Stronger Far East volumes point to firmer rates

Indications are that it won’t be too happy a Christmas for the shipping line fraternity, with no signs of the expected pre- Christmas rush for seafreight imports yet on the horizon. It’s not a time for Christmas cheer, according to shipowners, but rather a fight for survival in a market place that is only just showing signs of a stabilisation in volumes – but no significant sort of an upturn yet. Ships are getting fuller (although most of the lines, or groups of lines, have rationalised services and reduced fleet numbers and/or capacity) and the lines are sure enough to be aiming at both rate restoration and peak season surcharges – at least on the Far East-SA trade. Casting a weather eye on things, David Williams, MD of Maersk Line in SA, sees a possible sunny spell ahead, but feels it’s still a bit cloudy as far as volumes are concerned. “Reverting as usual to the Transnet National Ports Authority (TNPA) stats,” he said, “we’ve seen little positive development up to the month of June. “All the SA ports were handling a total of about 75 000 TEUs in the first part of the year, and this had reached about the 80 000 mark by April/May.” And the skies certainly seem to be clearing now, with his ships sailing a lot fuller from the Far East. “It’s sign that things are getting better,” he said – noting that some lines on this Far East trade were looking at imposing both freight rate restoration increases and peak season surcharges. “I still see a further firming of volumes in the second half of the year.” Much the same sentiments were expressed by another line executive on the Far East run. Indeed, he was even more enthusiastic about what is now happening. “Right now,” he told FTW, “we just don’t have sufficient capacity, and we’re rolling over cargoes from vessel to vessel” – although acknowledging at the same time that his line has already rationalised its services. He also confirmed that things had firmed enough for his line to be looking at a rate restoration on September 1, and a peak season surcharge from August 15. “However,” he added, “I can’t say there’s pre-Christmas growth, as our figures (taking into account the capacity cuts) are no indication that the volumes have picked up. But, if the figures are even levelling off, we’d be delighted.” Alex de Bruyn, SA trades executive (responsible for all trades) for Safmarine, is not shouting about a pre-Christmas rush, but is relatively optimistic about the second half of the year. “Container growth into/out of SA has been negative in the first half of 2009 compared to 2008 across all trade routes in line with global economic trends,” he said. “The trend has, however, stabilised during the second quarter 2009 across all trades into/out of SA.” He also confirmed the influence of lines’ capacitycutting exercise. “There has also be en a reduction of tonnage/container capacity on all the major trade routes,” De Bruyn added. “This has resulted in improved supply/ demand ratios in general across all trade routes going into the second semester of 2009. “Should import and export flows continue to pick up (as they appear to be) then we may expect a shortage of capacity (container and/or deadweight) on, but not limited to, the Middle East and Far East trade routes for the rest of the year.” Brian Naidoo, regional marketing manager for MSC, declared himself a “bit middle of the road” as far as expectations went. “There has certainly been a slight resurgence in volumes from the Far East trade, our Christmas season trade” he said, “and freight rates are probably getting to a stage where restoration can be considered.” But he couldn’t say there was any pre-Christmas rush. “The market, however, is showing a more established tonnage and volumes are stabilising. “That’s all putting a bit of a sparkle in lines’ eyes, and we’re slowly, slowly reaching volumes of normality.”