Seafreight rates hold firm – except on Asia route

As the global shipping industry moves into a rather significant year-end capacity oversupply, in South Africa the only tears yet seen on the faces of ship owners and operators seem reserved for some of those on the Asia trade. Imports from Europe and North America remain buoyant and rates are expected to firm, according to Alex de Bruyn, Safmarine’s SA trade director. “Also,” he added, “exports in general to all destinations remain strong and the level of demand for SA exports is expected to increase in early 2011. This should have a positive impact on freight rates.” Ron Frick, MD of Deutsche Afrika Linien (DAL), also noted cargo volumes were still moving strongly in both directions of the Europe-SA trade. “We anticipate that vessel utilisation will look positive until year-end,” he told FTW. Northbound, the perishable side of the SA trade to Europe has been boosted by an early start to the fruit export season, with reefer (refrigerated) capacity “running at full tilt”, he added. Apart from this fruit, Frick also noted that the volumes of SA automotive, wine, canned goods, and wool products, along with the agricultural exports from neighbouring states moving via SA, have all maintained their strength. And, southbound trade of mainly chemicals, machinery, capital equipment, project cargo and automotive components, is also holding up. Frick feels that this capital nature of much of the SA imports from the North-West Continent (NWC), the UK and the Mediterranean, is what makes the difference between this trade and the predominance of consumer goods from the Far East. This type of import trade is very sensitive to the available cash in the pockets of consumers, and in SA, that is still a bit scarce. It is reflected in low cargo loads on the Far East-SA run, which a line executive described as “overtonnaged”, and admitted to freight rates being “on the fade”. They are below US$1 000/TEU westbound, he told FTW, and suggested that a lot of the lack of growth was due to a big change in the SA buying pattern in Asian imports. This change, he said, was “a spreading of the cargo loads”, with importers buying and importing smaller quantities of product more frequently. He envisaged this continuing, if not actually dropping further in volume, in 2011. Iain McIntosh, trade and marketing director of Mitsui OSK Line (MOL), told FTW that, at the moment, things were very stable on both the Europe and the Asia trades. “But,” he added, “there’s already a storm brewing. “Quite a few Far East services have already taken one sailing out of their December schedules westbound out of Asia. That’s only one week of capacity, but it’s a lot of TEUs if you add it all together.” Asked whether this might lead to withdrawals from other strings or loops into the New Year, McIntosh preferred not to be drawn on any firm forecast.