…today, some thoughts and observations on the Transatlantic Trade westbound:
Surprisingly or not, the cargo pressure on the vessels continued during the months of December and. to our opinion will also continue the whole month of January.
We are saying “surprisingly or not” as some carriers came up with blank sailings so that the capacity would be shortened during those months. Also the question of accurate sailing schedules needs to be mentioned at times where single vessels pick up delays of up to 28 days at West Coast ports of the USA. Some lines also carried some rolled cargo to the next ships by which they could easily fill up possible empty slots if they ever existed.
The USA West Coast ports are still a bottle neck as the trade unions and the port authorities could not get to a fixture yet and seem to be miles away from each other. Unions inter alia are requesting carriers to keep on repairing chassis at the terminals with union staff, while the lines already sold all their equipment to leasing companies who have their own repair capacities. Such requests are totally away from reality. As the performance of the ports very much influences the economic growth or recession of a country, industry leaders and associations already contacted the government to come up with arbitrators or a solution. We would expect that the Obama administration will not keep on sitting on the side line to watch, they must react sooner or later to get these block heads in the USA to come to a solution
An interesting question will be the outlook for the next weeks and months and also the development of services, rates and costs.
On the capacity side there is some hope that certain changes in the service pattern, like the new individual service of CMA- CGM might help to bring some relief, even though all parties involved keep on emphasizing that the capacity just moved from slots to own ships, we cannot judge that.
Rumors go that the Yang Ming,K- Line, Cosco, Evergreen etc Alliance will come up with more capacity as of the second quarter, we will see, if that will really happen.
We should not oversee the fact that there will be new ships delivered by the shipyards in 2015 too and experience showed us over the years that existing vessels would be replaced by bigger ones, which again replace smaller ships on other trades etc. The cascading down of capacity might hit trades again in 2015 and might create a changing approach to space issues also on the Transatlantic.
Hapag Lloyd and CSAV merged and are still in the middle of the reorganization process; they recently published the following information:
Both Hapag-Lloyd and CSAV will continue to operate as stand-alone units until the start of the vessel cut-over program (combination of services).
Until vessel cut-over, all pricing, allocation and sales responsibilities, customer service, operations and finance processes will remain unchanged.
We will begin to gradually transfer CSAV’s services to the Hapag-Lloyd IT systems in March 2015 (vessel cut-over). Until then, you will not be affected by any changes to the two companies’ communication channels, and we kindly ask you not to change your current booking pattern until the vessel cut-over begins.
The transfer of all CSAV services into the Hapag-Lloyd systems should be completed by the end of June. A detailed timeline on the vessel cut-over schedule will be announced as soon as possible.
The question will be in how far such a “vessel cut over” program will influence capacities in different trades including the Transatlantic.
Fact is that the lines were able to increase their Transatlantic westbound rates to pretty respectable levels, which should bring them quite some profits, considering that the single box does many more earning voyages on the “short distance” trade to the USA than on the “long haul” trade to and from Far East. The big downside of the TA trade these days seems to be the weakness of the eastbound business from the USA to Europe and more and more carriers attempt to have the westbound “pay the entire bill” of the trade, which may function or not, depending on the development of capacities, port performances and rates.
Very much unexpected to all of us was and is the fact that oils prices are dropping dramatically, which helps the steamship companies to get some relief on the cost side, which is not to be underestimated by the amount of fuel that whole fleets of vessels consume, even at slow steaming. Part of these costs reductions are passed on to shippers by the reduced fuel surcharge, which some of them are still keeping separate from the rates.
Those carriers that rolled the bunker surcharge into the freight rates in the past are now facing a situation that their rates compare more and more expensive to the fluctuating BAF on freight rates of the competitors.
The rate “front” is pretty difficult too these days as several lines increased rates by January 1st and fixed them to March 31st, while others already confirmed the rate levels to that date after the October increase. There are carriers out there who limited the validity to January 31st and are now hoping to materialize another GRI or some kind of raises. Again, the decisions at the shipping lines are in the preparation stadium, some players in the market believe that the present tightness of space versus cargo allows the lines to do whatever they want as the cargo has no alternative ways to go, but we all know that the market will change ( it always went up and down in the past) and so times may not be far away, where people will be desperate to fill their ships. As usual, all of us are not doing business in vacuum, competitors, developments, necessities need to be evaluated and solutions must be found that allow all players to survive in the market place.
2015 will be another very interesting year concerning services, port performances, trade volumes and also rates.
We will be around to keep you informed.