Pushback time for container shipping
The roller coaster ride of container shipping continues.
Significant profits are now back on the agenda after a desperate 2009. But what lies on the horizon?
Looking across the Asia-Europe and the Atlantic trades, there is plenty to suggest that the final quarter of the year will see a dip in volume. At the beginning of September, for example, Maersk took the lead in withdrawing capacity and sailings on the Asia/North Europe trade to meet the downturn in market demand at the beginning of the fourth quarter. Others have followed suit.
A fourth quarter decline, however, is not widely viewed as a march into double-dip recession – as HSBC Global Research (HSBC GR) recently put it, this risk is considered to be a “limited” one.
HSBC GR forecasts that global container volume will increase by 12% in 2010, but reduce to an annualised growth of 6% in 2011. The more interesting statistics though are regarding container freight rates which over 2010 are expected to achieve an average rise of 17% in dollars per teu, but in 2011 are expected to only achieve an average 2% rise.
There is of course a big adjustment involved here regarding getting things “back to normal", even so this can be viewed as a manifestation of the roller coaster effect!
And just to make it more interesting, 2011 looks to be the year of “pushback” among container freight cargo shippers.
Indicative of this, The Global Shippers Forum, representing shipper bodies in Asia, Africa, North America and Europe, has recently issued a declaration citing “unacceptable shipping practices, ranging from the imposition of abrupt and opportunistic rate increases and surcharges, cargo rollovers, limitation of shipping capacity and general lack of adherence to contractual arrangements on an unprecedented scale".
A particular objective cited was liner shipping reform in Asia including the end of the conference system here.
At a company level it is also interesting to note the recent decision of the UK retailer Argos to initiate a legal claim for damages against Maersk Line for allegedly reneging on contract to carry 10,000 40ft containers between Asia and the UK in 2010-11.
Specifically, Argos contends that from an agreed contract rate of $930 per container Maersk tried to impose an increase of more than double to $2730 per container. If Argos wins its case or even if Maersk settles out of court the implications for container shipping are significant.
