Rates reflect consequences of competition

Positive moves by Spoornet JOY ORLEK THE TIDE has turned for shippers, particularly on the Far East route, where a proliferation of carriers has seen rates falling. After a good three-year run for shipping lines, it’s now a shipper’s market in the view of Gauteng-based regional director for Mediterranean Shipping Company, Andrew Modinos. 2006 is likely to be a tougher year all round, but maintaining and increasing market share by attracting new business is top of mind for the line which recorded a good 2005. This despite the ongoing challenges facing all players in the industry in terms of port congestion, rail inefficiency and intense competition. A strong advocate of the rail option, Modinos believes that Spoornet is making clear moves to increase its slice of the pie and win back cargo lost to road. “They’ve been working with the carriers and asked for our suggestions which we have put forward. And we are confident that shortfalls will be addressed. From a security point of view, rail has a lot to offer, says Modinos. “Spoornet is using bath tub rail trucks where possible which significantly limits the opportunity for pilferage, and once they have their cost structures in place, we could see a swing back to rail.” In terms of time-efficiency, Modinos points out that road congestion around the Durban port is adding several hours to the trucking option, which is not always quicker than rail. “For imports, there are five trains a day to/from Durban to City Deep. If shippers discharge their cargo on a through bill, it can reach them within 24 hours of vessel discharge,” he said. We don’t believe it’s a rates issue between road and rail – we’re talking about supply chain efficiencies which go way beyond freight rates. “And one of these efficiencies, which rail intends to exploit shamelessly, is its ability to move goods from terminal to terminal, without the problems of road congestion that are becoming increasingly onerous for hauliers. “We recognise, however, that there are inefficiencies between ourselves and our port hand-over and we are addressing this interface. – Spoornet