• Sat
  • Jul 12, 2014
  • Updated: 4:10pm

Holiday headaches for exporters

PUBLISHED : Friday, 13 January, 2012, 12:00am
UPDATED : Friday, 13 January, 2012, 12:00am

Hong Kong and mainland exporters, already facing uncertainty over trade prospects in North America and Europe, face another, more immediate, difficulty ahead of the Lunar New Year holiday - getting their products shipped in the first place.

Cuts in container shipping services on both Asia-Europe and transpacific routes have been exacerbated by a pre-Lunar New Year cargo rush, as mainland Chinese factories complete export orders ahead of the holiday shutdown.

This has led to delays in loading containerised cargo at Hong Kong and mainland ports, while cargo owners have also resorted to paying shipping lines extra money on top of the normal freight rate to guarantee shipment of their consignments. Even exporters who have had their shipments loaded on massive container ships in Hong Kong or mainland ports face having their cargo offloaded in other ports to make room for premium cargo from other shippers.

The Federal Maritime Commission in the United States is already monitoring transpacific shipments in case there is a repeat of the situation in early 2010, when exporters saw excessive cargo delays and rate rises after shipping lines cut capacity.

Cargo capacity on transpacific services has been cut by more than 15 per cent after container carriers curtailed and merged services while Orient Overseas Container Line, controlled by the Tung family, cut capacity on Asia-Europe services by 20 per cent in November.

Jacques Chan, general manager for Hong Kong and South China at freight forwarder BDP International, said cargo owners have lost reserved space for their freight on specific voyages on ships leaving Shenzhen, Shanghai and Ningbo ports. This came after container lines merged or stopped services to reduce capacity before factories closed ahead of Chinese New Year. He added that some carriers were also off-loading low- priority cargo at transshipment hubs such as Singapore to make space available for more urgent freight.

'The cargo can sit in a container yard for a week before reloading onto another vessel destined to Europe,' Chan said. 'Shippers are paying premiums to protect cargo space that they have already reserved. We are talking about [an extra] US$200-300 per container in most cases.'

He added: 'Shippers and receivers would be wise to factor in an additional seven days to the average transit time between Asia and Europe.'

While most containerised cargo is shipped at contract rates, the spot rate on Asia-Europe services was about US$615 per 20-foot container last week and US$1,832 per 40-foot container on transpacific services from Hong Kong to Los Angeles.

Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council, confirmed that other freight forwarders had highlighted the problem this week. He was 'not very surprised' cargo was being delayed because the cargo rush came after container lines consolidated services.

But he thought cargo delays and premium payments to container lines would be short-lived because carriers were facing 'a long period of very quiet months' after the holidays as economic problems continued in Europe and the US. Economists already expect China's export growth to be below 10 per cent this year.

Charles de Trenck, head of consultancy Transport Trackers, said carriers had cut services to reduce capacity. This came as their 'profitability in the fourth quarter [last year] was an absolute disaster'. Container lines are forecast to make collective losses of US$5.2 billion for 2011, according to Drewry Shipping Consultants.

15.4m

The capacity, in twenty-foot equivalent units, of the global container fleet, according to Journal of Commerce/Alphaliner

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