Box Trade Analysis of 2013 & Expectations from 2014

The first two quarters of the fiscal year 2013-14 has seen a marginal drop in container throughput for both Importers & exporters, year on year. However owing to the favorable exchange rate vis a vis USD in the third quarter, the Indian manufacturing industry has gained, giving a boost to exports. This is however not the case for the importers on whom the exchange rate has had an adverse impact.

               

The freight rates have been under pressure all through 2013. Even trade lanes such as India to East Africa which were profitable trade lanes in 2012 became unviable in 2013 with the rapid decrease in freight rates.

We have seen an imbalance of trade, fall in exports with supply of vessels out numbering demand. All in all 2013 has not been a healthy year for liner business.

Captain Anand Chopra.

Expectations in 2014

With new less tonnage coming in, It is expected that in 2014, the supply demand equation will even out With Indian export on the rise freight rates may hold or even improve slightly.

However this may be short lived owing to the P3 alliance formed by the 3 largest container ship operators namely Maersk Line, Mediterranean Shipping Co & CMA- CGM. The service is planned to commence around mid-June 2014. This will be operated by vessels of size between 14000 to 16000 TEU’s and is expected to capture about 40 to 45 % of the total market share. This may have a negative impact on the freight rates which may again come under greater pressure.

With the P3 alliance the manner in which the shipping business is carried out in future may undergo a change. In order to be competitive & retain market share other major carriers will similarly have to form alliances which again may result in a rate war. Thus, 2014 will not have any remarkable change in the freight rates and will continue to be under pressure.

The upturn in shipping business may come around in 2015 as there will be negligible new tonnage addition and the alliances would have stabilized.  This would have a positive impact on freight rates.

Second half of 2015 in all likelihood will result in better times for the shipping industry which has gone through some very hard times for far too long from second half of 2008 onward.

 Will the smaller Ship operators be able to sustain till then ? Only  time will tell.

About the writer:

• Captain Anand Chopra
• Director – Liner and NVOCC
• Doehle Danautic India Pvt Ltd

An internationally laden shipping background and vast experience in shipping businesses’ specializing in movement of project cargo and sensitive cargo across the globe.  Captain Anand Chopra successfully launched and managed SCI’s businesses’ across the USA, Europe, Far East, Middle East and Africa, thus making a strong case representing a living legend in the shipping fraternity.

In his current capacity at Doehle Danautic, Capt. Anand Chopra is the Director of the Liner & NVOCC vertical and is responsible for expansion of Freight Forwarding and Logistics businesses’ for Doehle Danautic.  He brings immeasurable global industry knowledge automatically catapulting Doehle Danautic as a leader in this space amongst its competitors.