Container lines may miss their peak- season targets on Asia-US routes as orders for backpacks, sneakers and flatscreen TVs fall below expectations and ships sail below-capacity. Christmas shipping may be the same, mb.com.ph reports.
The build-up to the holiday and back-to-school shopping seasons, the busiest periods for U.S. retailers, usually allows A.P. Moeller-Maersk A/S, Neptune Orient Lines Ltd.’s APL Ltd. unit and other container lines to introduce surcharges around mid-June. This year, levies were delayed to this week because of excess capacity. The lines still may get less than the $400 per forty-foot box they set as a guideline for shipments to US West Coast ports.
“What is agreed upon by a panel of container lines is one thing, but what will actually happen in the market is another,” Maersk’s Chief Executive Officer Nils Smedegaard Andersen said Tuesday. “It’s too early to say whether the surcharges will be successful.”
Container lines’ earnings have slumped this year as fuel prices have jumped 29 percent, while rates on Asia-West Coast routes have tumbled 21 percent to $1,589 per box, based on the Shanghai Containerized Freight Index. Extra trans-Pacific capacity may prevent the lines from pocketing surcharges that usually make the second half their most profitable period.
“Container ships to the US West Coast are not filling up, which leaves shipping companies with few bargaining chips for imposing surcharges,” said Dong Jinghua, general manager of Shenzhen Continents International Forwarding Co., which arranges about 300 container shipments a month. “Most lines are taking a wait-and-see attitude because those that act first may risk losing customers.”
Surcharges are likely to be “not much” this year as vessels are only 90 percent full on Asia-West Coast routes, said Jee Heon Seok, an analyst at NH Investment & Securities Co. in Seoul. Shippers are usually struggling to find space at this time of year, he said.
The Transpacific Stabilization Agreement, a group of 15 container lines with limited antitrust protection, originally advised introducing $400 surcharges on June 15. It later delayed the start to Aug. 15. Mitsui O.S.K. Lines Ltd., which isn’t part of the group, delayed its levies to Sept. 1.
Group members APL, Orient Overseas (International) Ltd., Hanjin Shipping Co., Evergreen Group and Yang Ming Marine Transport Corp. all said they would begin levying surcharges on Aug. 15 when contacted by Bloomberg News.
They didn’t say how much they would charge.
“We are optimistic in the third quarter that we will realize some portion of benefits in the peak-season surcharge both in the trans-Pacific and Asia-Europe trades,” APL President Kenneth Glenn said on Aug. 12. “Trans-Pacific utilization is improving.”
Orient Overseas, Hong Kong’s biggest container line, also anticipates “some degree of success,” Chief Financial Officer Ken Cambie said earlier this month. “There’s an expectation of some capacity constraints in the peak season.”
The build-up to the holiday and back-to-school shopping seasons, the busiest periods for U.S. retailers, usually allows A.P. Moeller-Maersk A/S, Neptune Orient Lines Ltd.’s APL Ltd. unit and other container lines to introduce surcharges around mid-June. This year, levies were delayed to this week because of excess capacity. The lines still may get less than the $400 per forty-foot box they set as a guideline for shipments to US West Coast ports.
“What is agreed upon by a panel of container lines is one thing, but what will actually happen in the market is another,” Maersk’s Chief Executive Officer Nils Smedegaard Andersen said Tuesday. “It’s too early to say whether the surcharges will be successful.”
Container lines’ earnings have slumped this year as fuel prices have jumped 29 percent, while rates on Asia-West Coast routes have tumbled 21 percent to $1,589 per box, based on the Shanghai Containerized Freight Index. Extra trans-Pacific capacity may prevent the lines from pocketing surcharges that usually make the second half their most profitable period.
“Container ships to the US West Coast are not filling up, which leaves shipping companies with few bargaining chips for imposing surcharges,” said Dong Jinghua, general manager of Shenzhen Continents International Forwarding Co., which arranges about 300 container shipments a month. “Most lines are taking a wait-and-see attitude because those that act first may risk losing customers.”
Surcharges are likely to be “not much” this year as vessels are only 90 percent full on Asia-West Coast routes, said Jee Heon Seok, an analyst at NH Investment & Securities Co. in Seoul. Shippers are usually struggling to find space at this time of year, he said.
The Transpacific Stabilization Agreement, a group of 15 container lines with limited antitrust protection, originally advised introducing $400 surcharges on June 15. It later delayed the start to Aug. 15. Mitsui O.S.K. Lines Ltd., which isn’t part of the group, delayed its levies to Sept. 1.
Group members APL, Orient Overseas (International) Ltd., Hanjin Shipping Co., Evergreen Group and Yang Ming Marine Transport Corp. all said they would begin levying surcharges on Aug. 15 when contacted by Bloomberg News.
They didn’t say how much they would charge.
“We are optimistic in the third quarter that we will realize some portion of benefits in the peak-season surcharge both in the trans-Pacific and Asia-Europe trades,” APL President Kenneth Glenn said on Aug. 12. “Trans-Pacific utilization is improving.”
Orient Overseas, Hong Kong’s biggest container line, also anticipates “some degree of success,” Chief Financial Officer Ken Cambie said earlier this month. “There’s an expectation of some capacity constraints in the peak season.”