Drewry cautions against recovery hype

Drewry cautions against recovery hype    Despite robust growth in volumes and rates for container lines, Drewry Shipping Consultants said Tuesday that a more clear picture of the recovery will emerge in the next six weeks, when a backlog of shipments out of Asia should be cleared.
   'There are some potential derailers to this renaissance of which industry stakeholders should not lose sight, and we do not concur with the belief among some carriers that it is business as usual — yet,' said Neil Dekker, editor of Drewry Container Forecaster. 'There is still a huge backlog of shipments in the system which is not new demand and once this is moved out of Asia in the next six weeks or so, we believe that the true strength of the summer peak season will be somewhat less than many predict. There is every possibility that utilization factors will decline, which in turn will have a knock-on effect on freight rates. By no means do we see a precipitous fall, but there will be an impact.'

Dekker

   Dekker said the backlog, coupled with a shortage of containers, is giving a false impression of true recovery. The company did, however, say carriers appear to be more focused on profitability than market share.
   He said efforts to provide differentiated services, and a determination to better manage capacity, are signs the industry is learning from past mistakes.
   'Slow-steaming strategies are here to stay as they remain an efficient way to absorb capacity and reduce costs,' Dekker said. 'Furthermore, by restricting supply more in line with demand, carriers appear to have finally learned that they have the ability to drastically improve their revenue streams. The old days of the volume shipper being seen as a VIP account appear to have gone as many shippers have told us their stories in recent months about lack of space and short shipments. In this new environment, carriers are taking the opportunity to push up freight rates via a succession of (rate increases), peak season and now additional equipment surcharges which shippers have little option but to pay.'
   He also said that while carriers' efforts to achieve sustainable revenue levels are admirable, there is a point at which shippers will rebel against rate increases and surcharges that constitute normal service.
   'There needs to be a quid pro quo however and no longer should ocean carriers send out GRI notices to the trade stating that rate increases are required in order to continue to provide 'consistent high levels of service,' ' Dekker said. 'Many shippers have had their freight transportation bills doubled in recent months and are still not managing to ship their cargo out of Asia.'