Maersk sees unprecedented container shortage

Maersk Line, the world’s biggest container shipping group, said today a strong rebound in global trade has led to an unprecedented shortage of containers as shipping enters its peak season.

Maersk Line, part of Danish oil and shipping group A.P. Moller-Maersk, announced unusually high peak season surcharges on freight rates from Asia to Europe last week.

“The present market situation is unique,” Lars Reno Jakobsen, head of Network and Product and member of Maersk Line’s management board, said in a statement.

“We are experiencing a demand surge in most trades, which is a development that is both unprecedented and unexpected by us and our customers,” Jakobsen said.

The Asia-Europe trade is growing by 23 per cent year-on-year, outpacing the market’s 3-6 per cent forecast from six months ago, he said.

“We expect an even more pronounced and serious shortage of containers in the coming months as we enter the peak season,” he added.

After a plunge in the market from late 2008 through last year, the global shipping industry is recovering with world trade.

“Maersk Line expects the equipment (container) shortage to last through the third quarter of this year and will continue to work closely together with all stakeholders, not least our customers, to further reduce equipment turnaround times,” it said.

During the slump of 2008-2009, many container shipping and container leasing companies stopped sourcing and producing containers, Maersk said.

“As carriers and shippers did not expect the current demand surge, the necessary equipment has not been ordered in 2010, ultimately resulting in the global shortage in equipment,” it said.

In response to the equipment shortage, Maersk Line has begun producing new containers and leasing containers, it said.

It has also re-activated laid-up vessels to help reposition containers as fast as possible from, for instance, the east coast of North America and Latin America to Asia, it said.

Last week, Maersk Line announced a peak season surcharge (PSS) for the Far East-Europe trade applicable from July 2010, Maersk said.

The surcharge will help Maersk recover the higher costs caused by the increased volumes and equipment shortages, such as port costs and costs of extraordinary vessels deployed to reposition containers, Maersk said.

Maersk said it would apply only one peak season surcharge so it would not announce separate surcharges or rate increases in connection with the peak season.

Source: Malaysian Insider

10mp: Shot in the arm for maritime industry

The maritime industry welcomes the 10th Malaysia Plan (10MP) initiatives to improve related industry infrastructure, as it will give the industry a much needed boost in terms competitiveness against counterparts in neighbouring countries.

Dr Mohamed Amin Kassim, a founding member of the Malaysian Logistics Council, said although the general consensus might indicate that the country’s maritime infrastructure was already good, the 10MP initiatives would resolve some nagging issues to further improve the industry.

"The last-mile connectivity, especially to seaports, has always been a problem thus the plan to work on that is a good thing"- DR MOHAMED AMIN KASSIM

“For example, the Government has indicated that it will enhance the road connectivity to seaports and airports. The last-mile connectivity, especially to seaports, has always been a problem, thus the plan to work on that is a good thing,” he told StarBiz.

Amin, who is also deputy managing director of Century Logistics Holdings Bhd, lauded the Government’s initiative to improve multimodal connectivity between seaport, airport and rail, which was expected to ensure seamless transportation and distribution of goods.

“But, on the capital dredging part, the Government must justify why only certain ports are selected,” he said.

The Association of Malaysian Hauliers president Datuk Ahmad Shalimin Shaffie said the emphasis given to the logistics sector in the 10MP proved the Government recognised the importance of the sector to economic growth.

“The logistics sector should no longer be part of the services sector, but needed to be established as a stand-alone industry.

"The logistics sector should no longer be part of the services sector, but needed to be established as a stand-alone industry"- DATUK AHMAD SHALIMIN SHAFFIE

“Nevertheless, the association appreciates the initiatives identified under the new plan as it will enhance our competitiveness, especially against our regional rivals,” he said.

In the larger context of the 10MP, Shalimin said it was gathered that the objectives of the plan would only be achieved if everyone worked together.

