Cyberattack shuts down ports 💻✋🏽

SHIPPING NEWS

Boom & Bust Times For Shipping Lines

After a pandemic-induced profit surge, the global container shipping industry, which is responsible for transporting 80% of the world’s merchandise, faces a stark reversal of fortunes. Here’s a deeper look at the numbers underpinning this dramatic shift:

From Unprecedented Profits to Looming Losses:

• The industry enjoyed a windfall with a combined net income of $364 billion in 2021 and 2022. This boom was fueled by a pandemic-driven spike in global shipping demand.

• However, current forecasts paint a different picture. Industry giants like A.P. Moller-Maersk predict a significant downturn in their financial health. Maersk, for instance, anticipates an 80% reduction in free cash flow this year, with the risk of turning negative by 2024.

Supply Glut Following Demand Surge:

• During the pandemic, freight rates soared due to a sharp increase in demand and a shortage of shipping capacity. Rates on some major routes increased by several hundred percent.

• Presently, the industry faces an oversupply problem. As new, larger ships enter service, there's a decrease in freight rates. The Shanghai Containerized Freight Index, a barometer for shipping rates, has reported a significant drop in average rates year-over-year.

Financial Pressures and Industry Response:

• In response to these challenges, shipping companies are implementing cost-cutting measures, including reducing operational capacity. Some have cancelled voyages or suspended services on less profitable routes.

• The Bloomberg Intelligence report highlighted that larger companies are focusing on cost-cutting rather than aggressive capacity reductions.

Investment Requirements for Decarbonization:

• The industry is also grappling with the need for substantial investments in cleaner technologies. The estimated cost for the industry's shift to decarbonization is around $1 trillion in the coming decades.

Diversification as a Strategy:

• To mitigate market volatility, companies like CMA CGM are diversifying their business models. They're investing in sectors like airlines, logistics, and media, using the profits from the pandemic period to stabilize their operations in the face of current challenges.

The statistics and developments in the container shipping industry reflect a sector at a crucial crossroads. After riding the wave of high demand and profits, companies are now adjusting strategies to navigate a new reality marked by oversupply, looming financial pressures, and the urgent need for sustainable transformation.

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VIDEO OF THE WEEK

The Crazy Amount of Power Needed to Move the World’s Largest Container Ships

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GLOBAL TRADE SNIPPETS

Global air freight rates are still rising as peak season continues, according to the latest data from TAC Index, the leading price reporting agency for air freight. The overall Baltic Air Freight Index rose a further 4.4 percent in the week to November 13 following a series of gains in September and October, cutting the year-on-year decline to only 26.4 percent."

Freight Forwarding Market Size/Share Worth USD 320 Billion by 2032 at a 5.5% CAGR. According to the latest research study, the demand of global Freight Forwarding Market size & share was valued at approximately USD 200 Billion in 2022 and is expected to reach USD 212 Billion in 2023 and is expected to reach a value of around USD 320 Billion by 2032.

Value of EU trade deals surpasses €2 trillion. The European Commission report shows that trade with our top 20 trade agreement partners grew by close to 30% on average in 2022. The Commission, working with Member States and EU businesses, also broke down over 30 barriers to trade in 19 countries. Tackling barriers over the last five years helped unlock 7 billion euros of EU exports in 2022 alone

Autonomous Trucks Reshaping the Freight Industry. Autonomous trucking, once regarded as the stuff of science fiction, is gradually moving closer to viability in real-world freight operations after years of investment, development work and on-road testing and validation.

TRADE NEWS

Cyberattack Paralyzes Major Australian Ports

DP World, a major player in global port operations, is currently grappling with a backlog of 30,000 shipping containers at key Australian ports due to a cyberattack that occurred on November 10th. The hack, which targeted one of the world's largest port operators, led to a temporary shutdown at the eastern ports of Melbourne, Sydney, Brisbane, and at Fremantle in the west. Although operations partially resumed on November 13th, ongoing investigations and efforts to bolster network security are expected to cause further service disruptions.

On the day of resumption, DP World managed to process about 5,000 containers across the four ports, a figure substantially lower than the usual daily throughput. The recovery process is further hampered by upcoming local strikes, suggesting that normal operations might not be restored until the following week, according to a company spokesperson.

DP World's significant role in the Australian maritime trade, handling nearly 40% of the country's imports and exports, highlights the extensive economic and commercial impact of an attack on a single entity. This incident adds to a growing list of high-profile cyberattacks this year, including one on the Industrial & Commercial Bank of China Ltd., the world's largest bank by assets, which disrupted certain Treasury market transactions.

As automation increases and reliance on paper documentation decreases in ports, the risk of cyber threats such as ransomware attacks becomes more pronounced. These attacks involve hackers taking control of systems and demanding payment for their release.

In light of DP World's challenges, Clare O’Neil, the Australian Minister for Home Affairs and Cyber Security, has announced initiatives requiring businesses to report any ransom-related incidents, demands, or payments. The government will also issue a guide to help companies prepare for and respond to such ransom demands.

SHIPWRECK OF THE WEEK ⚓️☠️ 

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