Hapag-Lloyd warns of Atlantic space crunch, Pacific delays

Hapag-Lloyd warns of Atlantic space crunch, Pacific delays    Adolf Adrion, chief executive officer of Hapag-Lloyd Container Line, predicted that westbound transatlantic trade will see shortages of capacity later this year, while transpacific shippers and carriers will experience renewed congestion on the U.S. West Coast.
   There will be shortages of capacity in the westbound transatlantic trade “from May to nearly the end of the year,” Adrion warned.
   He cited the capacity cuts made by CP Ships and Maersk Sealand in the Atlantic.
   Eastbound transatlantic shippers, though, should not fear such space crunches, according to the German shipping executive. Despite the growth of U.S. exports to Europe, volumes in the eastbound transatlantic trade are still much lower than westbound, he explained.
   CP Ships has recently downsized the vessels used in one of its Montreal/North Europe services. Ocean carriers have blamed low freight rates in the Atlantic for poor levels of profitability in this trade.
   Adrion also warned that the effect of port congestion this year, and the trend towards Asia/U.S. East Coast all-water services, will tighten capacity in the transpacific market. This is because a weekly Asia/U.S. East Coast service typically requires the use of eight ships, whereas a weekly Asia/U.S. West Coast loop utilizes only five, he said. Overall, congestion absorbs 2 percent of ship capacity globally, the carrier estimates. “Shipowners have reacted by moving cargoes via the Panama Canal whenever possible,” he said.
   “Last year, there were delays of up to seven days,” Adrion said. “I see the same problem (this year) on the U.S. West Coast.” There continues to be a lack of rail cars to move cargoes inland from the West Coast, according to the carrier.
   Hapag-Lloyd and other transpacific carriers have yet to introduce congestion surcharges for the port of Los Angeles covering transpacific shipments. However, Adrion said Hapag-Lloyd “reserves the right” to do so in the future if necessary.
   Asked about changes in container demurrage charges billed to shippers, Adrion replied: “We try to reduce the free time. We try to motivate shippers to take their cargoes as soon as possible.”
   Adrion does not expect many shipping lines to introduce new Asia/U.S. East Coast services via the Suez Canal — a measure that some have advocated to avoid U.S. West Coast congestion. He said carriers with existing services on this route, like the Grand Alliance, are increasing capacity within current services.