Peak-Season Surchage Canceled ?

According to news published in Lloyd List by Janet Porter, shipping lines decided to cancel – or at least postpone-  surchage. We will keep you updated in coming days.

Article by Janet porter is here :

HOPES of a summer respite for the container trades have been dashed as efforts to impose a peak season surcharge on Asia to Europe cargo fizzle out.

Members of the Far Eastern Freight Conference and independent carriers had planned to impose a levy of $158 per teu at the start of August.

But then a few lines decided that the market was not strong enough to take the extra rates usually charged at this time of the year during the pre-Christmas cargo surge. Very quickly, the rest of the industry followed suit, Lloyd’s List has learned.

The big question now is whether the peak season surcharge can be introduced later in the summer, once the Olympic Games are over and Chinese factory production returns to normal.

But some have their doubts.

Failure to obtain the usual PSS comes against a backdrop of sharply declining ocean freight rates in the Asia-Europe trades, with some down to $500 per teu, or even lower for certain business.

FEFC lines could have their very last chance to try and collectively restore rates when chief executives meet in Geneva next month on the sidelines of the Box Club summit. Less than a month later, the FEFC will be disbanded as the European Commission outlaws conferences.

The situation is not all bad, with lines reporting an upturn in July litings after a year-on-year drop in June for westbound cargoes from Asia.

Volume growth last month “was much improved” compared with the earlier part of the year, said Derek Wakeling, K Line director of trade and operations in London. The August figures are also looking better, with the corresponding recovery in ship utilisation levels.

Even so, the upturn is probably not enough to squeeze extra money out of shippers.

Container lines are now turning their attention to the market in mid-October when the seasonal cargo bulge will have finished, with the possibility of ship lay-ups now being openly discussed.

While lines are most unlikely to withdraw from service their biggest ships that provide economies of scale, large panamaxes could be put into long-term lay-up if there is no recovery in demand, say industry sources.

The news is no better in the US where Piers Global Intelligence Solutions chief economist Michael Andrews last week delivered a gloomy assessment of prospects for the country’s container trades as the slowdown spreads around the world.

That will dampen growth in US containerised exports that had been benefiting from the dollar’s decline with a 17.5% increase last year. But growth will drop back to a forecast 10.9% this year.

To make matters worse for shipping lines that have benefited from outsourcing, Dr Andrews said in a webcast that high energy prices are likely to persuade some manufacturers to shift production closer to the consumer markets, with anecdotal evidence that this is already happening. That would reduce voyage lengths.

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