As Chinese Lunar
New Year celebrations continue this week in semi-full
swing, we wish prosperity and good luck to all
as we track air and sea activity to this point
in 2013. China’s official holidays started
10 February this year.
This prompted a
January rush of exports first by sea and, as the
days to the cut-off were counted down, then by
air, as shippers looked to guarantee ample stocks
and parts over the holiday shutdown of factories.
This saw a build
up of capacity ex-China and Hong Kong to cope
with the pre-Lunar New Year Rush in late January
and early February and helped HKIA, for example,
book a 20 percent increase in cargo in January
compared to a year earlier.
economy then, as usual, came to a virtual standstill
as workers trekked home to visit families. Indeed,
many factories are expected to remain closed until
the final week of February this year.
Hong Kong Chinese New Year night parade
marks the Year of the Snake as celebrations
wind down. Holiday ends this week amidst
reports of a major bump in both air and
sea shipping action.
A number of airlines
including Saudia Cargo took the opportunity to
shift capacity out of China once the Lunar New
Year celebrations began, just in time to hit the
peak flower season ex-South America and Africa
into Europe for St Valentine’s Day. But
once output from China’s factories fully
resumes in late February inventory restocking
could prompt another mini-boom in air freight
On the shipping
side of the transport equation, lines have taken
rather hearty measures to keep freight rates stable.
To cope with the
deathly quiet loading season in China carriers
announced a series of capacity cuts and blank
sailings. Maersk, for example, suspended one of
its Asia-Europe loops until April due to “declining
Other leading liner
executives have spoken about the need to maintain
disciple to sustain freight rates at profitable
Many are pinning
hopes on a series of major General Rate Increases
announced on the Asia-Europe trade starting early
to mid-March and ranging from $600-800 per TEU.
Whether they can force through the hikes remains
to be seen.
Analysis from ACM/GFI
shows that rates are already far higher than a
year earlier despite vessel slot capacity availability
being more plentiful.
ACM/GFI says the
liner shipping paper market reveals weak forward
sentiment towards the March GRIs, but there is
more evidence that this year companies are planning
for a traditional Q3 peak season in freight rates,
something that has largely failed to materialize
over the last two years.
Stabilisation Agreement (TSA) which represents
most major carriers on the route has also recommended
GRIs starting April of $400/FEU and $600/FEU for
shipments from Asia to the US West Coast and East
coast, respectively. The ‘G6’ alliance
of carriers (Hapag Lloyd, NYK, OOCL, APL, HMM
and MOL) which was set up last year to aid co-operation
on Asia-Europe lanes has now been extended to
the Transpacific, suggesting carriers are extending
effort to manage capacity.
else, these latest announcements point to further
commoditisation on the Transpacific head haul
trade,” said ACM/GFI. “While carriers
are still free to co-ordinate rate hikes whenever
they choose, albeit via a thinly veiled consortium,
they do so despite market fundamentals, and at
the same time as aligning their service offerings.”
On the plus side,
it seems the threat of strike action at U.S. ports
and congestion surcharges has given greater certainty
to U.S. shippers after USMX and ILA reached agreement
on a master contract valid for six years.
course, the fate of freight rates also depends
on the strength of the global economic recovery.
Initial signs in early 2013 suggest financial
conditions are improving and policy actions are
economy remains on the expansionary track at the
start of 2013,” said Peter Sand, BIMCO Chief
Shipping Analyst. “The positive development
is underpinned by rising global employment, a
faster new order inflow and a higher output of
services and manufactured goods.
economies contributed to the composite Purchasing
Managers Index’s (PMI) growth. As global
manufacturing PMI is a leading indicator for global
industrial production, which is closely linked
to shipping demand, BIMCO see this overall improvement
as a support to shipping.” And, he may have
added, for air cargo too.
World output will
jump from 3.2% in 2012 to 3.5% this year, according
to IMF January projections.
Sand said that for
container shipping the demand situation looked
rather solid and “underpins the optimism
that also originates from a lower inflow of tonnage
as the year progresses”.
year there will be asteady procession of new Ultra
Large Containerships joining the fleet which will
be the largest on the High Seas once they are
launched in late Spring and early summer.
After some 51 vessels
of more than 10,000 TEU capacity were added to
the fleet last year, another 42 will be introduced
from this will be felt in particular on the Far
East to Europe trading lane, where these vessels
are almost exclusively heading,” said Sand.
“This will mean that a bit more than 4 full
strings of 10 vessels each will be added.”
growth continues to be outstripped by supply expansion,
January was the most active month on record for
container ship recycling, behind only two months
in mid-2009, providing some ballast to market
“At the beginning
of 2010 and again in 2012 rates went up from low
levels to double up and quadruple up, bringing
around a freight rate level that left room for
subsequent rate slides throughout the rest of
the year within healthy distance of break-even
levels,” said Sand. “2011 was very
different, but 2013 has started along the positive
lines of 2010 and 2012.”
is anything to judge by, the freight rate lifts
that have been experienced on the trans-Pacific
and Far East to Europe trades in recent weeks
may bring about rather decent average full-year