rob shelley ceo Maritime Cargo Services
Following a well-established pattern, freight rates on the main trade routes slipped again recently; and this comes despite carriers recently announcing price increases in January that have, allegedly, already now been pushed back to Q2.
Container shipping supply is expected to exceed demand in 2011 by between 1.5% and 2%. So, will rates continue to fall or will carriers manage capacity, as they have in the past, to force rate increases? This might yet be avoided. Shipping lines have worked hard over the last few years to cut operating costs; with some realising an estimated saving of between 20-30%.
In addition, many carriers have fine-tuned their ability to better manage the ebb and flow of capacity and can react more quickly to market conditions, prompting some to predict more stability for 2011 freight rates.
Of course, it's never as straightforward as that and it will take nerves of steel and some adroit handling. We still have a growing global fleet and none of the carriers want to reduce capacity early and risk losing market share. So capacity may yet still not be optimally managed and rates may continue to slide.
Logistics experts have warned that the UK must be more prepared for the bad weather that is said to cost UK PLC over a £1bn/day. The port of Felixstowe was recently shut for four days; ships continued to arrive but couldn't be offloaded, causing a backlog that has taken until the end of January to clear.
The UK is not prepared for severe weather and the government should do more to protect the supply chain. Given our lumbering bureaucracy, that's never going to be easy or, indeed, even possible. But £1bn/day could buy a lot of snow clearing technology, equipment and labour!
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