Container rates may begin to rally in April on box shortages-APL

Monday, 7 March 2011 00:01 - - {{hitsCtrl.values.hits}}

(Reuters) - The cost to ship goods on container ships could begin to spike as early as April due to an expected shortage of boxes and limited inland transportation capacity, a senior industry executive said last week.

Soaring oil prices above $110 a barrel have forced vessels to reduce their speeds to save fuel, keeping them and the millions of boxes that they carry sailing for longer periods.

Container box availability has fallen to around 1.6 per twenty-foot equivalent unit (TEU) this year, from 2.2 four years ago, said Eng Aik Meng, president of APL container shipping line, a unit of Singapore’s Neptune Orient Lines .

That translates into around 23.7 million container boxes available to the container shipping industry, which has a capacity of around 14.8 million TEUs.

“As early as April, you are going to see some shortages. I’m quite sure by peak season, you are going to have a severe shortage,” Meng told reporters at a news conference. “Undoubtedly, freight rates will go up.”

The peak season for the container industry typically begins sometime in the second quarter and ends a few months before the year-end holiday season.

“The peak season and slack season differential is going to be much larger this year and going forward. Cargo is going to be more seasonal than expected,” Meng said.

Rates could also find support from limited rail and truck capacity in the United States and Europe, he said.

A similar box shortage last year led to a surge in freight rates that helped NOL, A.P. Moller-Maersk and other firms rapidly recover from a dismal 2009, when the economic downturn cost the industry an estimated $19.5 billion in profits.

APL’s 2010 on-time record in Trans-Pacific – 95%

Container shipping leader APL’s on-time performance in the all-important Trans-Pacific Trade was 95% last year.

In its final report on 2010 vessel reliability, the Singapore-based carrier said last week that APL ships missed their arrival window just 12 times in 237 port calls to the U.S. West Coast.

“Schedule reliability is the cornerstone of customer service in container shipping,” said APL President Eng Aik Meng. “While we’re pleased with our performance in 2010, we won’t be satisfied until we’re 100% on-time.”

APL’s accounting of 2010 reliability, following a mid-year report last August, is being made available this week. It’s visible at the carrier’s website: www.apl.com.

The report measures reliability on the five Asia-to-U.S. West Coast services operated exclusively by APL vessels. The trade lane is watched closely as a barometer of global trade since it connects North American consumer markets with Asian manufacturing centers.

APL considers vessels on-time if they arrive within four hours of their scheduled arrival. Most carriers measure reliability on arrival windows that range from 12-to-24 hours.