“The days of very cheap transport prices are over,” this was the message from MOL (Europe) MD Chris Bourne in his keynote speech at the recent Freight UK conference. Containerisation has driven globalisation with China now the powerhouse of growth in world trade and India set to follow. Global containerisation has grown an average of 8.2% per annum over the last two decades and shipping lines have consistently provided a good service to shippers but are only now making good returns. “This is not a crime,” stressed Bourne, since lines need to invest to provide the ships of the future.
Bourne also highlighted the increased costs now faced by shipping lines such as fuel prices, stevedores costs and shipyards charging $120 million for an 8,000TEU vessel that cost $80 million only two years ago. Port facilities in many countries also require significant development and investment according to Bourne. Although massive sums have been invested in developing ports in Asia and particularly China, many European and US ports are becoming overly congested. Carriers have even been forced to apply congestion surcharges to cargo moving through the ports of Los Angeles and Long Beach.
With regard to the UK, Bourne lamented the failure of approval for Dibden Bay and the lack of any concrete timescale for other important projects such as Felixstowe South, Bathside Bay and Thames Gateway. The lack of capacity and subsequent congestion has led to a 40% increase in UK deepsea freight moving via Rotterdam over the last year, Bourne said. Due to all these factors, he concluded that shippers need to be prepared for further rate increase. Many trades have already seen steady rate restorations and freight rates will have to continue rising. Only then will shipping lines be able to support the continual growth in world trade and provide customers with the high level of service they demand in terms of capacity and transit times.