“This is because 2020 is not that far away and we have to work hard to realise the vision to become a high-income economy.

“Thus, we must strive to move up the value chain in whatever we do. Innovation and productivity are the two key elements that will support that,” he said.

Among the notable maritime-related projects under the 10MP is land reclamation in Westports in Port Klang, where the financing will be under the facilitation fund that is expected to attract private sector investment of RM200bil during the next five years.

The Government also focused on the development of a wider and efficient multimodal transport network to support national growth.

The major projects currently being implemented include Phase 2 of the East Coast Expressway from Kuantan to Kuala Terengganu, which will be completed during the plan period at a total cost of RM3.7bil.

The expressway will also be linked to Kuantan Port, which will be upgraded and spur growth in the east coast. Road networks to the hinterlands will also be improved.

Among them are the roads linking Kuala Lipis to Cameron Highlands, and Jerantut to Sungai Lembing.

In addition, the electrified double-track rail project from Gemas to Johor Baru, which is estimated to cost RM8bil, will be implemented to complete the entire rail project from Padang Besar in the north to Johor Baru in the south.

About RM2.7bil will be invested to build road and rails leading to key ports and airports, while logistics management will be improved to enhance efficiency in the transportation of cargo through rail, ports and airports.

In terms of maritime industry, the national port policy will be formulated during the 10MP to outline the strategic directions and further development of the port sector.

Maritime infrastructure will also be upgraded to ensure the competitiveness of Malaysian ports. The plan includes RM1bil for capital dredging of port channels to cater for bigger vessels and upgrading works at Westports and Port of Tanjung Pelepas to provide additional capacity for import and export of goods.

Key private investment during the period will include upgrading works at Westports, Port of Tanjung Pelepas and Penang Port.

As for airports, capacity would be expanded at a cost of RM3.3bil, as passenger arrivals are expected to grow to 62 million in 2015 from 47 million in 2008.

Source: StarBiz

Shipping rates plunge as idle ships deployed

Shipping rates on the Asia-Europe trade route have dropped for more than 12 consecutive weeks because of a hasty resumption of idled capacity and new vessel deliveries.

Almost 30% of what had been a rebound in the freight rates over the past year has been wiped out since March as nearly one million 20-foot equivalent units (TEU) of idled vessels have been reintroduced into operation in the year.

The weekly capacity on the Asia-Europe trade route is expected to rise 15% to 48,550 TEU next month from January, industry sources said. Most of this increase is derived from the revival of idled vessels. At the same time, 10 new 13,000 TEU vessels are to be deployed by Maersk Line and CMA CGM in the trade lane.

The idled fleet dropped from a peak of 1.5 million TEU in December to less than 550,000 TEU on May 24, shipping consultant Alphaliner said in a weekly report. As June and July are the peak seasons for the trade lane, it expects the laid-up vessels to further decline to 450,000 TEU by the end of this month.

"Capacity management is the perennial weakness of the shipping lines because the industry is very fragmented and lacks a market leader to stabilise the market," Geoffrey Cheng, a transport analyst at Daiwa Capital Markets, said.

Tung Chee-chen, the chairman of Orient Overseas (International), warned of the problem more than two months ago.

"Any imprudent reintroduction of capacity currently idling or laid up, if mismatched with demand, could see fresh rounds of rate cutting," he said in March.

Since then, the freight rates on the Asia-Europe trade route have fallen 17%.

Transpacific trade, however, is subject to yearly contracts and is less volatile.

Average freight rates from the mainland to northern Europe fell to US$1,802 per TEU for the week to May 23, compared with US$2,164 during the week to March 5.

Laid-up vessels compared with the global fleet have dived to 4.1% from 11% last year.

China Shipping Container Lines, however, said rates on the Asia-Europe trade route had reached the bottom. Freight rates had stabilised and demand from Europe had increased, its investor relations manager Frank Fan said.

Source: Edge Daily