Subscribe to our free, weekly email newsletter!


Ocean cargo in second half of 2012: challenges and opportunities

In a collective effort to stem the flow of eroding freight pricing, ocean carriers are now competing on the two major global trade lanes – EU-Asia and the Transpacific – by focusing on value rather than rates.
By Patrick Burnson, Executive Editor
June 23, 2012

All the major players are telling shippers the General Rate Increases (GRI’s) will not be jeopardized by competition offering deep discounts this year

In a collective effort to stem the flow of eroding freight pricing, ocean carriers are now competing on the two major global trade lanes – EU-Asia and the Transpacific – by focusing on value rather than rates. Indeed, all the major players are telling shippers the General Rate Increases (GRI’s) will not be jeopardized by competition offering deep discounts this year.

While no major multinational corporation wants to hear that supply chain expenses may soon escalate, there is an attractive aspect of this forecast, too. Ocean carriers – and the lead logistics providers who work with them – may rely on a sustainable level of capacity and service through 2012 beyond.

According to to Drewry’s Container Research – a London-based industry think tank – nearly 60 new vessels of at least 10,000 twenty-foot equivalent units (TEUs) are being staged for deployment. And while the active global ocean cargo container fleet has grown by less than 2 percent to date, analysts feel that it will expand more than 7 percent by the end of this year.

The major question, however, is whether the buying spree of last year will pay off. Overspending and rate cutting to win market share proved to be profoundly damaging strategies for all but a few ocean carriers.
Just how bad was it? Maersk – the world’s largest container line – reported a significant loss last year, along with France’s CMA CGM SA and Hamburg- based Hapag-Lloyd AG. Industry analysts blame frenzied bidding on the world’s two largest container-shipping trade routes.

According to SeaIntel Maritime Analysis in Copenhagen, the cost to the industry overall was a staggering $11.4 billion over the previous 14 months.
Nor were things much better for COSCO, the largest integrated shipping company in China and the second largest in the world.

Container shipping and related business moved volumes totaling 6.91 million TEUs in 2011, up 11.2 percent from the previous year. However, revenues from this segment were down 11 percent year-on-year.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


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!

Recent Entries

Information abounds about the growing trend of electric lift trucks and the advantages and disadvantages of the electric solution. Amid all of the information from so many sources, what's the truth about electric lift trucks? This complimentary white paper breaks through the clutter to review why electric lift trucks are gaining in popularity and also to review their challenges, as well as their economic and environmental benefits.

Three weeks after initiating a coordinated series of slowdowns that have mired the major West Coast ports of Tacoma, Seattle, Oakland, Los Angeles and Long Beach, the ILWU has pushed away from the bargaining table.

DHL has released the third edition of its Global Connectedness Index (GCI), a detailed analysis of the state of globalization around the world.

The truck driver shortage is worsening, threatening the trucking industry’s ability to serve the nation’s supply chains. The shortage will almost certainly cause fleets’ costs to increase and shippers’ rate to continue to rise.

The Agriculture Transportation Coalition has asked the Administration to bring in a federal mediator to help resolve the negotiations, and if a strike or lockout occurs, the AgTC advocates the rarely-invoked Taft-Hartley Act.

Article Topics

News · Ocean Freight · Ocean Cargo · Trade · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA