The bulk sector has faced numerous challenges over the past 18 months due to geopolitical instability, which has affected freight rates and added unpredictability to the sector. Having access to key disbursement accounting (DA) and port tariff data can help ship owners and operators regain some control over voyage costs amid these disruptions. The current geopolitical climate, particularly the Houthi attacks in the Red Sea, underscores the need for transparency and real-time data to navigate these complexities. The maritime industry, known for its resilience, is now navigating the repercussions of recent Houthi attacks on commercial vessels in the Red Sea. Since mid-November 2023, there have been numerous attacks, leading many shipping companies to reroute their vessels away from the Suez Canal and the Red Sea, opting for longer and more expensive routes around the Cape of Good Hope. This has extended voyages by up to 14 days, increasing costs and adding further volatility to the dry bulk market.
These geopolitical tensions have led to a notable impact on port tariffs and the overall commercial viability of shipping routes. Ports in eastern Africa have seen increased demand as vessels avoid the Red Sea, leading to potential adjustments in tariffs to capitalise on this new traffic dynamic. Conversely, the Suez Canal has experienced a 15% rise in transit expenses for Suezmax vessels, despite a drop in traffic and husbandry calls by 94%.
In the traditional process of port operations, owners and operators often grapple with fragmented information and opaque tariff structures, leading to inefficiencies, potential inaccuracies, and missed opportunities for cost optimisation. The manual, paper-based disbursement processes of port cost analysis, is often time consuming and prone to error.
Disbursements – port costs that occur to a vessel when calling a port – constitute the second largest expense of a commercial voyage after bunkering and are essential for precise voyage calculations. Port expenses are costs such as port dues, canal transit fees, towage and pilotage costs that are based on official port tariffs, issued by the port authorities for vessels making use of its infrastructure and services. In addition, principals pay agent fees for the services port agents offer to their vessel and husbandry owner expenses for crew handling, crew transportation and accommodation, and fees for getting spare parts onboard, for example.
Increasingly, companies are opting for digital DA options as a transparent and efficient alternative to traditional, paper based disbursement processes, to have instant access to real-time port costs and bridge the transparency gap to assist stakeholders make informed decisions.
When time is money and margins are razor-thin, the importance of real-time data cannot be overstated. HarborLab has made leaps and bounds in modernising this area of the industry alongside owners and operators to develop pragmatic solutions that best tackle real-world problems.
HarborLab’s Port Cost Estimator and Disbursements tool leverages real-time data obtained from ports and verified by human port analysts to determine port fees for individual vessels.
These tools have become increasingly critical as operators seek to understand the financial implications of rerouted voyages and changing port tariffs. For instance, from 2023 to 2024, HarborLab data show that transit expenses for the Suez Canal have risen by 15% for Suezmax vessels despite the drop in traffic and husbandry calls.
In North African ports, the problem is reversed, whereby demand has been growing among vessels avoiding the Red Sea, seeking bunkering and restocking services that enables port operators to capitalise on growing traffic. Some North African ports have seen a 45% increase in husbandry calls, while ports such as Las Palmas have seen a 2.2% increase in tariffs due to heightened demand from rerouted vessels.
We posed the question at Harbor Lab as to whether we could utilise our real-time data of husbandry port calls across the region to see the impact on tariffs. Compared with the period of August to November 2023, Harbor Lab data shows that husbandry calls – covering everything from crew changes to spare parts for example – were down 94% in the Suez Canal, impacting revenue for the Canal by 40%. Dry bulk vessels have been impacted slightly less, whereas higher risk cargoes, such as chemical and crude tankers, have seen a larger 97% reduction.
Ultimately, what we are seeing is that while many bulker vessels are still choosing to use the Suez Canal rather than divert, they are not choosing to make their husbandry calls at regional ports in great numbers. Instead, they are choosing to make their calls at alternative ports, spurred on by the growing transit expenses. As expenses and port tariffs increase in ports in and around the region, ship owners and operators are using real-time data more than ever to enable them to fully understand the commercial reality in ports, and how that will impact their bottom line. This data is even more critical to bulk vessels operating on the tramp trade, whereby visiting new ports becomes challenging when relying on data that may not reflect the reality of ever-changing dynamics.
Securing accurate data of port tariffs and fees is a traditionally cumbersome task. Through digitalising these processes, it is clear to see the value that can be provided in added transparency and understanding of how this will impact the commercial operating costs of shipping companies. It is important to eliminate opaque pricing structures and fees to help provide both agents and principals with access to authenticated port tariff information, thereby enhancing transparency in the disbursement process.
Costs incurred at ports represent significant expenditures for principals, and securing accurate data on these expenses is crucial for maintaining profitability. Harbor Lab continues to work closely with ports to collect reliable data and develop sophisticated algorithms powering their online DA Tool.
This approach helps operators and charterers achieve significant savings by providing transparency and allowing for more informed decision-making based on real-time data.
In conclusion, the ability to navigate the changing dynamics of port tariffs and route adjustments, particularly in light of the ongoing Red Sea crisis, hinges on access to high-quality, real-time data. This transparency enables better decision-making and helps mitigate the financial impacts of geopolitical disruptions on maritime trade.
