Today’s Logistics Report: Shipping Shares Tumbling; Flagging Shadow Carriers; Broken Pier Plan

Today’s Logistics Report: Shipping Shares Tumbling; Flagging Shadow Carriers; Broken Pier Plan

Logistics

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By Paul Page

Maersk was among a slew of shipping and logistics shares that tumbled on prospects that the surge in freight rates would end. PHOTO: OLIVIER HOSLET/SHUTTERSTOCK

Hints of potential peace in the Middle East are taking a toll on the shipping sector. Shares in shipping and logistics providers that had surged as freight rates rose came under heavy selling pressure on news of a possible cease-fire between Israel and Hamas. The WSJ’s Dominic Chopping writes that investors are eyeing the possibility that containerships could return to the Red Sea, ending the lengthy route diversions that have effectively constrained capacity in the sector and driven up freight rates. The sharp movements in trading in carriers including A.P. Moller-Maersk, Hapag-Lloyd and Cosco
Shipping
illustrate the impact the diversions have had on the market since Houthi rebels in Yemen began attacking commercial vessels last year. The Shanghai Containerized Freight Index for rates out of China skyrocketed 82% from early April to June 7, and several carriers have boosted their earnings outlooks from earlier downbeat projections.

Transportation

The tanker Pablo caught fire off the coast of Malaysia last year. PHOTO: MALAYSIAN MARITIME ENFORCEMENT AGENCY/AFP/GETTY IMAGES

A shadow fleet of aging tankers carrying sanctioned oil is increasingly relying on a series of small countries to register their vessels under obscure flags. The move toward “flag states” such as Gabon, Comoros and Cameroon is aimed at sidestepping a system that has long helped keep the oceans safe, by ensuring ships are properly insured and seaworthy, and that sailors are well treated. The WSJ’s Costas Paris and Joe Wallace report that the Gabonese ship registry has ballooned to hold more than 100 tankers, according to ship brokers and owners. Lloyd’s List Intelligence estimates more than 70 of those vessels have obscure ownership and form part of a shadow fleet of
tankers dedicated to sanctioned oil trades. Experts say the ships are beyond oversight, presenting hazards on the water. Last year, a Gabon-flagged tanker burst into flames off Malaysia, and authorities still haven’t determined who owned the ship.

Quotable

Transportation

A soldier stands on a military vessel near the pier intended for delivering aid to Gaza. PHOTO: OREN ZIV/AGENCE FRANCE-PRESSE/GETTY IMAGES

Building a makeshift maritime port turns out to be tougher than it sounds. The $230 million pier that the U.S. military installed off Gaza has had trouble meeting its mission. The WSJ’s Nancy A. Youssef reports the floating structure broke apart late last month after just 10 days of operation, and some humanitarian organizations have all but given up making longer-term plans around the pier. The plan has faltered in the face of the Mediterranean’s rough waters and the difficult logistics of bringing humanitarian aid through an uncertain gateway with only limited reach to the inland points it was meant to serve. Those involved in the shipping industry in Cyprus described the pier’s suspension as
inevitable. After a week of repairs, the pier went back in place Saturday, only to be shut down again Sunday because of the rough waters, the Pentagon said. It reopened Tuesday.

Number of the Day

$2.384

Average U.S. Gulf Coast price per gallon for jet fuel in May, down 22.1 cents from April and the lowest monthly average price for the fuel since June 2023, according to the Energy Information Administration.

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