A RATES increase appears imminent on northbound sea cargoes to the Far East.
The time is now, said Alan Naidoo, marketing manager for east-west trades for the shipping major P&O Nedlloyd. We haven't had an increase for many years now and the restitution is necessary to cover the costs of the services we have to provide.
But paying for what you get has not been a habit in the marketplace for some time - with heavy competitive factors forcing cut rates on everyone in the Far East-SA (and South America) trade.
However, Naidoo feels that conditions are softening, with lines moving into new vessel sharing agreements, cutting back frequencies and generally easing the over-supply problem on the route (particularly northbound).
There's basically now less tonnage fighting for a share of a market that has slowed-down dramatically in the last year, said Naidoo. In the medium-term, we see the demand for space on our ships increasing. A 2% export growth can be added to market share shift, as the lines reposition themselves.
This, Naidoo added, should allow for a rates restoration. And the waters have already been tested - with a southbound restitution of US$200 per TEU (twenty foot equivalent unit).
While the northbound restitution is likely to be a lesser amount, according to Naidoo, that's because the basic outbound rate has been pegged down for so long.
Naidoo feels that there wasn't resistance to the southbound increase amongst those aware of economic truths in the sea trade. So he hopes that a northbound hike will also not rattle cages.
There is no question that there's a need for a restitution, Naidoo said, and the customers are expecting it.
The rates increase is currently before the Safari consortium and the line principals for further evaluation, according to Naidoo.
By Alan Peat
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