• Wed
  • Jul 30, 2014
  • Updated: 12:49pm

Year-end hope for container shippers

PUBLISHED : Thursday, 17 November, 2011, 12:00am
UPDATED : Thursday, 17 November, 2011, 12:00am

Transpacific container lines could see a better-than-expected end to the year as an increase in cargo demand and cuts in shipping capacity combine to lift overall revenues, shipping companies said.

Some carriers have already seen a rise in demand in November and December as importers placed orders for consumer goods for delivery ahead of the new year and lunar new year holidays.

At the same time, a host of shipping lines have ended all transpacific routes or halted some services, cutting capacity and allowing carriers to consider raising freight rates.

Soren Karas, chairman of the Hong Kong Liner Shipping Association, said carriers had reduced capacity on transpacific trades by 11 to 12 per cent and 'possibly more than that' by cutting services. These shipping lines include Grand China Shipping, an offshoot of the HNA group, which saw its final eastbound sailing leave Shanghai last week, while the Containership Company and Matson culled services earlier this year.

He said the reduction in cargo space could allow carriers to stabilise and bolster rates. Karas, who is also head of South China for Maersk Line, said October was 'a pretty robust month' for cargo demand, and while volume growth had been flat, there could be small year-on-year growth in October, November and December. As a result, 2011 could turn out a bit better than expected, he said.

Stephen Ng Siu-kow, director of corporate planning at Orient Overseas Container Line, said: 'There was a small spike in volume during October, mainly from the China regions as a result of the National Day holiday rush.

'November volume is back to normal, which is traditionally a slack month. It is anticipated that volume may move up sometime in December. There may be an uptick before the Chinese New Year.'

Transpacific container lines had earlier been forecast to make collective losses of US$600 million this year, according to an estimate by Alphaliner, a maritime consultancy. However, one senior container line executive, who declined to be named, said: 'We're really optimistic we'll get a freight rates improvement in the coming months.' He said there were positive economic signals coming from the US, with falling unemployment levels and a slight increase in retail demand. 'Stores are carrying minimum levels of stock, so if there is a pick-up in consumer demand, there will be a cargo rush again.'

The Transpacific Stabilisation Agreement (TSA), which represents carriers operating from Asia to the United States, said last Monday that lines would raise all-in freight rates and charges by a minimum of US$400 per 40-foot container from January 1. The 15 carrier members of the forum, which together control about 90 per cent of eastbound cargo capacity, include OOCL and Cosco Container Lines.

Some carriers said freight rates and charges could also be increased from December 1, while the 10 members of a similar group on the westbound transpacific trade increased rates by US$200 per 40-foot container from November 1.

Brian Conrad, the TSA's executive administrator, justifying the increases, said: 'Rate levels during 2011 have steadily eroded despite rising inland transport, cargo handling and other costs. Now, carriers are seeing stronger US holiday season cargo volumes on the heels of positive economic growth and retail sales data, as well as robust forward bookings leading into the early lunar new year factory holidays in Asia.'

48,000

Number of containers of cow hides exported by the US every year, mainly to China, where they are turned into handbags, coats and shoes

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