Ocean Cargo: Peak season will mean higher transpacific rates
Patrick Burnson, Executive Editor -- Logistics Management, 7/1/2009
SAN FRANCISCO — Shippers were told at a recent industry forum that the worst may be over for cargo vessel operators. But that may not be an entirely positive, as prices are likely to get a boost during the coming peak season.
That was the good news/bad news for those shippers attending the annual meeting of the Agriculture Transportation Coalition in San Francisco last month, as they braced for a new rate structure to be introduced on the transpacific and other key trade lanes.
“We don’t think that there will be any container lines going out of business,” said Edward Zaninelli, vice president trans-pacific westbound trade, OOCL. “There are too many 'Catch-22s’ for that to happen. But we will see more slot-sharing and consolidation, and rates have got to go up…that’s a given.”
Meanwhile, the fleet of idled container vessels owned by OOCL and other carriers is shrinking as many of the larger ships are being brought back into service to handle the seasonal rise in cargo volumes.
According to ASX-Alphaliner, the Paris-based consultantcy, the idled carrier-owned fleet has fallen from a peak of 241 ships of 1.04 million twenty-foot equivalent units (TEU) in March to 199 vessels of 790,000 TEU. Among the trends to watch, said Zaninelli, will be for carriers using more all-water services that avoid both the Suez and Panama Canals. “We’ll see more 'slow steaming’ around the Cape and Horn as vessel operators seek ways to save on fuel costs, which are rising again,” he said.
And that figures into the higher rate equation, too. Rising crude prices mean a boost in bunker fuel prices, but it’s the currency imbalance that really hurts the carriers, explained Zaninelli. “The weak dollar has just been killing us,” he said. “Revenue is below cost in all trade lanes now, and the recovery is just beginning. Asia and the U.S. will be the first economic zones to see growth in 2010, but the EU is going to take longer.”
Carriers are positioning themselves for this slow rebound by brining ships out of lay-ups, he said, but it’s a time-consuming process. Zaninelli also noted that shippers will see some “funny marriages” as various nation states cooperate on vessel sharing. “When China [with China Shipping Lines] and Taiwan [with Evergreen] agree to get together, you’ll know it’s a new era,” he said.
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