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Global container market to rebound in H2

Singapore, April 12, 2011

The global container market is set to rebound in the third quarter after a sharp downturn driven by overcapacity and limited demand, senior industry executives said on Tuesday.

Container freight rates on the benchmark Asia-European route tumbled by about half in the last nine months, trading last week at around $978 per twenty-foot equivalent unit (TEUs) from more than $1,800 in July 2010.

Seasonal demand, surging bunker fuel prices and tight container box availability should help push rates higher and help ease the "sense of panic among carriers", said Eng Aik Meng, president of APL, the world's sixth largest container firm and a unit of Neptune Orient Lines.

APL's rivals also agreed that freight rates could not linger much longer at current levels, especially with bunker fuel prices at multi-year highs.

"I am optimistic on the second half. The availability of containers, the cost of fuels and liners looking for ways to reduce their consumption will cause a slowdown in transport times," said John Lines, chief executive of ANL Container Line, at an industry conference in Singapore.

"These in many ways will balance the oversupply in capacity."     

Bunker fuel prices, which can make up anywhere from 10 to 70 percent of operating costs depending on the type of vessel, climbed to 2-1/2 year highs this week.

Shipping companies have adjusted their contracts with clients and introduced additional fuel surcharges to ensure operating costs do not dip below earnings.

"I don't think any liners today can afford this type of rates at these high costs," said SS Teo, managing director of Pacific International Lines. - Reuters




Tags: shipping | container | freight | APL |

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