Wednesday, January 28, 2015

Established Freight Forwarder and Liner Agency Predicts the Future of Far East Trade

With 180 Years of Experience Analysis of Market Carries Some Weight
Shipping News Feature

UK – FAR EAST – Analysing future cargo trends is a notoriously dangerous game but few shipping companies have the sort of pedigree which Hull based freight forwarding and liner agency John Good possess with over 180 years of experience in the world transport market, so when the still independent company chooses to assess the Far East trade in which it has so long been a player it is doubtless worth listening to.

The company says it has enjoyed a successful 2014 developing its regional customer base but cautions against volatile rate swings as the carriers struggle to balance available capacity against demand. With a host of alliances formed in the past few months, and ever larger ships to carry the combined trade, the company says it believes there is no end in sight to the confusion with 40 foot rates poised to jump from the mid $1,000’s up over the $3,000 mark as we approach Chinese New Year, with ‘Peak Season’ surcharges and general rate increased being predicted across the board.

The jury is very much out on the efficiencies which the alliances promise, in the case of the 2M alliance, the stripped down former three way grouping including CMA CGM which was proscribed by the regulators, the partners, Maersk & MSC, are destined to take a 37% market share on Asia - Europe trade with 195 vessels and 2.4 million TEU of available capacity, a development John Good finds ‘interesting’. The elephant in the room for the Lines is that despite economies of scale a 12% increase in capacity may not work out well for them with only a 3% increase in cargo volumes forecast in the short term.

The East Yorkshire based company has seen an 11% jump in overall volumes coming in from Asia in 2014 against 2013 and, with the recent appointment of Peter Shan who is based in Shanghai as the UK Trade Manager for John Good Shipping, anticipates an even stronger future. This, and the investment made in improved IT with a complete end-to-end solution including a detailed PO management system that allows customers to track their orders from placement through to delivery at final destination, means John Good can supply the increased visibility & traceability which shipping and freight forwarding clients now expect.

Currently the company is preparing for the fast approaching Chinese New Year (Year of The Goat) which celebrations set to run from 19 to 24 February. Good’s predict a rush to increase rates on or around February 1 with players crossing fingers and toes that the market holds as they look at arrest the slump they have seen in the last quarter of 2014 and give themselves a stronger position for 2015.

Photo: With giant vessels approaching a quarter of a mile long is this huge gamble by almost all the container lines a winner or a step too far?