Post-recession ‘overtonnaging’ could see rates dive

As the official start of spring was declared on September 1, so minds in the freight and trade industries turned to the prospects for the pre- Christmas rush of import goods to fill the shelves for the festive season. And the port figures for August, released to FTW by Transnet National Ports Authority (TNPA), seemed to give an early indication of import trade picking up to peak season levels. According to the stats, the total full boxes handled at the SA commercial ports this August was 290 779- TEUs – 30.88% up on the 222 178 in August ’09. Of these, 151 137 were imports, which certainly shows major growth – being 32.7% up on the 113 859- TEUs of last August. And this overall volume growth on the westbound run from Asia has certainly continued into September, according to senior sources in the Far East-SA sea trade. But, they added, a large chunk of the cream on top of the peak season rush, usually shared by all the carriers on the trade, has been gobbled up by the Chilean carrier, Compania SudAmericana de Vapores (CSAV). It separated out its Far East-SA-East Coast South America service, running two full strings, one on the Far East-SA trade and one covering Far East-ECSA. In the middle of August it cut out the Durban calls from its Asia-South America Express (ASAX) service, and introduced the New Discovery service covering the North/Central China-SA trade. It offered a weekly schedule deploying 7 x 2 500-TEU vessels on the port rotation: Xingang- Shanghai-Ningbo-Chiwan- Hong Kong-Singapore- Durban-Cape Town- Singapore-Xingang. It was all part of a dramatic turnaround in fortunes for CSAV which, earlier in the year, had staved off the spectre of bankruptcy after it put together a US$710- million capital-raising plan in agreement with the Hamburg-based shipowners that own much of its chartered fleet. This saw the group posting first half profits of US$68-million compared to a record loss of US$669-m in 2009, and saw the German bail-out investors making an immediate 10% return on their investment. Also, since restructuring, CSAV has been one of the fastest-growing container lines, adding 203 000-TEUs (or 61%) to its capacity in the first nine months – helping it to move up six places (from 13th to 7th) in French shipping analysts, AXS Alphaliner’s global rankings of boxlines. But, although this may have delighted the investors in CSAV, it has done nothing for the other carriers on the Asia-SA trade, according to SA executives representing two of these lines. “The westbound trade from Asia has been showing an improved flow,” one said, “but most of this has been eaten up by CSAV having opened a direct SA service.” The other was equally disconsolate. “We usually call it a peak season when we are turning away container traffic,” he told FTW. “But that’s not been the case this year, and we haven’t been able to impose our usual peak season surcharge. “We are all seeing the effect of CSAV, which I calculated to have immediately increased its market share to 9.4%.” But the two executives also pointed to another eventuality of this extra tonnage. “As we emerged from the global recession, everybody re-activated tonnage to meet the growing demand,” said one of FTW’s shipping authorities. “But what’s this going to mean come the end of 2010, and the peak season turning into the normal drought at the beginning of the year?” Our other voice expressed the same sentiments. “Given the usual endof- year downturn in cargo volumes, the trade is going to be totally overtonnaged, and rates are going to have to ease considerably to match the fall in demand. “That’s great for the shippers. But a total disaster as far as the lines are concerned.”