Ocean carrier services decline as rates increase

The latest data shows that the aggregate on-time performance for the Asia-Europe, trans-Pacific and trans-Atlantic trades dropped to 58 percent in December, down from 62 percent in November and 64 percent in October, according to Drewry Supply Chain Advisors.

December’s on-time performance was the worst since August (55 percent) with the monthly decline the result of weaker reliability across all three trades.

This news from the London-based think tank comes just as carriers have embarked on concerted efforts to raise rates in all trade lanes.

Reliability in the Asia-Europe trade (7,475 voyages tracked) declined by 4.5 points month-on-month to 64.3 percent. In the trans-Pacific (3,826 voyages), the on-time performance dropped 3.3 points to a new low of 47.4 percent, while trans-Atlantic (570 voyages) reliability also slumped to a nadir of 46.3 percent, down by 12.6 points.

Maersk Line was the most reliable carrier in the October-December period, recording a three-month average on-time performance of 80 percent, up 3 points on the previous quarter. In second place was Hamburg Süd with 75 percent, followed by COSCO on 70 percent.

The biggest improvement in the fourth quarter came from MOL, which gained 11 points to 60 percent, while MSC, one of the industry’s perennial under-performers, jumped by 9 points to 61 percent. The improvement at MSC suggests that it is striving to meet the standards of Maersk, its partner in the new “2M” vessel sharing agreement that starts this month.

“The slower-demand winter season should ease some of the congestion pressures and allow for some improvement in container shipping reliability,” said Simon Heaney, senior manager of supply chain research at Drewry.

“Falling bunker prices should also help raise the on-time performance as carriers will face a lower fuel bill for speeding up ships that fall behind schedule. However, the introduction of new alliance service networks from the start of 2015 is a short-term risk to reliability as new schedules are phased in,” added Heaney.

Meanwhile, shippers may not expect any declines in rates.

Anticipating strong pre-Lunar New Year shipments from Asia to the U.S., container lines in the Transpacific Stabilization Agreement (TSA) are proposing a $600-per-40-foot container (FEU rate increase for all origins and destinations, to take effect on February 9, 2015.

The increase is intended to ensure that carrier costs are adequately recovered coming out of the slower winter season. “This is a very challenging operating environment for transpacific container lines,” said TSA executive administrator Brian Conrad, “and it is critical to maintaining service levels that they not leave money on the table during the Lunar New Year period.”

Conrad emphasized that, while some carriers have reported profitability in the trade in recent quarters, it has come almost entirely from cost-cutting as revenues have shown only marginal improvement over time