Wednesday, March 24, 2010

Can Maritime Shipping Costs Be Contained?

Oceans “Heating Up” with New Signs of Vitality in Overseas Commerce

Upward pressure on maritime container shipping costs is intensifying.

After the global economic crisis began in September 2008, steamship operators responded by cancelling new ship orders, mothballing existing container ships and “slow steaming,” with capacity tied up by extending voyages and keeping more ships on the water. Cancelled orders alone eliminated 140 ships, with the ability to carry 436,000 TEUs (20-ft. equivalent container units), reported the Journal of Commerce.

The cancellation figures do not include ships that were built but not delivered due to the owners’ inability to make full payments. In addition, some older container vessels were scrapped or sold by their owners.

With U.S. ocean importers and exporters saying the situation is hindering their ability to compete in global markets, the Federal Maritime Commission (FMC) announced March 17 they are launching an investigation into tight vessel capacity, and a House Transportation committee heard testimony from shippers and ocean carriers on the state of the industry. An executive order directed the employment of “every available federal resource” to support President Obama’s goal of doubling exports in five years. The FMC is scheduled to deliver preliminary recommendations June 15, with a final report due July 31.

Now ocean carriers are re-activating increasing numbers of laid-up container ships to keep pace with growing cargo volume on key liner trade routes.

“Carriers are gearing up for the summer shipping season with optimism nurtured by a revived demand in most main trade lanes,” said Paris-based shipping monitor Alphaliner. Shippers and freight forwarders are braced for higher rate demands as the typical May 1 annual contract renewal date approaches.

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