The global economic slowdown is clearly taking its toll, and volumes from the Far East are a telling barometer. A source in France told FTW last week that freight rates from the Far East to Europe had plummeted in the past six months from $1300 a teu to $300 excluding surcharges. While the impact in South Africa has been less dramatic, lines and their customers agree that the outlook is less than rosy. Alex de Bruyn, SA trades executive for Safmarine, told FTW recently that this year’s peak had been slow to take off with volumes only beginning to increase around September, compared to July last year. “Overall, Chinese exports were down during July/August – a phenomenon referred to as the ‘Olympic Dip’,” he said, although eastbound trade remains strong from the commodity-hungry region. Iain McIntosh of Mitsui OSK Line reports a ‘blip’ in the export market. “But it is likely to be very short-term as there are many, many factors influencing this,” he said. “It's not affecting bookings at the moment as it is a certain segment of the market and likely to recover once China and Brazil reach an accord on iron ore prices. There are however other factors that, of course, are heavily clouded by current turmoil in financial markets.” As for imports it is no secret that volumes are lower and there has been no real peak this year. “But,” McIntosh said, “the fact is that while SA imports are softer today than a year ago, the volumes moving from Asia are still double what they were three years ago." Another source who preferred to remain unnamed predicted that the slowdown would result in some price competition on the Far East-SA route, although perhaps not at the level experienced on the Far East- Europe route where he said the $300 with CAF and BAF would amount to around $1000/teu from $1 300 a year ago. “Very suddenly everyone's putting on the brakes,” he told FTW. "On the export side, prices of exports – like chrome ore to China – are dropping. On imports we have noted a sudden 30% drop in liftings. "At this time of the year we would normally still be running at full peak. But this year there has been no rate increment in the fourth quarter, and no peak season surcharge (PSS) imposed.” The downturn has grabbed the headlines of specialist media internationally. APL’s greater China president, Dan Ryan, has called for container shipping lines to reduce capacity on the Asia- Europe trade or face a more "significant downturn" than it has experienced in years, according to an article in UK-based IFW. Lloyd’s List meanwhile produces similar figures to our French source for Far East- Europe rates. “A 20 ft container could now be shipped from Hong Kong to Hamburg for as little as $350, excluding surcharges, compared with around $1 400 per teu last summer,” according to the article. “In all my years in the business, I do not ever remember such difficult trade conditions,” according to the trade director of a big Asian line. The slowdown comes as several lines begin to take delivery of newbuildings ordered at the height of the boom. But as one shipping line executive told FTW recently: “Shipping is a cyclical business – fleet expansion is part of a longterm strategy.”
