rate increase !!!!!!!!

Freight forwarders and shippers on the Asia-Europe trade have been warned they could be faced with equipment shortages and tight capacity during the coming peak season, according to the world’s third largest shipping line. 

CMA CGM Senior VP Asia-Europe Nicolas Sartini told IFW the volumes experienced by shipping lines so far this year were “a little bit incredible”. 

He expected demand to remain strong over the next three months and, as a result, he believes there is a risk that vessel space “could be tight” in the third quarter. He also said the industry could be faced with an equipment shortage. 

He said: “In terms of container availability, we are starting to see the impact of slow-steaming. It takes more time to bring back the equipment to Asia from Europe and the US, on any trade. 

“Secondly, because of the difficulty in accessing credit for financing, there was a lack of container ordering in 2009, and also this year. 

“The lines are faced with very strong demand and difficulty in getting efficient equipment in time."

As a result of the increased volumes, he expected to see a “correction” in rates in July, when second-quarter rates expire and carriers start to implement peak-season surcharges. 

CMA CGM has announced a third-quarter rate increase on the Asia-Europe trade of US$250 per teu and it will implement a peak season surcharge of $200 per teu with two weeks’ notice. 

Sartini’s remarks reflect those of forwarders who told IFW they were already noticing tightening of space and equipment shortages. 

Looking further ahead, Sartini said the situation in Greece and the impact on the euro could also impact volumes in the fourth quarter – “a situation that we must take into consideration and treat seriously”.

June 7 2010
Container shipping volume to grow 6-8% by year end after strong Q1

Container shipping volumes are expected to rise six to eight per cent by the end of this year despite companies in the industry showing double digit growth in the first quarter. Experts said trans-Pacific routes and those between Europe and Asia are likely to slow the most while intra-Asia services remain stable. Container shipping seems to be coming back after a tough 2009. According to shipping consultants Drewry Maritime, volumes have risen some 40 per cent on-year in the first quarter of 2010.
Market watchers said that's largely because of last year's low base.
But they said, going forward, there are still risks like Europe's debt crisis and unemployment in the US, which may affect consumption.
Divay Goel, head of Asia Operations, Drewry Maritime Services Asia, said: "If the contagion spreads to the bigger economies, there would be a sentimental reaction, like we saw in 2008's last quarter and 2009 - a slow down in credit which affects trade because it would become difficult to get letters of credit."
And there could be another cap to improvement for the sector this year as analysts said that in light of improving volumes, companies have been re-introducing ships that were moth-balled during the crisis, thus driving down rates for the rest of the year. Contract freight rates for Asia-Europe and Trans-Pacific routes have risen up to 25 per cent since the start of the year.
Intra-Asia rates have only gained about 12 per cent and are generally expected to hold up better due to fewer macro-economic risks.
Combined with potential overcapacity, the container sector is expected to end the year on a choppy note.
Katharine Cheong- Koh, director of Research, Island Shipbrokers, said: "We are seeing a more moderated recovery on the demand side and in terms of supply, we're seeing heavy pressures in terms of supply overhang.
“For example, we can see those 5,000 TEU and above container ships. 45 per cent is their ratio for order-book over fleet, so that's still a very huge percentage."
Volumes are expected to grow six to seven per cent across the board by the end of the year with supply of shipping capacity hitting seven to eight per cent, leaving the sector with still more fat to work off.

Source: CNA

agree...market is expected to be high due to shortage of containers within the shipping industry....sure cheong!!!!!HUAT ARGH!!!!!!!

Above expectations; maintain OUTPERFORM but lower target price to S$2.50

 

(from S$2.60). NOL’s 1Q core net loss of US$98m is already more than our fullyear

 

forecast for US$85.5m loss and consensus loss forecast of US$95m, but we

 

consider the 1Q results to be above expectations, as NOL guided that full year

 

profitability would be possible if the current trend of operating improvements

 

continues for the rest of the year. No dividend was declared, as expected. We

 

believe the positive guidance will be the key re-rating catalyst for the stock. Our new

 

target price is slightly reduced because of the weaker US$, but remains pegged to

 

1.8x P/BV multiple, which is 20% premium to the upper limit of its 0.5x-1.5x

 

historical trading band. Our core earnings forecasts have been revised up to a profit

 

of US$35m in 2010, to US$328m in 2011 (+22%), and to US$446m in 2012 (+22%)

 

as we factor in a stronger-than-expected cyclical recovery into our numbers.

 

• Container shipping losses narrowed. Liner revenue came in at US$7.2bn

 

annualised, which is 13% higher than forecast as both the average rate and volume

 

outstripped expectations. Although 1Q core liner EBIT remained in the red at

 

US$107m loss, it was a substantial improvement from the loss of US$212m in the

 

immediately preceding quarter and US$236m loss a year ago. Europe rates rose

 

40% yoy and 23% qoq, and intra-Asia rates rose 11% yoy and 7% qoq. Rates to the

 

Americas were still 11% lower yoy due to the drag from the previous contract

 

negotiations, but rose 14% qoq as rate hikes were successfully implemented.

 

Volume growth was also very strong at 46% yoy, with IA volume growth the most

 

robust at 60% yoy, followed by TP at 50% and AE at 24% due to the lack of

 

capacity. NOL noted that post-Lunar New Year volumes remain stable. Meanwhile,

 

implementation of slow steaming had helped to reduce fuel consumption.

 

• Outlook for transpacific trade looks bright. US retail sales in April increased for

 

the seventh consecutive month, rising 0.4% mom on top of the 2.1% rise in March.

 

Meanwhile, the University of Michigan preliminary index of consumer sentiment rose

 

to 73.3 in May from 72.2 in April, and US payrolls increased by 290,000 in April after

 

a 230,000 gain in March. These data suggest that US consumer demand will

 

continue to improve. We also note that spot TP rates to LA/NY have continued to

 

increase to approximately their mid-2008 peaks.