Doubts over shipping lines' ability to enforce peak season surcharges
Demand is brisk, but there are fears over stability of rates
Japanese container giant K Line expects ocean freight rates to remain at current levels on key trades through the summer peak season, and plans to intensify its rate restoration efforts in the coming months.
But although demand is brisk, some forwarders doubt whether shipping lines will be able to push through planned additional peak season surcharges and general rate increases next month.
Although the carrier said the depreciation of the euro and poor economic figures in the US were causes for concern, “robust cargo movements are expected to continue for some time on all routes, and especially on East West routes”.
It added: “In this environment, the company will continue efforts to maximise cargo volume, achieve further restoration of freight rates and rigorously cut costs by means including eco-friendly slow-steaming.”
According to the New Shanghai Containerised Freight Index, spot rates to European base ports were running at US$1,895/teu on 23 July, down $8 on a week earlier.
Spot rates to US east coast ports were up $24 on a week earlier, at $4,012/feu, but for west coast gateways contracted $15 to $2,779/feu .
One leading Chinese forwarder told IFW he expected some carriers to delay the introduction of a second general rate increase on Asia-Europe trades in August, but predicted that a second peak season surcharge might be applied on transpacific trades.
But Paul Tsui, Chairman of the Hong Kong Association of Freight Forwarding and Logistics (Haffa), said that space on trades from Asia to the US west coast had eased significantly in recent weeks, with carriers now seeking more cargo.
“The US east coast is tight, but improving,” he said. “For the US market, everyone is now watching to see how much, of the second peak season surcharges due before 1 August, the lines will try to push through.
“Everyone is looking at load factors on upcoming sailings. They are testing the market but the chances are that they won’t fully implement them.”
K Line said its volumes in the quarter ended 30 June on Asia-North America and Asia-Europe routes increased by 6% and 14% year-on-year, respectively.
It reported ¥112.26 billion (US$1.28bn) of operating revenue was generated by its container business in the period, with operating income totalling ¥9.62 billion.
Group consolidated operating income totalled ¥23.06 billion in the quarter, compared with an operating loss of ¥22.13 billion a year earlier.
But although demand is brisk, some forwarders doubt whether shipping lines will be able to push through planned additional peak season surcharges and general rate increases next month.
Although the carrier said the depreciation of the euro and poor economic figures in the US were causes for concern, “robust cargo movements are expected to continue for some time on all routes, and especially on East West routes”.
It added: “In this environment, the company will continue efforts to maximise cargo volume, achieve further restoration of freight rates and rigorously cut costs by means including eco-friendly slow-steaming.”
According to the New Shanghai Containerised Freight Index, spot rates to European base ports were running at US$1,895/teu on 23 July, down $8 on a week earlier.
Spot rates to US east coast ports were up $24 on a week earlier, at $4,012/feu, but for west coast gateways contracted $15 to $2,779/feu .
One leading Chinese forwarder told IFW he expected some carriers to delay the introduction of a second general rate increase on Asia-Europe trades in August, but predicted that a second peak season surcharge might be applied on transpacific trades.
But Paul Tsui, Chairman of the Hong Kong Association of Freight Forwarding and Logistics (Haffa), said that space on trades from Asia to the US west coast had eased significantly in recent weeks, with carriers now seeking more cargo.
“The US east coast is tight, but improving,” he said. “For the US market, everyone is now watching to see how much, of the second peak season surcharges due before 1 August, the lines will try to push through.
“Everyone is looking at load factors on upcoming sailings. They are testing the market but the chances are that they won’t fully implement them.”
K Line said its volumes in the quarter ended 30 June on Asia-North America and Asia-Europe routes increased by 6% and 14% year-on-year, respectively.
It reported ¥112.26 billion (US$1.28bn) of operating revenue was generated by its container business in the period, with operating income totalling ¥9.62 billion.
Group consolidated operating income totalled ¥23.06 billion in the quarter, compared with an operating loss of ¥22.13 billion a year earlier.
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