to you because of their shipping agreements all Associated costs and that’s exactly what you’re seeing

This is uh from John maau over in the blue Alpha group so one of the things JN does is track in Imports exports of containers into US port reports and this charty do shows you West Coast as a percentage of total inbound volume volume back in 2017 we saw the trend

Here of shifting from cargo coming from Asia into West CO Coast ports shifting over to East Coast ports 2017 coincides with the opening of the new Lane in the canal in 2016 and you can see how much it is so much so that by 2022 it was

Under 50% and the downward trend is going but notice now it is kicking back up again and la and Long Beach who had all the problems during the supply chain crisis which by the way they haven’t solved yet it’s still there but they had less cargo coming into them are now

Seeing a Resurgence in cargo heading their way if you look at the import volumes here and number of containers for November you’ll notice that for east coast and Gulf Coast they’re down compared to West Coast and that’s a big change now you see they’re up their November percentage change up

24.5% if you look over for 3 months it’s up 17.8% so what we’re seeing is a shift back into the West Coast that means for a lot of shippers who have Diversified and they had their containers coming into Houston Savannah uh New York New Jersey now they may be shifting back to

LA and Long Beach which means that a lot of times you’re going to have to pay that also additional handling costs of warehousing it over on the west coast and then class one rail and then of course your drage to get the containers back across these are the water levels for

Katon Lake right now it’s sitting at 81.6 FT and the prognosis is not good projections actually have it going down to about 80 ft by the end of February and if you look at the Historical Trend we usually see the water levels decrease but the average mean level is down to

About 83 ft that’s usually the lowest you see the lake at it’s at 81 ft right now so we are talking about historic lows for it and with no forecast for major rain that means we’re expect to see continued delays in and around the Panama Canal this is going to create

More disruptions with the situation we have in and around the Red Sea that brings us to Story number four which is the cost associated with all these disruptions we’re seeing in and around the Red Sea story from uh Greg Miller over at freightways while the Fallout will be much greater for containers it

Won’t be as much so far for tankers and bulkers and as I mentioned to you before we’re not seeing the disruptions in the tanker and bulker Market but we could and that is a great potential that we need to be aware of because if all of a

Sudden the Spade of in attacks increase and they start targeting tankers and bulkers we will definitely start seeing more diversions along those lines the big issue that’s causing the shipping companies to divert has to do with the issue of War risk and the war risk is still Rising the story from David Osler

Over at Lloyd’s back on 20 December so War risk is Insurance on top of the normal insurance usually you have two types of insurance on a ship you have what’s called p&i which is protection and indemnity that’s the cargo and then you have hulland Machinery H&M and that

Covers the vessel itself War risk is like flood insurance it’s something that if you don’t have that specific protection for you’re not going to be covered by your normal Insurance when the war started and the conflict started we already had a high-risk area in here starting with the

Invasion back in October 7th you saw all of a sudden that this area got a lot of attention and the normal War Risk insurance to sail through the area was 0.2% of the value of the vessel well as attack increased this increased and we went from 02 up to about

7% in the Black Sea you’re seeing War risk rates of up to 2 and 1 half to 3% when you look at historically at something like the Iran Iraq tanker War of the 1980s that was almost 5% so you’re paying a good deal of money you’re about a

Million dollars you’re paying for a containership in terms of War Risk insurance to go through this area so it is causing a lot of issues and therefore necessitate necessitating some of these diversions around as they’re doing that the ship Charter rates continue to escalate due to Red Sea diversion so

When you know a lot of shipping companies don’t own the vessels they have they actually charter the ships and ship Charters are a big issue is and one of the things we’re seeing is the rate for vessels is increasing because there’s more demand because of these

Longer voyages if you have to travel 12 to 15% over a longer distance then you may be needing a ship for more time and that means you need more ships on that route and so ship Charter rates are going to be increasing at the same time you’re seeing those SE charges being

Imposed by companies Mar CMA CGM are all imposing these extra charges as they go around we’ve seen seen the very first ones going around here and you see that going on so you’re seeing sech charges here mayor set a standard 20ft container traveling from China to Northern Europe

