Global ocean market conditions expected to remain same in coming months, says Global Port Tracker

With the first half of 2013 officially in the books, the most recent edition of the Global Port Tracker report from Hackett Associates and the Bremen Institute of Shipping Economics and Logistics states that minimal-to-slow growth is likely to remain intact for the foreseeable future.

By ·

With the first half of 2013 officially in the books, the most recent edition of the Global Port Tracker report from Hackett Associates and the Bremen Institute of Shipping Economics and Logistics states that minimal-to-slow growth is likely to remain intact for the foreseeable future.

Ports surveyed in this report include the six major container reports in North Europe: le Havre, Antwerp, Zeebrugge, Rotterdam, Bremen/Bremerhaven, and Hamburg. And the report is calling for a mere 0.9 percent annual growth rate over 2012 to roughly 40.1 million TEU (Twenty-foot Equivalent Units). And in Northern Europe alone, the report expects annual volumes to be down nearly -5 percent.

Hackett Associates Founder Ben Hackett said in the Global Port Tracker report that this data is reflective of an ongoing recession in Europe, which likely could translate into the absence of a traditional Peak Season.

This was made clear in the report as it explained that carriers are seeking out ways to increase or stabilize rates at a time when the global container fleet is expanding, especially on the larger end of vessels coming on line, even though overcapacity is apparent.

In an effort to blunt the overcapacity, the report said that some carriers are ceasing voyages in August and September. It also added that the “P3” alliance among Maersk, CMA-CGM, and MSC, which was established to bundle activities on major trade routes is designed to address overcapacity.

Hackett said in an interview that the current situation makes it increasingly likely there will not be a true Peak Season in Europe or the United States.

“U.S. Consumer demand still remains weak at a 1 percent growth rate even though the GDP is slightly above 2 percent,” he said. “The inventory-to-sales ratio has also gone up and is close to pre-recession levels that were last seen around 2006,” he explained. “That is a potential warning sign and it also means there is enough inventory in stores which do not require importers to have a big Peak Season.”

And with current inventory levels ostensibly sufficient Hackett added that is hindering any reason to increase levels.

Due to the sentiment and related data supporting the thesis that Peak Season is likely not coming, Hackett said that the recent announcement by the Transpacific Stabilization Agreement regarding a guideline peak season surcharge (PSS) of $400 per 40-foot container from Asia to all U.S. destinations, effective August 1, is unlikely to stick despite TSA officials citing things like positive signals on consumer confidence for the second-half 2013, and healthy consumer spending data in the second quarter, that suggest a likely bump for Asian imports in coming months, with container shipping lines in the TSA are preparing for a potentially healthy Peak Season.

What’s more, shippers have been bracing for the rate hikes for several months now.

“It is hard to say at this point what the size and the timing of the peak will be, but lines are expecting a defined peak period and want to be prepared,” said TSA executive administrator Brian Conrad. “That means having the necessary vessel and equipment assets in place, the right mix of services, and their costs adequately covered to quickly address contingencies.”

Hackett said that despite the TSA’s reasoning, this scenario is not likely to come to fruition.

This sentiment was supported by a Wall Street Journal report, which pointed out that freight rates recently came close to $1,400 a container last week, but they had been closer to $600 for much of the year “as a sluggish global economy has slowed growth in international trade.”

Another key thing to remember, said Hackett is that those are spot rates, which represent about 5 percent of total ocean cargo volume, with the rest contractually negotiated.

About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Efficiency improvements in Track/Trace Enhances Customer Loyalty
Consumer satisfaction with the quality of your products is clearly important, but the service you provide before and after the sale is equally important to any business, but often overlooked as benefiting the bottom line.
Download Today!
From the October 2016 Issue
Over the past decade we’ve seen a major trend in regards to safety regulations for freight transport within the United States as well as for import and export shippers—that trend is the “international­ization” of rules and regulations.
European Logistics Update: Post-Brexit U.K. moving ahead, but in which direction?
Badcock Home Furniture &more: Out with paper, in with Cloud TMS
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
How API Technology Connects the Transportation Economy
Dynamic decision making is made possible through accurate, actionable data. When combined with progress in data science and the Internet of Things, technology companies that add value to direct-to-carrier APIs and combine them with high-power data analytics will create new concepts for the information economy.
Register Today!
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...

2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...