ASIDE from implementing an emergency bunker surcharge, container shipping lines are considering other measures to mitigate the increasing cost of bunker fuel.
One question the container shipping market must consider is whether the proposed surcharges and slow steaming announcements are justified. According to London's S&P Global Platts, the issue is whether slow steaming will resolve the fundamental problem of too much vessel capacity and not enough cargo demand.
'Slow steaming is also a good way to absorb excess capacity,' Platts cites one unnamed carrier as saying.
The container industry knows the carriers are taking delivery of new ships in excess of 20,000 TEU. The problem is the only logical route ships of this size can be deployed on is the north Asia to UK and north continent. Carriers are struggling to raise the spot box rates this month owing to this fact and in the majority of cases they did not secure a mid-month rate rise.
The box rate validity was instead extended to June 30 alongside an average drop of US$50 to $1,350 per forty foot container (FEU) for these routes in the week ending June 15. Some carriers are offering box rates as low as $1,100/FEU, but this is not representative.
From a bunker charge perspective, IFO380 is down $2 per metric ton for the north Asia to north continent route at $450/mt. On a monthly average basis though, June to date is $450 compared to April at $399.5/mt. Across the Atlantic the north Asia to west coast North America route, PCR13 closed down $100 to $1,250/FEU.
Likewise for PCR5, north Asia to east coast North America declined to $2,250/FEU from $2,300/FEU. The main reason for these declines is the failure to fill the ships. Certain carriers still have 100 per cent capacity but were forced to lower their rates in line with the market or risk losing some cargo to their rivals.
The IFO380 north Asia to west coast North America route was assessed at $455.50/mt on June 14 from $463.50 on June 1. On a monthly basis it was up a similar amount to the north continent route of $53/mt from April to June so far.
The east coast North America from north Asia followed the west coast North American characteristics and closed down $1 at $451/mt on June 14 from $452 on June 1. It also increased by $54.50/mt to $450/mt for June to date from $395.50/mt for April's monthly average.
One question the container shipping market must consider is whether the proposed surcharges and slow steaming announcements are justified. According to London's S&P Global Platts, the issue is whether slow steaming will resolve the fundamental problem of too much vessel capacity and not enough cargo demand.
'Slow steaming is also a good way to absorb excess capacity,' Platts cites one unnamed carrier as saying.
The container industry knows the carriers are taking delivery of new ships in excess of 20,000 TEU. The problem is the only logical route ships of this size can be deployed on is the north Asia to UK and north continent. Carriers are struggling to raise the spot box rates this month owing to this fact and in the majority of cases they did not secure a mid-month rate rise.
The box rate validity was instead extended to June 30 alongside an average drop of US$50 to $1,350 per forty foot container (FEU) for these routes in the week ending June 15. Some carriers are offering box rates as low as $1,100/FEU, but this is not representative.
From a bunker charge perspective, IFO380 is down $2 per metric ton for the north Asia to north continent route at $450/mt. On a monthly average basis though, June to date is $450 compared to April at $399.5/mt. Across the Atlantic the north Asia to west coast North America route, PCR13 closed down $100 to $1,250/FEU.
Likewise for PCR5, north Asia to east coast North America declined to $2,250/FEU from $2,300/FEU. The main reason for these declines is the failure to fill the ships. Certain carriers still have 100 per cent capacity but were forced to lower their rates in line with the market or risk losing some cargo to their rivals.
The IFO380 north Asia to west coast North America route was assessed at $455.50/mt on June 14 from $463.50 on June 1. On a monthly basis it was up a similar amount to the north continent route of $53/mt from April to June so far.
The east coast North America from north Asia followed the west coast North American characteristics and closed down $1 at $451/mt on June 14 from $452 on June 1. It also increased by $54.50/mt to $450/mt for June to date from $395.50/mt for April's monthly average.