Spot rates still tumbling, but carriers 'can still make good money', says NVOCC
Container spot rates from China to Europe and the US tanked again this week, leading ...
Notwithstanding Covid skewing comparison, OOCL’s huge 24% year-on-year volume growth in Q1, revealed in its operational results on Friday, is still likely to be ahead of most of its rivals.
And the Cosco Shipping subsidiary recorded an above-industry par 7.3% growth in its liftings for 2020, evidence of its aggressive market share aspirations.
Exporters from Asia are facing weeks of delay in shipping their goods, at any price, but OOCL and some of its peers are adding capacity and piling on extra loaders to accommodate the demand.
THE Alliance member HMM alone has deployed more than 20 extra sailings since last August, mainly to the US, to ease the backlog of cargo for major compatriot customers like Samsung and LG.
The South Korean carrier also is loading a second extra sailing to North Europe, outside of THE Alliance, from Busan this week.
However, some carriers are keen to “keep a lid” on extra loader capacity, preferring a more cautious approach to supply and demand, instead focusing on recovering their network schedules following the Suez disruption.
An abundance of cargo on the spot market, at freight rates at least five times higher than a year ago, guarantees voyage profits for standalone services, even for panamax-size ships and smaller, that would have been impossible a year ago.
The newest entrant into the lucrative Asia-North Europe market, where shippers are being offered very limited space by carriers at up to $14,000 per 40ft, is Chinese domestic carrier CULines.
It took on round-trip charters on two small ships from China to North Europe last week and seems to have garnered the support of Dusseldorf-based XSTAFF, an international purchasing association, formed by the Swiss COOP group and Belgium Colruyt group five years ago, which was expanded in 2019 by the membership of Spanish fashion giants Mango and Tendam.
XSTAFF partnered with CULines on its maiden voyage to North Europe in February, operated by the 2,702 teu Laila, but confirmed to The Loadstar it was just a customer of the carrier.
A spokesman told The Loadstar that, while it was “the driving force and initiator” of the first trip, subsequently it had not had any operational or financial involvement in the service.
“We are grateful for this possibility of shipping and will certainly use this option in the future,” said XSTAFF chairman Bodo Knop. “However, XSTAFF does not assume any operational activities or act as an operator.”
The Loadstar understands CULines is actively marketing further sailings in May and June from China to North Europe, having secured base cargo support from XSTAFF and other shippers.
Meanwhile, forwarders, such as DSV and Geodis have fixed one-off charters from Asia to North Europe to mitigate some of the impact of the capacity crunch on the route, as well as to fire a warning shot across the bows of the major carriers to help ensure they respect their contracts.
However, open tonnage in Asia is now almost impossible to find, so the DIY option for the big forwarders is now virtually closed off.
By comparison, CULines has access to the Chinese domestic fleet charter market that, hitherto, has seldom appeared on the radar of the traditional containership brokers.
In addition to CULines, the abundance of cargo and sky-high rates is sure to attract new entrepreneurs to the liner market – providing they can find open ships and equipment.