Now face total extra charges of $700 uh containers Bound for the east coast of North North America will be charged $500 each if you’ve got to ship 10,000 teu that’s $5 million that of extra sarch charges are being in incurred and being accumulated by the shipping company so a lot of

Money here is being talked about and these higher Freight rates are being used to offset the coast uh the cost from the red SE diversions Mike Schuler over at Gap used this analysis from Fitch ratings fit se’s container shipping is the sector most likely to experience the higher increase

Considering 25 to 30% of global Shipping volumes rely on the Suz Canal come down here a little bit fit estimates that rerouting around Africa which could increase travel time from the far east Europe by 50% could potentially reduce global Shipping capacity by 10 to 15% now fortunately the shipping companies

Have invested in huge new construction 2023 to 2025 we’re seeing a whole batch of new containerships come online when the container companies got flush with cash as a result of the global supply chain crisis they invested that money in new ship construction so they were facing the prospect of having too much

Capacity and lower Freight rates and in a way the h doing them doing them a huge favor now of course we’re seeing the flip side of that where allegations are that the carriers are price gouging and shippers are claiming that the rates are skyrocketing mainly so that the shipping

Companies can profit from this at the same time the person who’s going to pay for this is going to be the consumer as you see in this piece from container news the Red Sea crisis Market consumers will pay the price and then load star comes back and and this is the

Issue I think we need to be thinking about is how the Box ship owners may actually benefit from the Red Sea and the Suz diversions as I mentioned you before January 1st is the date for renegotiation long-term rates between Europe and Asia 70% of containers that move on the ocean go under long-term

Rates and you know the short-term rates are the ones you see Spike you know those are the ones where you saw the $25,000 per box limit and a short-term rate is negotiated typically at the last minute it’s like going to the airport and buying your your plane ticket you

May get a deal or you may get screwed it depends on the deal you just never know and long-term rates are the key January 1 is the Asia to Europe route and then may is going to be the Asia to North America route and the question is how

Long does this go on and what impact does this have on overall Freight rates I think that shipping companies where they’re sitting there saying hey you know this is a big issue we got to solve this and everything at the same time are probably like this is not a bad thing

For to happen right now for our ships to go this longer distance and we will set up these Express routes with this additional coverage provided by the world’s navies and we will charge a premium to go through this area even though it’s actually shorter and cost less we’ll give you that extra premium

But we’re going to keep and send our ships around Africa this is a very unique situation all right let’s go ahead and look at our last story so Story number five is what else is going on here that is going to impact this and

There are a lot I I mean this is one of the stories I can do and entire what the ship on because the amount of unforeseen and unpredictable factors are probably up there but let’s talk about some of the key ones number one empty boxes will

Be stuck in all the wrong places for the new year Peak as you start diverting vessels and ships are not making the schedule Port calls like they’ll they want one of the things that makes containerization work is you have to be able to keep boxes moving you have to

Load them offload them return them back and do it all over again and if all of a sudden you wind up with empty boxes at one site nobody likes to pay to move an empty box there there’s no profit in it there’s nothing it’s it’s a loss and

What we saw and this happened during the global supply chain is that empty boxes wind wound up piling up in LA and Long Beach because ocean carriers were trying to get their ships back faster and they didn’t want to wait to load an empty box and so they left until they were

Literally mandated to do it we saw the number of empties in LA and Long Beach increase and they clogged up the yard this is another Factor we may see we may see empty boxes being a big issue now fortunately we’re coming into q1 the first quarter of the new year that’s

Typically the lowest Freight moving in terms of containers uh you’ve got the Chinese New Year you’ve got a whole batch of factors that are play here golden week there’s a lot of things going on and so usually we see the lowest Freight during this period of

Time time which is good but if ships are altering from their normal routes and not going back to where they need to go then we’re going to see containers piling up second African ports may be overwhelmed by the Red Sea rerouting heading to South Africa is a

Big issue if you go back to Marine Traffic you can see how we’re pushing a lot of ships into the Southern Hemisphere and I think that’s a fairly significant South Africa is going to find itself extremely busy coming forward and understand there have been issues in South Africa prior to this

