No Christmas stocking for box ports
The stocking fillers may be lacking this season
The liner industry has entered the slow season. Normally the peak season comes around late August through early October, but this year it came early in the July-August period.
Probably the primary reason for this is that wholesalers and retailers where uncertain about the availability of both shipping space as well as containers in the lead up to June.
As usual, the industry had left out discourse about coordination among all the players. One side was concerned about raising freight rates in order to survive, the other about getting the goods into the warehouses that had been depleted in response to the recession.
The year started out with great uncertainty and “surprise”. As the trade volumes picked up steam just as ships reduced speed, North America experienced a surge that will most likely end with a 16%-17% year-on-year increase in imports while Europe will most likely see the year out with at least a 12% year-on-year increase. All this despite low relatively low consumer confidence and retail spending growth. A significant portion of the growth will have been due to re-stocking and import substitution.
Carriers are facing a significant growth in the 10,000+ teu ships entering the system. This is causing additional capacity that they really do not need. As a subsequence, and due to the high cost of “hot lay-up” there is considerable cascading of relatively large vessels to smaller trades on the North-South and Southern Hemisphere trade routes.
With the slack season, which is expected to last through February, 2011 carriers are pushed into missing voyages as well.
The impact of all of this is further slow steaming on routes where it has not been as prevalent, combined with much lower utilisation levels. This is not healthy for the carriers as their costs increase and the freight rates take their seasonal decline.
There is also another impact not often considered. The effect on the terminals with limited quay space to work larger vessels, some in feeder operations, with less than optimum stowage for efficient operation is impacting handling efficiency. The year ends with seasonal uncertainty.
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