Port decongestion to hit rates

Congestion at ports in different parts of the world ties up between 13% and 14% of the global dry bulk shipping capacity; easing of that congestion is the biggest threat to continued strong freight rates, says Camillo Eitzen, the listed Norwegian bulk shipping company. Australia accounts for about half of the total congestion in larger vessel types and efforts made to relieve this through the reintroduction of a quota system appeared to work at first, but then bad weather derailed the programme. In 2Q07, congestion in Australian ports actually increased by 35%. In India, heavy increase has taken place in waiting times at ports, which is threatening imports in the country whose economy is developing at a fast rate. “The huge investments planned in infrastructure appear to come slightly later than required,” Eitzen said. Looking ahead, the company believes that efforts to relieve congestion at various parts of the world will be partially successful, but it is unlikely that the figure of capacity tied up this way will fall to the level of 7-8% of the global dry bulk fleet that was seen at the end of last year. This would mean a slight softening of the market, but nevertheless it is likely to remain firmer in the near future than what it was in 2006, Eitzen said.