Event there have been strikes and disruptions in the ports down there the South African infrastructure is not the greatest to handle this large influx that’s about to come raining down upon it and so we can expect to see some issues plus you add 3,500 miles this going to involve some ships needing to

Refuel because ships tend to refuel at Major places where the fuel is cheap and fuel down in Durban is not going to be cheap uh this disruption is significant I should also note when you look at some geopolitical issues uh if you look at the brics countries for example and

Brics is uh Britain excuse me Brazil Russia uh India China and South Africa this is a big issue for the bricks countries because we’re seeing a lot of trade heading down in that area but when you get to the fuel issue this is a fuel price for Durban South Africa so if you

Look at ports like Singapore or reram Houston or fuera these are maj major fueling ports and these are the different types of fuel this is the high sulfur fuel oil this is the very low sulfur Fuel Oil and Marine gas oil you can see where they sit right here all

Roughly between four to $500 a ton uh sitting right there pretty good but when you get into Durban well you’re talking about over 600 for high sulfur uh fuel oil when you’re looking at very uh low sulfur fuel oil you’re talking about almost 700 and then Marine gas oil

You’re looking at a jump of over $1,000 per ton that you need and so fueling in Durban is going to be issue it’s not going to be just price it’s going to be facilities uh are there sufficient dock space is there suff sufficient bunkering vessels to come out to fuel is there

Enough fuel oil at these sites to handle what’s coming in because some ships are going to need it there was a a a ridiculous story out there about ships running out of fuel and and and Crews abandoning them that’s not true at all but you may have ships stuck in Durban

Waiting for fueling and and that is a potential cause because once you start rerouting and you go off the normal route you’re going to need to adjust we see that happen all the time when storms hit and and disrupt fuel supply you also have this story over at freightways by

Eric kulich cargo owners consider Air Freight alternatives to Red Sea shipping delays now aircraft cannot handle the the the volume that’s moved by sea however if you’re in a tight schedule and you have an inventory that is compatible to go in an aircraft you may want to sit

There and say all right I’m going to load my stuff on an airplane I’m going to pay extra money to do that it’s going to be through the nose but this also creates another thing how much aircraft Freight is available out there how much capacity is out there aviation fuel

There’s a finite amount of aviation fuel out there is there enough aviation fuel to support an increase in the movement of goods in that I’m not an Aviation Transportation expert but I’m telling you right now this is going to be a sector that’s going to be impacted

Because we’re going to see that same thing with Overland rail especially from Asia to Europe one of the things that was happening prior to Russia Ukraine conflict was China was developing an extensive rail network across Asia into Europe they have still kept that system up except it doesn’t go from Russia into

Europe anymore it basically terminates on the Black Sea and then it’s picked up by black sea ships and brought across will that continue maybe via the India Iran turkey route there’s a lot of Alternatives here for some moving some cargo and so I’m think you’re going to

See some very unusual ones come up and then finally I want to end on this uh Peter Sand’s over at zentia and he gave a talk and it’s over at in Sea trade Maritime cargo flows through the Red Sea experts staring at many unknowns uh I watched Peter s’s talk and and basically

The that we’re seeing right now is the great what if we we just don’t know what else can happen here if all of a sudden tomorrow the US can get the houthi to back down or the Allies can get the houth to back down does the ocean carriers immediately switch back to that

Route I don’t know that’s a it’s an interesting question it’s one I’d love to pose to the CEOs of the major shipping firms uh right now they’re seeing some Advantage by going around the Africa route it’s generating revenue for them that they were not having they’re coming off the max profits

They’ve ever had in 2021 2022 and the forecast for 2024 zentia Peter Sans a few months ago did a forecast for 2024 and it was looking pretty bleak for the container lines now it’s not looking so Bleak right now and so I think that is a significant issue

However I’m not exactly sure this situation resolves the the way you solve the problem ass sure with the houthi is you fix the problem in the mid East with Israel in Palestine and fixing the Middle East peace that’s a tough one it’s not easy to do and I don’t foresee

