BAROMETER. Military action in the Middle East did little to destabilise container freight rates in June. Maritime professionals showed great sang-froid despite the wide-ranging international instability.
Main developments
- Israeli-American strikes in Iran
The Israeli-American attack on Iran did not fundamentally destabilise maritime trade in June. The market stayed solid on oil prices and freight rates, with only limited movement in reaction to the intensification of the conflict in the Middle East.
On the other hand, the attack will have a major impact on operations, since it has delayed the prospect of the wide-ranging return to the Suez Canal which the shipping companies had written into their budgets for the second half. As things stand, the return to the canal cannot be envisaged operationally before the fourth quarter, given that it will necessarily be implemented progressively.
Now that it has become a long-term phenomenon, the deviation round the Cape of Good Hope is set to become a sort of new norm. This is not a bad thing for shipping companies, which can thus maintain an economic balance, which is generally favourable to them.
- The performance of Gemini
Sufficient time has now passed for us to be able to make a first assessment of the performance of Gemini, the alliance launched by Maersk and Hapag Lloyd in February. We cannot but conclude that the high standards the alliance has set itself and its operational discipline are paying off. Gemini has fulfilled its promises regarding quality of service with a reliability rate of more than 90%.
Another interesting indication is that the market generally is showing improved quality of service to a greater or less degree, showing that Gemini's differential hub and spoke strategy is generating competition which is beneficial for shippers.
- China-US trade negotiations
In May, Washington and Beijing concluded a preliminary agreement providing for the suspension of most of their respective tariff increases on each other's goods for 90 days and the easing of a certain number of restrictions. There was a fresh round of negotiations between the two countries in London in mid-June, which led to the signing of a framework agreement on 26 June. It is understood that China has agreed to review and approve applications to export controlled goods, particularly rare earths, to the United States, while the US has agreed to cancel a certain number of restrictive measures on the importation of Chinese goods. China confirmed that the new agreement had been signed but, so far, all the details of the agreement have not yet been made public. As a result, it is still too early to know what tariffs will be applied from 9 July, when the truce between the two nations is due to end.
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