MARKETS • CONTAINER
The ocean carriers soon relented but determined that the problem was structural, not a passing matter related to repositioning. What started as a response to the earlier Chinese New Year via a cutback in sailings had run head on into a spike in demand which carried through the entire supply chain, exclusive of restructuring.
New order underway
Jim Hanscom looks at the wider implications of the liner alliance reset that took effect from April 1 this year.
A shift in Asia-Europe traffic flows from westbound to eastbound is altering liner planning, and, for those seeking an explanation in timing and impact, consider butterfly wings.
After last year’s near-death experience and resulting restructuring, the industry’s three major alliances appeared set for a new start April 1. Then, April proceeded to live up to its reputation as T.S. Eliot’s ‘cruellest month,’ if not its most uncertain.
Seasons aside, the challenges to orderliness have arrived in waves so deep and so often that a possible explanation may lie only in modern chaos theory, which is the study of random or unpredictable behavior of systems seemingly governed by deterministic laws.
The equations may be beyond our pay grade, but the effect has been described as that of the flapping of butterfly wings in Brazil causing a tornado in Texas. A small change can create a large-scale alteration. As an
FE-Europe/Med capacity share
example, Hanjin’s demise last year certainly provided service impacts far beyond expectations.
The background for chaos stands intact. There are more than 40m teu of dry intermodal containers on earth. Probably 6-7m boxes are in motion at any one time, and no one person is in charge of knowing where and when they are headed next.
The timing here couldn’t have been more challenging. Global schedules were being revamped to account for new alliance arrangements involving ship sizes, port calls and memberships.
Chaos was evidenced by a massive movement of containers being repositioned to serve the new systems. Trainloads of empty containers were routed to different ports around the globe.
Then came news that the carriers were out of space on Asia-bound vessels. Maersk said it couldn’t accept new bookings for five weeks. See you in May.
Since eastbound is normally the backhaul, the notion of no service for more than a month qualified as newsworthy as ‘man bites dog’. Chaos indeed.
Far East-Europe weekly capacity by alliance/carrier (teu)
Shippers naturally suspected that they were being held ransom to orchestrated circumstances in an effort to raise rates. Antitrust officials started investigations.
The last word was that a permanent trade shift was in the making, as Chinese producers shifted their production from exports to domestic consumption. That amounted to a significant matter consistent with overall trends across shipping.
Conventional wisdom holds that differing shipping sectors are driven by different forces and that their prospects are only casually connected. But at the same time this was happening the Baltic dry cargo exchange hit a two-year high, LNG spot fixtures rose, iron ore and coal were on the upswing, oil tankers retained their resiliency, product rates soared, charter rates for bereft container ships rose 50%, and the offshore sector attracted speculators for rigs and supply boats.
Even with overcapacity, the long night of shipping despair was dawning on all horizons. Coincidence?
With the April 1 reset, the
expectation was that the liner systems would soon settle down to orderly service. But questions remained. The squeeze on smaller ports appeared unrelenting and unresolved, with the larger ports hoovering up a larger percentage of the trade.
SOURCE: ALPHALINER Visit:
seatrade-maritime.com
Further, the new Europe/Asia schedules indicated that the alliances were planning to speed up their schedules slightly, presumably to get a competitive marketing edge. Three fewer days, Shanghai to Rotterdam. Wuzzat? The sound of flapping butterfly wings?!
Seatrade Maritime Review • Quarterly Issue 2 • June 2017 13
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