PETALING JAYA: The container shipping industry is expected to
experience tight capacity next year due to limited access to new
capital or bank financing for ship building coupled with tight
supply of new containers, said United Arab Shipping Co (UASC)
Malaysia Sdn Bhd country general manager Desmond Yong.
“Trade volume is also expected to continue to grow in line with this
year’s trend indicating a possibility of a global container trade
reaching 11.1% growth or a total of 138 million twenty-foot
equivalent units (TEU).
“Although various regional trade sectors may see differing demand as
well as supply trend – vessel lay-ups, extreme slow steaming,
service or capacity diversions will continue to be the options for
lines to strike a balance in revenue.
“Looking ahead, three major factors will have major effects on the
business, namely security, environment and oil price, which will
require sector players to adjust their business process to a new
mode of operation,” Yong told StarBiz.
In general this year, Yong said the trend of global demand was
exceeding boxship supply due to cancellation of ship deliveries and
the high demolition rate earlier this year.
As for Malaysia, Yong indicated that there were a number of positive
developments which had materialised this year, with some shipping
lines and manufacturing base making Port Klang their hub.
“The challenges ahead for next year is really on how Malaysia can
focus on seizing this golden opportunity by enhancing and
strengthening Port Klang, making it truly a convenient and business
friendly hub for the shipping lines and manufacturers.
Yong said there were a number of areas that the country needed to
benchmark against neighbouring countries in order to increase local
“As for shipping lines sustaining their hub at Port Klang, areas we
do need to watch out for are some untimely and outdated practices
and policies within the industry, which do not make it any easier
for shipping lines to conduct their business.
“And there is indeed an urgent need by various authorities and
sector players to jointly make the necessary improvements,” he said.
Meanwhile, Wilhelmsen Ships Service managing director Winston W.F.
Loo foresaw a pickup in demand in the near term (next month) running
up to the Chinese New Year festival, before it tapers off.
This year, Loo said it had been a decent year for container
operators despite rates being “softer” compared to 2009.
“Rates for both the main East-West trades have remained fairly
decent supported by shortage of containers as well as shortage of
spaces in the early part of the year.
“Rates were as high as US$2,000 per TEU to European main ports
during the first quarter.
“Unfortunately, the rates continued to slip from thereon by an
average of US$200 per TEU per quarter.
“Present rates out from Malaysia hovers around US$1,300 – US$1,400
per TEU,” he said.
Going forth, Loo said many carriers had announced general rate
increase (GRI) to be implemented with effect from Jan 1, with
average increase of between US$250 and US$300 per TEU.
On the other East-West trade of Asia-US-Asia, Loo said it started
off the year poorly, averaging US$1,800 (West Coast) and US$2,900
(East Coast), but gained strength during the second quarter.
“Implementation of the peak season surcharge of US$600 per
forty-foot equivalent units (FEU) for West Coast and US$800 per feu
(East Coast) in June were very successful.
“This success prompted the shipping lines to further implement a GRI
averaging US$600 per feu (West Coast) and US$800 per FEU (East
Coast) from July 1.
“Unfortunately, some could only hold for two weeks before mitigation
starts creeping in due to both supply and demand pressures. After
that, rates continued to decline.
Presently, Loo said the rates out of Malaysia hover around US$1,900
to US$2,000 per FEU (West Coast) and US$2,900 – US$3,000 per FEU
“In the near term, we foresee that volume to the United States out
of Malaysia will remained stagnant, thus rates will remain under
pressure going into next year,” he said.