Oriental trade remains oversupplied
Although international eyes
tend to focus on freight rates
on the main east-west trades,
the north-south trades
are the major focus for SA
viewers.
And on the local scene,
there would appear to be a
major difference between the
rates situation on the western
world trades and the eastern.
A scenario that is mostly
attributable to the oriental
trade being oversupplied
with capacity, while the
trades with Europe and
North America are rather
better balanced on a supplydemand
basis, according
to Ron Frick, MD of DAL
Agency in SA.
And this, according to our
commentators, means that
the rates between SA and the
Far East, by far our largest
sea trade route, tend to be
under greater pressure and
extremely volatile.
Looking at the Europe and
North America trades, Glenn
Delve, SA marketing director
for MSC, described them
both as “stable”.
“With Europe, both for
imports and exports, there
are no significant rate
fluctuations and they are at
an acceptable level for the
lines,” he told FTW. “Also,
it’s SA’s citrus export season
coming up, and that’s a good
time for the lines in the reefer
trade.”
And here Frick pointed out
that there were only three
shipping services on the
trade. There’s the consortium
headed up by MSC, the
SA-Europe Container Service
(Saecs) group of Maersk,
Safmarine, MOL and DAL,
and the multi-purpose
service runs by Macs. “All
three are pretty well utilised,”
said Frick, “and there’s no
overcapacity as on the SA-Far
East trade.
“So rates are still fairly
stable and no major
fluctuations. But they’re
under pressure without a
doubt.”
Delve described the
SA-North America trade as
stable.
“There’s a fair amount
traded between the two
regions,” he added, “and it’s a
nice niche market.”
But the Far East run has
struck up a bit of a debate.
Delve was relatively happy
about the rates, but an executive
with an Oriental carrier said
that everybody was “hastily
scratching around” looking for
any type of cargo to fill up their
ships.
“Export rates are under
stress because of a lack of
volumes of commodity exports
from SA, and import rates are
just plain bad.
“They are half what they
should be. An acceptable level
is around US$1 050 to $1 100
per TEU. At their peak, rates
were about $900 to $1 100. But
they’ve taken a dive to about
$450-$550.”
Even general rates increases
(GRIs) are a bit of a no-no.
“Some lines are applying
them,” he said, “but when they
do, they just lose business to
those that haven’t. And if you
talk about peak season, it’s just
a joke. I mean 25 years ago
rates were about the $1 000
level and look where we are
now.”
But, using this long-term
history you would find the same
situation on the SA-Europe
trade, according to Frick.
“I would have to agree with
that man’s comments,” he said.
“In trade with Europe, rates are
about half what they were about
25 years ago, mostly due to
larger ships and more capacity.”
But, looking at the shortterm
history, Delve insisted
that things weren’t too bad.
“On the import side we’ve
had a bit of a resurgence,” he
said. “Some GRIs seem to be
holding, so there is some light
on that front. And there is
a peak season and a bit of a
firming of rates.”
However, for exports from
SA, Delve saw a fair amount of
empties on the trade as lines
redeployed boxes back to the
east.
“Export rates have been
pretty flat for some time,” he
added, “especially because of
poor commodity prices and
export volumes. But we’re
filling most of our vessels with
one cargo or another.”
