Weak Western growth to hit cargo demand
Shipping executive says despite higher container rates, 2013 will be as difficult as last year
Anaemic growth in the US and little improvement in Europe's economic conditions will make 2013 as "challenging" as last year for Orient Overseas Container Line (OOCL), the financial head of the shipping line's parent company said yesterday.
Ken Cambie, the chief financial officer of Orient Overseas (International) (OOIL), said first-quarter cargo demand was as difficult as 2012 although container rates were higher than this time last year.
He said OOCL was looking to increase rates in the coming months as cargo contracts are renewed with freight owners on transpacific and Asia-Europe trades and general rate rises are implemented. Asked if there was concern cargo owners could resist rate rises, Cambie said OOCL was seeing a typically seasonal pattern with a weak January and this was expected to be followed by a stronger spring and summer.
Johnson Leung, the head of regional transport at Jefferies, said container lines are expected to get part of the planned US$$700 per teu (20-foot equivalent units) increase on Asia-Europe trades from March 15.
Cambie said Søren Skou, the chief executive of Maersk Line, the world's largest container shipping company, expected freight rates will be higher in 2013 than last year.
But warning of potentially choppy conditions ahead, Cambie said there may be a trend of switching factory production back to the US, while Chinese manufacturers could refocus on the mainland's domestic market, creating a slowdown in exports. Both would hit cargo demand at a time when delivery of new container ship capacity will rise.
