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Global
liner operators across the world
are anxiously watching for the
third quarter statistics on the
performance of the United States
trade to evaluate the severity of
the decline.
After
a period of unprecedented growth,
there are strong signs that the
container trade across major
east-west shipping lanes in the
world is heading towards a slump
following the 0.8 per cent decline
in the trade of the world’s
largest economy.
In
the wake of the uncertainty major
operators are already adopting
pre-emptive measures including
restrain on capacity and waging a
freight “war” to keep the
bottoms filled although weak
demand, rapidly eroding freight
rates and bloating capacity in the
global trade paints a grim
picture.
In
an unprecedented move, the Far
Eastern Freight Conference,
serving the Europe/Asia trade, has
asked its members to look at
rationalizing their shipping
capacity that could include
withdrawal of tonnages from the
trade to restore equilibrium in
the supply and demand marketplace.
The
other major shipping lane in the
world covering the trade between
Asia and the US which last year
notched up an unprecedented growth
of about 15 per cent, is looking
anxiously for an overall growth of
1-2 per cent this year as both the
US and Asian economies continue to
weaken demand.
According
to industry analysts the Pacific
eastbound volume, which rose 14
per cent last year, is expected to
record only 2 per cent rise while
the westbound trade which saw a 12
per cent increase is expected to
expand by a mere 1 per cent
It
is not just the weakened demand
condition that worries the
shipping lines but the surge in
capacity with a number of major
carrier taking delivery of new and
large vessels that is aggravating
the concerns of the shipping
lines.
Ironically,
the super post panamaz ship with
capacity above 6,000 TEUs in
particular, seen as answer to
shipping lines to reduce costs by
achieving economies of scale is
becoming an albatross to the
industry.
In
the Europe-Asia trade about 20 per
cent of the capacity now deployed
in the trade has been estimated as
surplus to the prevailing
requirement.
Thus,
shipping lines, which are already
hit by declining freight rates in
the sector, may have to take off
some of the capacity in the trade
to prevent erosion of the freight
rates. The proposed capacity
rationalization agreement could
see a significant number of
vessels laid-up.
According
to Drewry Shipping Consultants the
speed with which the downturn has
taken place which is particularly
worrying carriers in the trades
and the “considerable” amount
of post-panamax tonnage due to be
deployed before the end of the
year.
Most
of the orders were placed during
the two boom years of 1999 and
2000.
Shipping
database Lloyd's Register-Fairplay
lists over 100 new giant ships
under construction, each capable
of carrying over 5,000 TEUs, apart
from many smaller ships also in
the pipeline in the range between
2,000 TEUs – 4,500 TEUs
Slot
utilisation on the trades has been
estimated to fall to 75. 8 per
cent in the first half of this
year from 80.6 per cent in the
first half of last year on the
westbound trades and 78.3 per cent
in the second half of the year
compared with 82.1 per cent in the
last six months of 2000.
The
utilization of the slots in the
second half is expected to worsen
to about 60 per cent eastbound and
70 per cent westbound.The
deceleration follows double digit
eastbound transpacific growth for
the past four years.
The
trade between Asia and the US is
also fast deteriorating. In 2000,
containerised imports from
northeast and Southeast Asia
totalled 6.9 million TEUs and this
year is expected to total just
over seven million TEUs.
The
revised forecasts coincide with a
widening gap between supply and
demand on the Pacific.
Capacity
expanded by 9 per cent between
July 2000 and July 2001, according
to the report and on a weekly
basis, slot capacity now stands at
205,518 TEUs, equivalent to 10.7
million TEUs of yearly one-way
slot capacity, compared with
188,538 TEUs 12 months ago.
Leading
shipping lines calling at local
ports confirmed dramatic reduction
in volumes of cargo lifted (and
discharged) although creating
counting of the number of boxes
moved at their facilities seem to
give a glowing picture of the
throughput race the local ports
are senselessly engaged in.
Lines
report that volume of hinterland
cargo (comprising exports and
imports) has plunged, between
20-35 per cent at local ports.
Shipping
lines said the ports are only
propping the throughput with the
transshipment traffic which
generally gets counted twice,
thrice (and in some cases even
four times by including
re-stows!).
In
the first seven months of this
year transshipment at Port Klang
grew spectacularly from about
700,000 TEUs to 1.02 million TEUs.
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