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

Last week, the United States Department of Transportation took further steps to address various issues identified in recent train accidents involving crude oil and ethanol shipped by rail. The announcement was made by DOT with other DOT agencies, including the Federal Railroad Administration (FRA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA).

Logistics Management Group News Editor Jeff Berman had an opportunity to interview Derek Leathers, President and Chief Operating Officer of Werner Enterprises, at this month's NASSTRAC Shippers Conference and Transportation Expo in Orlando. They discussed various aspects of the truckload market, including prices, fuel, and regulations.

During this webcast our presenters will apply the findings of the 23rd Annual Trends & Issues in Transportation and Logistics Study to the world of shipper-carrier decision making. They'll examine the primary aspects that will influence the future direction for shipper-carrier decision-making.

For February, the month for which most recent data is available, the SCI dropped to -1.0 from January’s 2.6, with FTR explaining that the short term positive impact from one-time adjustments for rapidly dropping diesel prices and the suspension of the 2013 motor carriers hours-of-service expires later this year.

Seasonally-adjusted (SA) for-hire truck tonnage in March was up 1.1 percent on the heels of a revised 2.8 percent (from 3.1 percent) February decline, with the SA index at 133.5 (2000=100). This is off 0.3 percent from the all-time high for the SA of 135.8 from January 2015 and is up 5 percent annually.

Article Topics

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

Comments

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


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA