July 1, 2010  -  Maersk Line is rejecting some shipments and retrieving empty ocean containers from customers more quickly to help offset a shortage of containers, according to Bloomberg News.

"There are hundreds of little things that we are trying to do, but at the end of the day there is a shortage and we can't fix that," Soren Karas, head of Maersk Line's South China operations, told Bloomberg News Wednesday in Hong Kong.

Maersk has reactivated idled vessels to help relocate empty containers and ordered new boxes after a larger than expected jump in shipping demand squeezed supplies. The global container fleet shrank 4 percent last year, according to Textainer Group Holdings, the world's largest container-lessor, as lines cut spending on new units amid the global recession and slumping world trade.

"It's the first time in many years that we are seeing consistent equipment shortages in many areas of Asia," said Claude Lebel, senior vice president for Asia at CMA CGM. Shipping demand "is still growing much faster than we were expecting."

Manufacturers may produce the equivalent of 1.5 million 20-foot containers this year, up from 200,000 last year, Lebel said.

The container shortage may persist through the third quarter before easing in the last three months of the year, Karas said. "This is not healthy for us," Karas said. "We like balanced supply and demand."

The shortage of boxes has been compounded by shipping lines operating vessels more slowly to pare fuel costs. This means that journeys take longer and that containers spend more time onboard vessels.

Liner companies including Cosco and China Shipping Container Lines have also imposed extra surcharges this year citing the shortage of boxes. Cosco, for example, announced surcharges on shipments to Taiwan from Shanghai from July 15 because of a container "imbalance."

The combination of levies and rebounding demand has pushed freight rates to near historical highs, according to the Hong Kong Shippers' Council, a group representing exporters and traders in the city.

"Shipping lines are just maximizing their profits now," said Sunny Ho, executive director of the council. "Since they have imposed peak season and other additional surcharges, they should be delivering better services and boosting their shipping speeds."

 

 

July 6, 2010 - South Korea's container cargo handling in June was the highest ever for the month of June, reported Maeil Business Newspaper.

The Ministry of Land, Transport and Maritime Affairs (MLTM) said the throughput in June stood at 1.69 million TEUs, a 25.8 percent year-on-year increase, following a monthly high of 1.71 million TEUs in May.

Thanks to growing demands on shipments due to an improvement in the real economy, the volume of shipments including imports and exports (1.06 million TEUs), transhipment (609,000 TEUs) and coastal shipping (23,000 TEUs) grew by 21.9 percent, 33.3 percent and 23.8 percent, respectively.

The shipments handled at Busan port, which takes up approximately 74 percent of the total, surpassed 1.2 million TEUs for the three straight months since April by breaking the highest figure of last May.

However, due to a decrease in outbound shipments from major freight owners, the amount of cargo handled at Gwangyang port fell slightly from 182,000 TEUs to 172,000 TEUs and Incheon port handled 161,000 TEUs.

 

 

July 6, 2010  -  Despite robust growth in volumes and rates for container lines, Drewry Shipping Consultants said Tuesday that a more clear picture of the recovery will emerge in the next six weeks, when a backlog of shipments out of Asia should be cleared.

 

"There are some potential derailers to this renaissance of which industry stakeholders should not lose sight, and we do not concur with the belief among some carriers that it is business as usual -- yet," said Neil Dekker, editor of Drewry Container Forecaster.

 

"There is still a huge backlog of shipments in the system which is not new demand and once this is moved out of Asia in the next six weeks or so, we believe that the true strength of the summer peak season will be somewhat less than many predict. There is every possibility that utilization factors will decline, which in turn will have a knock-on effect on freight rates. By no means do we see a precipitous fall, but there will be an impact."

Dekker said the backlog, coupled with a shortage of containers, is giving a false impression of true recovery. The company did, however, say carriers appear to be more focused on profitability than market share.

He said efforts to provide differentiated services, and a determination to better manage capacity, are signs the industry is learning from past mistakes.

 

"Slow-steaming strategies are here to stay as they remain an efficient way to absorb capacity and reduce costs," Dekker said. "Furthermore, by restricting supply more in line with demand, carriers appear to have finally learned that they have the ability to drastically improve their revenue streams. The old days of the volume shipper being seen as a VIP account appear to have gone as many shippers have told us their stories in recent months about lack of space and short shipments. In this new environment, carriers are taking the opportunity to push up freight rates via a succession of (rate increases), peak season and now additional equipment surcharges which shippers have little option but to pay."

 

He also said that while carriers' efforts to achieve sustainable revenue levels are admirable, there is a point at which shippers will rebel against rate increases and surcharges that constitute normal service.

 

"There needs to be a quid pro quo however and no longer should ocean carriers send out GRI notices to the trade stating that rate increases are required in order to continue to provide 'consistent high levels of service,'" Dekker said. "Many shippers have had their freight transportation bills doubled in recent months and are still not managing to ship their cargo out of Asia."