Squeezed seafreight capacity puts pressure on rates

A SHORTAGE of seafreight capacity is one of the
biggest constraints on the Far East route and it’s
likely to get worse before it improves as the ‘silly
season’ approaches.
“The season peaks every year from August to the
end of November, but in general we’ve seen year
on year increases in volumes and it’s a challenge
getting space on vessels and not getting cargo
rolled,” says ZA Trans chief international forwarding
officer Paul Lawrence.
“The result is pressure on rates with the lines
also imposing a peak season surcharge from August
to November.
“To ensure that our clients aren’t compromised
we are constantly refining our supplier management
programme and we are very transparent with our
clients who need to understand that you can’t get
the cheapest rate and still expect to be assured of
space.
“From the shipping line’s point of view they
want to take the highest paying cargo and you have
to educate some of the clients on that basis – there
are agents out there offering rock-bottom rates
but importers should not be misled; the question is
whether they can get space on vessels.”
While the lines are bringing on more capacity,
the China – US and China – South America routes
are far more lucrative. “That’s understandably their
priority, particularly with a worldwide shortage of
capacity. As much as the lines will service South
Africa from a strategic point of view they’re unlikely
to put priority on the SA route if they can make
more money elsewhere,” says Lawrence.
For ZA Trans furniture is a big commodity, with
technology, clothing and apparel making up the bulk
of its inward-bound cargo, mainly from Indonesia
and Mainland China.
“We’ve established a strong independent
agency network and also belong to FFSI, a network
of agents around the world who are particularly
focused on the Far East. This powerful network
gives us strong buying power as well as the
agility of quick decision making and exceptional
responsiveness.
“All our Chinese partners speak very good English
which is a big advantage for a local customer who
needs to communicate with his supplier in the east.”
While the Far East accounted for 20% of the
company’s business five years ago, it’s now up to
30% and growing.
But India is knocking on the door, says Lawrence.
“They’ll soon be competing strongly with China
and we are well placed to take advantage when that
happens.”
Commenting on the impact of the quota
system implemented on textile imports from China,
Lawrence believes, along with a number of industry
commentators, that it’s done little more than
change the manufacturing base from China to the
likes of Vietnam and other areas.