OCEAN CARRIER REVIEW - North-south trade offering promise for ocean carriers

By: | at 08:00 PM | Channel(s): International Trade  Liner Shipping  

By Paul Scott Abbott, AJOTWhile burgeoning East-West trade continues to draw the lion’s share of industry discussion, ocean carriers are by no means neglecting North-South routes.
Port congestion and infrastructure challenges continue to be problematic, especially in Latin America, but carriers are still finding opportunities in traditional North-South Americas routes and others. As is the case in all trades, the overriding concern is the ever-increasing price of fuel.
At his company’s April 25 annual review and outlook conference in Hamburg, Germany, the chairman of the executive board of Hamburg Süd, Dr. Klaus Meves, cited bunker prices nearly double those of 2004. He added that there is a general fear of overcapacity due to the continuing influx of new vessels.
“The shipping group’s core trade lanes from Europe, North America and Asia to South America East Coast recorded very pleasing market growth,” Meves said. “Exports from Brazil, however, were dampened by the hefty revaluation of the Brazilian real. This made products such as footwear, leather goods, timber and paper barely competitive in many countries.
“Growth in the traditionally strong reefer trade from Brazil and Argentina fell below expectations, with animal diseases such as avian influenza and foot-and-mouth disease, in particular, exercising a negative effect,” he continued.
All trade lanes to the East Coast of South America recorded substantial overcapacity, which led in part to sharp declines in freight rates, particularly in the off-season, according to Meves. As a result, many carriers – with the active involvement of Hamburg Süd – rationalized their services in the latter months of the last calendar year, adjusting capacity to cargo volume.
“Given the steady cargo growth of recent years, infrastructure in South American ports, especially in Brazil, had come under increasing strain,” Meves said. “Consequently, 2006 saw considerable holdups and delays in the ports, combined with negative repercussions on service quality and additional operational costs.”
Predictions of growth this year of about four percent for the Brazilian economy do offer encouragement, Meves said. He added, however, that handling concerns can be expected to remain at Brazilian ports and that cost increases for intermodal and inland transport – chiefly in North America – will continue.
The trade routes between the West Coast of South America and Europe and North America displayed “quite pleasing development” over the past year, according to Meves.
With its Trident Service, Hamburg Süd has, since February, been offering its own service in another North-South trade – linking Europe, North America East Coast and Australia/New Zealand. In response to heavy customer demand, the shipping group switched the service from a fortnightly to a weekly frequency at the beginning of 2007 while doubling to 12 the number of vessels deployed in the service.
Meves added that significant increases in volume also were recorded in the service between the US West Coast and the Australia-New Zealand market as a result of Hamburg Süd’s takeover of the Fesco cross trades. The Australia-New Zealand region, in particular, experienced a substantial boost in volumes in 2006, more than doubling its throughput.
Indeed, several North-South trades appear to be flourishing, as indicated earlier this year by such developments as Crowley Maritime Corp.’s additional vessel deployments in separate lanes linking South Florida’s Port Everglades with Central America and the Caribbean.
Asian ocean carriers that have established themselves in East-West trades also are looking to expanded North-South services to enhance their global offerings. For example, Mitsui O.S.K. Lines last month initiated a new direct service between the East Coast of South America and the United States. Such offerings are expected to increase on the part of MOL and other Asian carriers as their US East Coast presence grows with new container terminals, such as the one being built by MOL

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For more than a quarter of a century, Paul Scott Abbott has been writing and shooting images for the American Journal of Transportation, applying four decades of experience as an award-winning journalist. A graduate of Northwestern University’s Medill School of Journalism, with a master’s magna cum laude from Trinity Evangelical Divinity School, Abbott has served as president of chapters of the Propeller Club of the United States, Florida Public Relations Association and Society of Professional Journalists. Abbott honed his skills on several daily newspapers, including [em]The Cincinnati Enquirer, The Richmond (Va.) News Leader, Albuquerque Journal and (South Florida) Sun-Sentinel, and was editor and publisher of The County Line, a weekly newspaper he founded in suburban Richmond, Va.[/em] A native Chicagoan, he is a member of American Mensa and an ever-optimistic fan of the Chicago Cubs.