Sea Intelligence: Carriers to see $9 billion profit in 2020 if they manage to keep current rate levels

Container shipping companies’ fight to maintain freight rates high through capacity management seems to have paid off, beating forecasts on carrier profitability.

The liners’ ability to adapt to the new normal through a disciplined approach to the deployment of ships comes as a surprise as dwindling of demand was expected to push carriers into the red.

The control over vessel capacity has been mainly exercised through the blanking of sailings and idling of excess ships to match the demand situation. The push has served as a strong underpinning for the freight rates.

The massive consolidation wave in the container shipping industry that dominated the sector over the past few years has also contributed to better synergies and a more unified voice of considerably lower number of carriers on the market when compared to 2016.

Copenhagen-based consultancy Sea Intelligence assumed that the pandemic would result in a 10% loss of volume. The consultancy assumed stable freight rates which would lead the carriers to a loss of $800 million. The other scenario assumed a “normal” freight rate war in a weak environment leading to a $23 billion loss.

“But the carriers have shown that they did not maintain stable freight rates – they have actually increased them quite substantially. With this taken into account, we now have two new scenarios,” said Alan Murphy, CEO, Sea-Intelligence.

“If the carriers maintain the current rate levels, they stand to have a profit in excess of $ 9 billion in 2020. If they start a freight rate war in 2H 2020, they stand to lose $7 billion. Once again, it is likely that it is the positive scenario which will unfold.”

MSC makes first ever Colombian avocado shipment to China

The first ever Colombian export of Haas avocado to China is being transported by an MSC vessel, on the line’s Aztec service arriving at Shanghai.

An MSC vessel left the Colombian Pacific port of Buenaventura 28 May with 28 tonnes of fruit, using Controlled Atmosphere (CA) technology, which keeps perishable products and temperature-sensitive cargo fresh for the entire journey.

Regulating the atmospheric composition inside the reefer containers throughout their journey is crucial, in order to preserve the fruit’s taste, freshness, texture and aroma. MSC was chosen to carry out this important task for its solid experience in transporting perishable goods.

“We use CA technology to slow down the ripening process and extend shelf-life. This allows fruit to travel long distances while retaining the same appearance, flavour and quality as when it was harvested.

“We continually invest in the latest reefer technologies to offer our customers the best and most sustainable transport options, and recently added 5,000 new Star Cool CA units to our fleet.  We also provide 24/7 customer support and expert advice on everything from cargo-stuffing to customs paperwork,” MSC said.

Colombia is becoming an important avocado exporter to Europe and other countries and thanks to a 2019 trade agreement with China, is now entering the Chinese market.

Cargo volumes up 15.9% at Panama ports in Jan – May

Cargo volumes in Panamanian ports grew by 15.9% during January-May 2020, in spite of the country fighting against the spread of the Coronavirus.

According to the Panama Maritime Authority statistics, cargo volumes for the first five months of this year reached 3.26m teu compared to 2.78m teu the year before. Vehicles fell by 47% to 39,960 units during this period compared to 74,187 vehicles in January-May 2019.

Manzanillo International Terminal (MIT-Panama) moved 1.08m teu, up 18.2% while Panama Ports’ Pacific Terminal Balboa volumes increased by 9.5% to 807,7265 teu and its Atlantic terminal Cristobal cargo also grew by 18.1% to 475,804 teu.

PSA Panama International Terminal moved 516,091 teu with an increase of 32.3% compared to January-May 2019. 

Evergreen’s Colon Container Terminal (CCT) volumes fell 4.2% to 293,899 teu and Bocas Fruit, a small fruit exporter port, grew by 69.9% to 49,838 teu.

“Ocean carriers’ network changes happen around April each year. In 2019, Maersk/Hamburg Sud, CMA CGM and Hapag Lloyd each went through network re-design as a result of the Eurosal service’s Hamburg Sud withdrawal. The changes resulted in the “creation” of around 400,000 teu per year of transhipment cargo that mostly benefitted Panama and Colombia (Cartagena),” says MIT’s vp of marketing Juan Carlos Croston.

“In the case of MIT, 2020 volume through May, has benefitted from those 2019 changes. We do project a ‘very different’ 2H 2020 volume to be impacted by the economic downturn,” added Croston who is also president of the Caribbean Shipping Association.

ONE offering alternative Baltic and Scandinavia with Xpress feeders

Container line Ocean Network Express (ONE) is offering alternative coverage with Xpress Feeders in the Baltic and Scandinavia after feeder services from its partner were suspended.

ONE said that due to the impact of the Covid-19 pandemic its partner had decided to suspend the Gothenburg Express (GTE), Sweden Denmark Express (SDX) and Russia Express (REX) feeder services until further notice.

“Ocean Network Express (ONE) will continue to serve our customers by offering three alternate services covering the related ports in the Scandinavia and Baltic region through a structural cooperation with Xpress Feeders,” the line said.

The services will be the Denmark Sweden Express (DSX) calling the Scandinavian ports of Fredericia, Copenhagen and Helsingborg; Poland Express (PEX) serving Gdynia to Hamburg; and Belgium Baltic Express (BBX) - a dedicated shuttle in and out of Riga via Rotterdam and Antwerp.

Ba Ria – Vung Tau to develop modern seaports, logistics services

A workshop was held in the southern province of Ba Ria – Vung Tau on June 18 to seek ways to develop seaports and logistics services, which are important components of the local economy.

Secretary of the provincial Party Committee Nguyen Hong Linh said from now to 2025, Ba Ria – Vung Tau is going to focus resources on developing modern seaports and related logistics services.

It will reserve 20 trillion VND (859.6 million USD) for investing in transport infrastructure linking seaports and regions, along with 2,000ha of land for developing the logistics system and a modern goods certification center during the period.

The province will also select capable investors to develop seaport logistics services, set up a management board of the Cai Mep – Thi Vai port complex to create the best possible conditions for businesses and shipping firms when using the port system, and develop this complex into an export and import gateway of the southern key economic region, Linh noted.

Chairman of the provincial People’s Committee Nguyen Van Tho said seaport and logistics services are defined as important components of the local economy, adding that Ba Ria – Vung Tau has worked with relevant ministries and sectors to carry out numerous solutions to boost investment in the services and reaped practical outcomes.

He cited statistics as showing that the volume of cargo transported by sea and handled in the province has increased by 10 percent between 2016 and 2020. In particular, container freight delivered by vessels has grown by over 20 percent annually.

At the workshop, Deputy Minister of Transport Nguyen Van Cong said the ministry is considering the allocation of medium-term capital to dredging the Cai Mep – Thi Vai marine passage.

He asked Ba Ria – Vung Tau to accelerate the progress of Ben Luc – Long Thanh Expressway project, as well as the construction of roads connecting the Cai Mep – Thi Vai port complex with Phuoc An bridge, Ben Luc – Long Thanh Expressway and Bien Hoa city in nearby Dong Nai province to boost demand for goods transportation via the complex.

Cong also suggested the province attract more big investors to create more export sources and build logistics zones before putting ports into operation.

The Cai Mep – Thi Vai port complex was the one posting the world’s fastest growth in 2017 and also among the 21 ports around the world able to handle vessels of up to 200,000 tonnes.

Of the 69 port projects planned in Ba Ria – Vung Tau, 48 have become operational, and they are able to deal with 141.5 million tonnes of cargo each year. Meanwhile, 2,312ha of land has been zoned off for developing logistics facilities, with 20 projects covering 224ha already put into use.

                                           (Source: The Maritime Executive, VNCustomsNews, Seatrade Maritime)