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Drewry: Carriers Bolster Supply in Asia-ECNA Trade

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first_imgzoom Upward spiralling headhaul freight rates earlier this year have lured most carriers to place a significant amount of additional tonnage into Asia-East Central North America (ECNA) trade via new services, according to shipping consultancy firm Drewry.Asian boxes bound for ECNA (including Canada and Mexico) in January and February climbed year-on-year by 15% in both months. Looking specifically at boxes landed at the US ports over the whole of the first quarter, the East Coast terminals saw gains of 23% while Gulf Coast discharges rose by 53%. This compares to a decline of 6% of Asian goods arriving along the US western seaboard and an overall growth of US imports from the Far East registering a gentle 3%, Drewry said.During the first quarter, it was Houston that witnessed the most explosive growth in Transpacific imports – up by 62% year-on-year – but throughputs at the premier Gulf Coast port are far lower than some of the USEC ports such as Savannah and Norfolk where Asian imports advanced by 40% and 28% respectively.  The New York/New Jersey complex, which draws the highest throughput of Far Eastern imports, enjoyed a growth factor of 19%.Instead of the 19 connections between Asia and ECNA there will be 25 Capacity provided in the first quarter of this year, averaging some 380,000 teu per month, represented a slight drop when compared to last quarter of 2014, and was only 3.2% above what was being offered in the trade a year earlier.Drewry predicts that this relative calm in slot supply is about to end because by the start of June six additional services will have been introduced. Instead of the 19 connections offered in the first quarter between Asia and ECNA there will be 25, and even after applying a generous allowance for out-of-scope cargoes, the monthly slot count is reckoned to reach some 475,000 teu, equating to approximately 18% greater supply compared to the third quarter peak season last year.Although a Suez routing for the coverage of the Asia-ECNA trade has become increasingly popular in the last few years (8 out of the previous 19 connections sailed via Suez), only one of the six new services that are being introduced will not transit the Panama Canal. According to Drewry, that might suggest that the carriers have already started jockeying for position in preparation for when the widened Panama Canal opens next year.The odd man out is Zim’s Seven Star Express which, sailing via Suez, will concentrate on the South China and the South East Asia markets, deploying ten ships averaging almost 6,000 teu. This permanent fixture follows three earlier ad hoc sailings that the Israeli carrier inserted to take advantage of the climbing freight rates during the flight of cargo away from the congested USWC ports. All three sailings, utilising 10,000 teu units, were reported to have been full.CMA CGM is involved in setting up two new services: one is within the newly formed Ocean Three alliance while the other – a Transpacific/Transatlantic pendulum product – will be operated with Hamburg Sud.“And if any further evidence is needed to demonstrate that modern-day global alliances are flexibly structured to allow individual members to “do their own thing” then Maersk’s decision to launch its TP10 service without any involvement of its 2M partner MSC bears testament to that,” Drewry said.Among the global carrier pack, MSC remains the only line that has so far resisted the temptation to bolster supply. First into the fray out of the six new loops was the new CKYHE alliance service which started out from Ningbo on 27 March with 9 vessels averaging 4,380 teu and which has been scheduled to make just two calls at ECNA ports – Savannah and Charleston.The 12-month rolling average eastbound demand growth rate still runs to double digits  and, although West Coast port operations are returning to normal, the proportion of US cargo routing via the eastern and Gulf seaboards is expected to steadily rise. Nevertheless, an 18% injection of capacity is undoubtedly putting rates under pressure. Just before Chinese New Year, eastbound spot rates had risen to almost $5,000 per 40ft but by the end of April they had fallen back to $3,700. Drewry said that this was an abnormally large correction for the Transpacific trade by any standards and open market rates are now barely $400 higher than where they stood a year ago.“Earlier in the year the Transpacific Stabilisation Agreement carriers set a minimum rate guideline of $3,800 for 1 May BCO service contract renewals, translating to an average hike of $1,000. The recent drift in spot rates means that that goal is now unachievable and that status quo or only modest rate uplift is a more likely outcome,” Drewry concludes.last_img read more

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BCs wildfire season to have longterm implications for logging

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WILLIAMS LAKE, B.C. — Recovering from a historic wildfire season is expected to take British Columbia’s forest industry at least five years, the province’s Forest Ministry said on Wednesday.The ministry said in a statement that although wildfires will likely remain active into the fall, plans to help the industry rebound are already underway.“To better support this process in the light of this year’s unprecedented fire season, a new recovery unit has been established to oversee and co-ordinate government’s cross-ministry response,” said the statement sent to The Canadian Press.Forests Minister Doug Donaldson said at a news conference Tuesday that the logging industry alone will experience lingering implications from the fires.Donaldson said an estimated 53 million cubic metres of timber has burned, which calls for support of harvesters already licensed to collect trees within the fire zone. New licences will also need to be issued to salvage usable wood in burned areas that weren’t previously due to be harvested, the minister said.Those efforts are well underway, along with long-term plans focused on the sustainability of the industry, Donaldson said.“We know there is going to be an extremely high need for reforestation and that’s been planned right now through my ministry in order to ensure that we do have the timber supply in the future,” he said. “But there is no question that there’s going to be an impact from that much timber being burned in the province.”The BC Wildfire Service said on Wednesday that the fires have charred more than 11,500 square kilometres of land this season.The ministry said the full extent of the damage won’t be known until the season is over.But once those areas are thoroughly surveyed, the ministry said it may adjust the annual allowable cuts and determine how much of the scorched timber should be salvaged or left for wildlife habitat.Susan Yurkovich, president of the BC Council of Forest Industries, said although mill infrastructure hasn’t been destroyed by fires, the shortage of timber and wood fibre, especially in the Interior, means companies can’t operate.“We’re not able to get into the forest obviously to do logging because of the fire activity so that’s going to have an impact on mills being able to run,” she said in an interview Wednesday.Many companies have been involved in fire suppression efforts and working with first responders to keep employees and their families safe.As fires are extinguished, Yurkovich said salvaging timber and looking at other areas to harvest wood are priorities to allow mills and the communities around them to get back to work.“When they’ve been through this kind of incident, they need to get back to normal, they need to get into their homes and they need to get back to work,” she said.David Elstone, executive director of the Truck Loggers Association, said even on the coast where fires have been less severe than in the Interior, contractors have seen a decline in work this season.“We can’t estimate how much of the workforce right now is not actually out there on the land working because of the dryness and the hazards but there are certainly contracting communities that aren’t out there in full force.”The BC Wildfire Service said 158 fires are still burning in the province, bringing the total number since April 1 to 1,212 blazes.Yurkovich said the industry is working closely with the provincial government on recovery efforts, and discussions about changing forest-management practices are expected to continue beyond the current fire season.— By Linda Givetash in Vancouver; with files from Laura Kane. read more

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