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After
more than nine months of a sharp downward trend,
the global container shipping industry is
showing signs of improving in the second
quarter, said a senior container shipping
official. Industry officials said the first
quarter of 2009 is still weak compared to the
last quarter of 2008, indicating a further
slowdown in activity, but project a positive
turnaround in business in the remaining part of
the year.
"There are growing signs that profitability will
return in the coming months. We see optimism
returning, however, business is still down at
the moment," Ken Bloch Soerensen, President and
CEO of United Arab Shipping Company (UASC), told
Emirates Business.
He said the fact that a number of container
lines are beginning to increase rates on various
routes is in itself a positive indicator for the
container business.
"We are still watching the market, we are not
yet sure of the trend we are likely to see for
the rest of the year. But there is some hope
that things will get better," added Soerensen.
UASC is planning to increase its shipping rates
on some routes effective from April 1. Rates
from Far East to Europe (North Europe,
Mediterranean and Black Sea) will be increased
by $275 (Dh1,010) per TEU (twenty foot
equivalent units). Rates from Europe to the Far
East will be increased by $100 per TEU, while
rates from Europe to the Red Sea, the Arabian
Gulf and the Indian Subcontinent will be hiked
by $50 per 20-foot container and $75 per 40-foot
container. The company will also adjust shipping
rates to US East Coast base ports of the US (New
York, Norfolk, and Savannah) by an increase of
$200 per 20-foot container and $250 per 40-foot
container.
Maersk Line, the world's largest container
shipping line, said recently that from May 1
rates for dry cargo shipped from all origin
points in the US and Canada to destinations in
the Mediterranean and North Africa will
increased by $80 per 20-foot container and $120
per 40-foot container, HighCube or 45-foot
container.
French carrier CMA CGM will also next month
increase rates between North Europe and the US
by $160 per 20-foot dry container and $220 per
40-foot/40-foot HighCube. Similar hikes have
been announced by APL containers on its
Asia-Europe trade route.
Freight rates, the main determinant for
profitability in the container shipping
industry, have come under pressure since the
second half of 2008, with rates on some major
trade routes falling more than 80 per cent.
In an effort to revive freight rates and improve
utilisation, UASC, the world's largest container
shipping company, said it would lay-up part of
its fleet throughout this year.
The company will take out of service three to
four ships of up to 3,000 TEUs for a while
during 2009 to help narrow the widening gap
between demand and supply.
The company has also started a restructuring
exercise for services across its global network
by placing underutilised tonnage into trade
routes where demand is relatively high.
"Some of our older ships will be idle for a
while during 2009 to ease pressure on
utilisation," said Soerensen "By taking out some
of the vessels, we will be able to bring back
some level of utilisation on the remaining
fleet, and this can help to push up freight
rates."
He, however, noted that the company was in no
rush to increase the number of vessels to be
laid up, adding that the decision would be based
on market trends.
Between 400 and 500 container vessels around the
globe are believed to be in hot or cold lay-up
and the number is expected to go up if the
market situation fails to improve. Soerensen
said UASC was going ahead with its restructuring
programme by removing capacity from the
Asia-Europe trades that have been hit worst by a
drop in demand and adding it to more active
trades such as the Middle East.
Source: Emirates Business
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