Alan Peat THE MEMBER lines of the Japan & Hong Kong/SA shipping conference intend to put in place a US$600/TEU (twenty foot equivalent unit) rates restoration programme next year. The current plan is to impose a general rate restoration (GRR) of US$400/TEU from April 1, and of US$200/TEU from July 1, 2004. This is due to be implemented by CSAV; K-Line; Maersk Sealand; MISC; MOL; NYK; P&O Nedlloyd and Safmarine. According to Glen Delve of the Mediterranean Shipping Company (MSC), one of the independents on the trade, the non-member lines are also likely to impose an increase, albeit possibly not the whole amount decided on by the conference members. This rates increase follows the imposition by the 12 member lines of the G8 (Asia/SA) forum of a US$200/TEU GRR this past July, a rates increase that was accepted by most shippers, according to one of the major lines which felt that the latest GRR was likely to be equally well met amongst shippers. “The pressures are such that it’s absolutely necessary,” he told FTW, referring to the serious price-cutting that the lines on the trade had suffered in recent years, when the Far East run was severely over-tonnaged. Last July’s increase - while arithmetically big as a percentage of the previous rate (about 50%, FTW was told) - did little more than pull lines’ revenue up from a loss situation prevalent over the last three years. It compared to rates as long ago as 1990 and before, of about US$1100-US$1150 for incoming boxes, and - before 2000 - of about US$800-US$900 for export containers, according to another line executive. This then slipped first to US$650-US$850 at the turn of the millennium, then even further to last year’s rate of about US$250-US$450 for big volume cargoes. When FTW investigated this year’s GRR, six shipowners complained about what was described as “a parlous state of rates” on the SA-Far East trade. They all agreed that the route was overtonnaged, lines were fighting for market share with price cuts, and the previous level of the rates was a loss for all the players. Iain McIntosh of P&O Nedlloyd baldly stated that “we’ve reached the bottom” and that his line’s intention was to get the rates pushed up. This now seems to be happening with the latest announcement from the conference lines.
