Leading Supply Chain Advisors, Drewry, have reported that overall Container shipping rates have continued to fall back from the heights reached during Spring 2017 though they are still considerably higher than the rates at the same point in 2016. Thus, while in the week to 13^th July 2017 overall quay to quay rates for shipping 40ft. Laden containers slipped by 2.1%, they are still up by 13% form the same week last year.

On the export side, out of Europe the annual increase has been much larger, with an average Rotterdam to Shanghai rate now standing at USD 1362, a 119% increase on the rate a year earlier. The Rotterdam to New York rate has, on the other hand dropped by 8% over the year to USD 1717.  The westbound Transatlantic rates are now running at about three times the rate for a container coming eastbound while on Europe/Asian routes the rates are very much closer to being in balance.

In a separate study Drewry reports an unexpected development of services offering sailings direct from Indonesian and other countries deemed to be secondary markets, to Europe. These services replace the feeder vessel and hub services offered in recent years. The direct services make use of smaller vessels that would have been displaced from the main-line services by the arrival of the Ultra large container ships. Use of the direct vessels should facilitate faster and more economical door-to-door freight.

Speaking at the IEA Supply Chain Workshop held in Cork on 15^th June, Port of Cork Commercial Manager, Captain Michael McCarthy, welcomed the granting of the final planning permissions by An Bord Pleanala that will facilitate the development of the deep-water facility at Ringaskiddy. Following the completion of the development the Port plans to re-locate the container services from the Tivoli location and general cargo from the City Quays area. Container capacity at the port will be doubled and feeder and other lines will be able to operate larger and more economical vessels on their Cork services.

Capt. McCarthy also told the meeting that the Port now has a majority interest in the former IFI location at Marino Point. Current plans will see this location being developed so as to facilitate the berthing and discharging of Bulk vessels. The facility is rail linked and the Port’s plans include the redevelopment of the railhead within the terminal area so that this mode can be effectively used to ship cargo to any Irish location.

Rosslare Europort Manager and IEA Supply Chain Initiative sponsor, Irish Rail, reports the very successful introduction of the weekly Neptune Lines service linking Santander, Le Havre and Southampton. While Neptune Line does operate a number of freight ferry service's the company’s main activity is in Trade Car and Truck distribution with services linking a number of European Ports. Discussions are now underway with a trailer freight operator to establish an export service to Iberian Markets for Irish manufacturers based on this service. Further details of the direct service will be announced shortly.

Irish Rail also advise that the revised scheduling of the Stena Line Southern Irish Sea corridor service linking Rosslare with Fishguard has proven to be successful and have noted an increase of freight traffic volumes through the Co. Wexford Port.

The key elements that moves sea freight costs are the availability of shipping capacity and the cost of fuel.

Capacity

On the Irish Sea and near Continent volumes of goods shipped continue to increase strongly.  The IMDO all-island figures for Ro-Ro (Trailer) traffic show a 6% increase over the 2015 figure totalling 1.9 million units. Laden Lo-Lo (Container) traffic increased 4% to 892,000 TEU (twenty foot equivalent units). On the Ireland/UK Ro-Ro services with the exception of Seatruck and to a lesser extent, Stena on its Liverpool service ex Belfast no new freight capacity was added during the year so increasing the space pressure on all services. This situation is likely to remain tight throughout 2017 and until mid-2018 when Irish Ferries will take delivery of a new vessel.

For Ro-Ro services direct to the continent no immediate changes are expected on services to French ports, but CLdN continues to add frequencies and increase vessel sizes on their Dublin/ Zeebrugge and Dublin/Rotterdam routes.

On the Lo-Lo services to and from Continental Europe that marketplace is such that lines are able to add or reduce capacity at short notice. They can also switch ports so as to minimise costs.

Services delivering containers and trailers to Benelux Ports are now able to link in with other shipping services covering ports along the Continent’s west coast as well as a widening range of rail services running deep into Europe and beyond.

Throughout the recession, the deep-sea market has been very difficult for all of the lines with massive over-capacity on almost all routes. The main problem has been that the lines have continued to order new larger vessels because they are relatively cheap and can offer considerably lesser costs per unit shipped. The introduction of these Very Large Container Carriers (VLCC) on the Asia/Europe routes has meant that the already large units being used on that traffic are cascaded down to other markets with the owners seeking to fill them. During 2016 South Korean Line, Hanjin collapsed and most lines turned in very poor financial results.

During 2017 the pressure is going to be on to reduce capacity on all routes. This will be achieved by a combination of reduced orders for new tonnage, increased levels of vessel scrapping and the establishment of three new carrier alliances, “2M” consisting of Maersk Line and MSC, “Ocean Alliance” which includes CMA-CGM and Cosco, and “THE Alliance” with Hapag-Lloyd and a number of, mainly, Far East based carriers.  The new Alliances are planned to come into operation on 1^st. April 2017 and could lead to a number of changes in service rotations, port calls, feedering etc. exporters should check these out with their Carriers or Forwarder.

These developments do, of course, mean that it is likely that freight rates on these services will increase during 2017.

Fuel Costs

Since early 2016 oil prices have steadily increased and these increases have gone straight through to the price of the Bunker Fuel and to that of Low Sulphur Marine Fuel.

Within the last year, the Bunker Fuel Surcharges (BAF) charged by carriers have increased from relatively low levels to become a significant element in the freight cost. As an example, Irish Sea Carrier, Seatruck’s BAF for the month of February 2017 stands at 14% while Stena Line currently adds almost €20 per standard trailer on its Dublin-Holyhead routes. Where cargo is shipped in trailers shipped aboard vessels transiting the Sulphur Emission Control Area (SECA), which is basically the English Channel and the North Sea, then additional surcharges will be applied.