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APL unit sees biggest monthly traffic jump in years; volumes on the rise
Pick up: APL, the company's container-shipping unit, is carrying more as US and European retailers restocked amid easing job concerns
The company will charter as many as 10 vessels this year, each with a capacity of as much as 6,000 standard twenty-foot equivalent boxes, chief executive officer Ron Widdows said in an interview last Friday. It also plans to return its last 10 idled ships to service by about June, he said.
APL, the company's container-shipping unit, posted the biggest monthly traffic jump in at least six years in January as US and European retailers restocked amid easing job concerns. Industrywide volumes on transpacific routes will likely rise as much as 5 per cent this year, with Asia-Europe demand growing even faster, Mr Widdows said.
Many lines are 'no longer burning cash', he said. 'That's a wonderful thing compared to last year.' Container lines likely lost about US$20 billion in 2009 because of slumping trade, overcapacity and price wars, according to Drewry Shipping Consultants Ltd.
NOL will deploy five of the idled ships on Asia-Europe routes, Mr Widdows said. He didn't say where the chartered ships would be used. Rates on Asia-Europe routes have now risen to a point where it 'begins to make more sense' to add capacity, Mr Widdows said. Transpacific rates are still below break-even, he said.
Mr Widdows said shipping lines may be 'reasonably successful' in securing higher transpacific rates in annual contracts due to start around May. APL, AP Moeller-Maersk A/S, owner of the world's biggest container line, and 13 other lines are seeking to raise rates by US$800 per forty-foot container on US west coast routes.
'All the big container companies are bleeding and this will be the year when they will try to break even,' said Divay Goel, head of Asia operations at Drewry. 'The industry may take at least two to three years to recover to pre-crisis levels.' NOL ended 4 cents down at S$1.92 yesterday.
The company has already returned 15 idled vessels to service after slowing ships to cut fuel costs and capacity. APL is running 75 per cent of its fleet at reduced speeds, also known as slow steaming, and this will likely rise to almost 90 per cent by mid-year, Mr Widdows said. 'Slow-steaming is going to be with us for a very long time,' he said.
A 10 per cent speed reduction can pare fuel consumption by as much as 30 per cent, according to Det Norske Veritas, which assesses the seaworthiness of vessels. Slow steaming also means that as many as seven vessels can be used on a typical transpacific route, compared with only five or six operating at quicker paces, Mr Widdows said.
Reduced speeds have helped absorb between two and three per cent of the industry's current active fleet which otherwise would have been idled, estimated Jay Ryu, analyst at Mirae Asset Securities in Hong Kong. So a glut of new ship deliveries this year may offset some of the gains.
New vessels with the capacity to carry about 1.7 million twenty-foot-equivalent boxes are due to be delivered this year, according to Mr Goel. That's equivalent to about 13 per cent of existing capacity and it compares with deliveries equal to about 10 per cent of capacity during 'historical boom times', he said.
Demand needs to grow by more than twice the estimated 5 per cent pace this year to absorb the glut, Mr Goel said. -- Bloomberg
(SINGAPORE) Neptune Orient Lines, owner of South-east Asia's largest container line, plans to boost capacity about 7 per cent this year as a rebounding global economy revives trade and freight rates.
The market has this 'time lag' or 'phase shift' if you like...
But the thing is, humans are not designed to discern this...
Like an inch-worm, they live only in the moment, inch by inch...
by ecstasy of the moment ...
hehehe...
No one knows everything,
There's always something no one knows...
But the market knows everything...
freeman_5js ( Date: 09-Mar-2010 20:45) Posted:
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