US-bound shipments clog Shanghai terminal

Shanghai port, the country's busiest, is becoming increasingly congested with US-bound vessels amid a frantic rush of shipments to the world's biggest economy.

But the benefit to shipowners may be short-lived. A huge influx of new mainland-constructed vessels threatens to exacerbate oversupply in the shipping industry, which is still suffering from the impact of the global financial turmoil.

'We've been talking about a super-spike in China's outbound trade since the end of December, and in recent weeks conditions have approached pandemonium for exporters trying to get cargo out before the Lunar New Year,' said Transport Trackers, a Hong Kong transport consultancy. 'Getting cargo out of Shanghai has been hell and cargo shippers have been forced to put cargo out at whatever rate being asked.'

The rise in shipments from Shanghai, the world's second-busiest port, follows improving throughput in Shenzhen and Hong Kong last month. Shanghai, Shenzhen and Hong Kong saw container throughput rise 7.1 per cent, 5.4 per cent and 3 per cent respectively in December, after months of decline.

Retail sales in the United States are expected to rise 2.5 per cent this year, after falling 2.5 per cent last year, according to the US National Trade Federation.

Transport Trackers cited a few 'crazy examples' in Shanghai port in the past two weeks, including one importer being forced to cancel a shipment and rebooking the shipment for an extra US$400. Large US retailers were shifting the higher costs of 'panic bookings' to their suppliers, it said.


'All container carriers withdrew capacity by 11 per cent in world tonnage last year, because shipping rates were just too low and the supply was too much. Carriers are exercising restraint in laying up tonnage,' said Stanley Shen, an investor relations executive at Orient Overseas (International) Limited.

The global shipping industry has experienced a big influx of ships from Chinese shipyards. Last year, China's exports of ships and vessels grew 45 per cent to US$28.36 billion, according to the Ministry of Industry and Information Technology.

The increase reflects the filling of orders made in 2007, the busiest shipping year of the decade, as it takes one to 1.5 years to order a large ship and build it, explained Russell Barling, Asia communications manager of Lloyd's Register.

There has since been a drop in orders for new ships, said Barling.


As Lloyd's Register is one of the world's top ship classification organisations, the number of ships it classifies is an indicator of the amount of orders placed for ships. In China, the number of ships classified by Lloyd's Register last year was roughly similar to 2006 but far below the figure for 2007, which was 600 per cent higher than in 2006, said Barling.

Rush season


Exporters are desperate to get cargo out before the Lunar New Year

After falling 2.5 per cent last year, retail sales in the United States are expected to increase this year by: 2.5%