Unlike the main east-west trade lanes where capacity is exceeding demand and rates are very soft, the consensus in SA is that rates on all the major trade lanes are stable, with capacity supply holding steady. Year to date, the market volume has been strong, according to Matt Conroy, trade and marketing manager of Maersk Line, most specifically on the Asia trade lane. At the same time, the supply of capacity has been maintained. “The supply and demand picture has shifted slightly in favour of shipping lines,” he added. “However, the market is still in a volatile stage and it remains to be seen whether this trend will continue.” From the supply side, Conroy noted that freight rates were at a low level, while time charter rates had tripled of late, resulting in hefty obstacles for new entrants. “On the demand side,” he added, “while there has been an increase in import volume and business confidence, consumption still very much remains a question mark. “Given the volatile market it is difficult to predict what the rate movements will be for the remainder of the year although we expect that there will be a gradual increase in freight rates.” The Far East trade, according to Conroy, has seen strong volumes and there has been a slight increase in the freight rates on the trade – predominantly due to an increased bunker adjustment factor (BAF). Iain McIntosh, marketing manager for Mitsui OSK Line (MOL), reckoned that rates on the SA-Far East trade had slid through the fourth quarter of last year into the first quarter of this year. The reason, he added, was the capacity that had been put on in the second and third quarters of 2010. “We’re now in the quiet period of the year,” he said, “following the Chinese New Year. Rates, therefore, will remain flat, and then rise in the later part of the year as capacity is not being added.” An executive for another Far East shipping line agreed about flat rates. “There was an announcement from the Far East lines of a general rates increase (GRI) of US$300 per TEU on April 1,” he said. “Basically, it’s not going to materialise, as the trade is over-tonnaged, and not all the lines are implementing the GRI. So it may only realise US$100/TEU.” He doesn’t even envisage a peak season occurring in June-November this year. McIntosh is enthusiastic about trade volumes from Europe, which he described as “very buoyant”. This mainly, he reckoned, because Europe produces more finished goods, and because the strong rand is keeping prices in euros (or British pounds) at competitive levels. Enough, he added, to even see a switch from the Far East as a source to Europe. “Inbound rates levels,” he added, “are flat – northbound as well.” Maersk’s Conroy said: “Within the European market we have seen competitive rates and the dry cargo volumes holding stable. There is adequate capacity on this trade to cater for the market due to the number and size of vessels across all shipping lines.” Mark Frauendorf, container manager of the multi-purpose line, MACS, described the rates on the US and Europe trades – the routes the line serves – as “pretty stable”. “For our line, the export volumes are down – with the strong rand a large factor,” he said. “But, on imports, the ships are very full.” Conroy saw the intra- Africa market (with a strong emphasis on SA-West Africa) as “opportunistic”. “And,” he added, “the rates are relatively stable – and the available capacity reflects this.” South America, particularly on the export side, is not a massive market as far as SA is concerned, according to McIntosh. “Inbound,” he said, “there are some large structural flows, but outbound very low.” Looking at the SE Asia and Middle East trades, Conroy said: “At the start of 2011 there was reduced demand from India although we anticipate that this demand will increase throughout the year. Rates are expected to increase as the market strengthens.