A big solution coming soon instead what I’m seeing is a suppression of the houthi right now by the US military you’re going to start seeing some of these Allied Nations running their nationship through the French the Italians uh interestingly enough groups you’re not seeing in this are the Danes

Where the where’s the Royal Danish Navy meines represents 4% % of the GDP of Denmark where are they Germany hophog where’s where’s the German uh Navy in this uh Japan Japan has ships stuck up in here o is stuck up in here where the Japanese will undertake an escort

Operation to move some o ships Korea uh hmm up there Taiwan yangmin Evergreen uh there was interesting uh story about Evergreen coming through here the ever good sistership for the everg given leave it to Evergreen to have an everg Ever G Class ship in it but the everg

Goods was one of the last vessels to go running through here very much a uh hold my beer watch watch what I’m going to do and they ran through there I should note that Evergreen before they did that put on their website a noticed that they would no longer haul Israeli goods and

Then once the everg goods got clear they took it down so uh I don’t know if that was some Evergreen uh uh manipulation there to get their ship out but they they got the ever Goods out H which is always good because you you can never

Account on an evergreen ship not to get stuck somewhere but we’re seeing a new situation develop what does this all mean for you wow I’m going to say right now disruptions and inflation coming your way I I don’t see any way about that uh I think the movement of crude

Oil refined oil still seems to be sorry still seems to be moving through here especially on ships carrying Russian oil but as oil prices begin to increase as you go above that price cap there’s a lot of effort right now to prevent the hauling of Russian oil above the price

Cap a lot of pressure being exerted uh you’re seeing containers flow around Africa right now that’s going to cause that disruption that delay which means that Goods that were scheduled to arrive may come late uh you’re already seeing the ocean carriers declare force majour that it’s beyond their hands so that

They can’t be fined for that we’re also seeing this express service maybe being initiated through here with the protection of navies I think the other big thing is the fact of how operation prosperity Guardian didn’t really coales together and that doesn’t bode well for the future I think that’s a big problem

Bruce Jones and his great book To Rule The Waves talks about this issue that we may start seeing the breakdown of the you know the the Freedom of the Seas the blue the blue ocean that exists and independent states may become more concerned with protecting their own shipping even

Though they may not fly the fly the flag from that Nation anymore ownership and their trade may become very important you’re seeing the us right now moving US flag vessels through this area largely because there’s some DOD cargo involved in this but also you want to move US

Flag vessels through it and again it’s overwhelming Force but that’s not going to be there all the time and the repercussions here going down the road I think are significant if the houthi can cause 12 to 15% of the World Trade to be interdicted what happens over in the

Pacific when you got to go across this big blue ocean ocean here and there are little Islands little spots and a whole batch of Choke points right here to get through the first island chain to get toward your islands and your possessions especially if you’re looking at getting off the coast here of

Taiwan and relieving Taiwan in a situation I think this creates a lot of new problems going forward in terms of ocean shipping uh we may we kind of take for granted the fact that we move 12 billion tons a year across the world’s ocean with very little problems now we may see

Those problems maybe being under the Panama Liberian martial Island registry is not as great as people think they are and maybe it’s a good idea to be under an American registry or a European or an Asian registry because they can come get you I don’t know but we’re definitely

Seeing a reordering of the world’s oceans I hope you enjoyed today’s episode it’s a long one I know but there’s a lot to cover I’ll have this segmented in individual group so you can take a look at them but most importantly of all I hope you enjoyed today’s video

If you did hey subscribe to the channel and hit the Bell so be alerted about new videos as they come out leave a comment share it across social media give it a big thumbs up and if you can support the page how can you do that well you can

Hit that super thanks button down below or you can head on over to patreon where you can become a monthly or yearly subscriber I’m not going to issue a sirar charge for using this video I’m not like the big ocean carriers I’m not going to make you pay more for having to

Do if you want to pay you pay if you don’t want to pay you don’t pay I hope you enjoy today’s video Until our next episode this is Al signing off and just real quick in case I don’t get another video in before Christmas happy holidays to everyone