Freight carriers hike rates as exports rise

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14 Jun 2010

united_arabshipping_copanies.jpgFreight carriers are increasing their tariffs as the industry is experiencing better performance with increased consumer spending resulting in increased exports. While the United Arab Shipping Company announced its second rate restructuring from July 1, Maersk has unveiled a significantly high rate on cargo from Asia to Europe starting July 15.
According to the US-based National Retail Federation, import cargo volume at the nation's major retail container ports is expected to be up 15 per cent in June compared with the same month a year ago, and double-digit increases should continue into the fall as the US economy recovers.
UAE-based United Arab Shipping Company has announced that effective July 1, it will implement a $300-$400 general rate increase on all cargo from the West Mediterranean to the US East Coast.
The $300 increase is for 20-foot container (TEU) and a $400 increase is for 40-foot container (FEU). The company's earlier announced rate restoration for vessels from Asia to North Europe, West Mediterranean and Adriatic Trade will be effective from June 15. It also announced that peak season surcharge will be applicable to all cargo from Asia to all WISC destinations, including Indian Inland.
Meanwhile, container shipper Maersk Line has announced that starting July 15 it would introduce a $750 surcharge per 20-foot container and a $1,000 surcharge per 40-foot container on freight rates from Asia to Europe following, what it said, was an exceptional demand this year as global trade recovers.
Vincent Clerc, Head of Maersk's Asia-Europe route, was quoted by Reuters as saying that demand on the route is up 23 per cent so far this year compared with the previous year, and demand in the third quarter – the traditional peak season – is also expected to be stronger than usual.
The high demand will lead to shortage of space on the vessels and for containers during the period, Clerc said.
"The utilisation on the vessels, the demand for transportation in the second quarter has been much higher than normal, which means there's less slack in the network to accommodate for the peak that is coming," he said.
Clerk said this year's high peak surcharges are higher, and will be introduced a bit earlier than usual due to the strain on the network of vessels. "A lot of the capacity has come back but the market increase is very atypical. Nobody's network has 23 per cent slack." said Clerk.
Maersk has not set an end date for the peak season surcharges. "It's a very atypical year, with very atypical numbers, so we cannot estimate," Clerc said.
National Retail Federation and the Hackett Associates in its monthly Global Port Tracker report said, the US ports handled 1.15 million TEUs in April, the latest month for which actual numbers are available. That was up seven per cent from March and up 16 per cent from April 2009. It was also the fifth month in a row to show a year-over-year improvement after December broke a 28-month streak of year-over-year monthly declines.
"Cargo import numbers are up but retailers are looking closely at other economic indicators to make sure they are sourcing the appropriate amount of merchandise based on consumer demand," said NRF Vice-President for Supply Chain and Customs Policy Jonathan Gold. "Job creation remains a key factor that's going to affect consumer spending and retail sales," he said.
According to the report, June is forecast to remain at 1.16 million TEUs but the figure would be up 15 per cent from last year. July is forecast at 1.23 million TEUs, up 11 per cent from last year; August at 1.27 million TEUs, up 10 per cent; September at 1.31 million TEUs, up 15 per cent; and October – traditionally the busiest month of the year – at 1.34 million TEU, up 12 per cent. The strong year-over-year increases are partly due to easy comparisons against unusually low numbers last year.
The first half of 2010 is expected to total 6.6 million TEUs, up 12 per cent from the same period last year. Imports for 2009 totalled 12.7 million TEUs, down 17 per cent from 2008's 15.2 million TEUs and the lowest since the 12.5 million TEUs reported in 2003.
"Virtually all ocean carriers now seem to accept that there will not be a relapse into a second-dip recession nor an end to the growth," Hackett Associates Founder Ben Hackett said, noting that many shipping companies have recently restored services and capacity that had been cut back.
"Not a day goes by without a new announcement of additional services or re-instatement of services that had been withdrawn," he said.

Source: Emirates Business

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