With local carriers trying to secure the required tonnage to cover the market needs.
Gold Star Line, the Hong Kong-based intra-Asian carrier, could be handling 1 Mn Teu by the end of this year, driven by the expanding regional Asian trade and the new services it has launched. The company’s initial plan, according to its budget, targeted 850 k Teu to be handled this year, but the record 1 Mn Teu now looks rather easy to be achieved. This turns to be the largest market in the world, much bigger than the trans-Pacific or Asia-Europe trades. The difficult part for the carrier seems to be contracting adequate chartered-in tonnage to cope with the expanding volumes.
The preference of the company towards chartered tonnage rather than acquiring its own assets to handle the fast growing volumes means that the carrier must face the currently high demand for mid-sized ships. 1 Yr. TC rates for a 4.4 K teu container ship increased by 57 per cent since early 2018, standing at USD 12,000 per day.
Fleet capacity for vessels ranging from 4 to 5.1 k Teu has remained rather flat so far in 2018, after having declined by 5.3 and 7.7 per cent in 2017 and 2016 respectively, year-on-year. Due to the optimism developing further in the liner markets, several carriers now start appearing more concerned about what to expect as rates for standard ship types keep on increasing. The majority of owners have been pushing for one-year charters, bringing the earlier trend of charters between three to six months to an end.
Gold Star Line has a presence of 60 years in the industry, having recently launched more services. It recently started employing its own 4 k Teu vessels in the “CTI” (China-Indonesia), replacing an earlier slot charter agreement. Last year, the carrier launched its “GCX” service with six 6.5 k Teu ship, linking China and southeast Asia with Sri Lanka, Pakistan, and the Middle East. Gold Star Line is also about to launch more services between Asia and South Africa. Container volumes traded in intra-Asian routes are set to rise by around 5 per cent this year, reaching 31 Mn Teu by end of 2018 and expected to stand at 34 Mn Teu by 2020. Volumes handled by Gold Star Line have been growing faster so far this year, at about 6 per cent. The main drivers have been several factories moving out of China to other countries in South-eastern Asia, in an effort to reduce their costs of labour and land. Moreover, the tensions between China and the US provide further reasons for companies to move their activities from China to countries such as Malaysia.
Activity is picking up in intra-Asian containerised trade. Vietnam has been one of the fast growing producers of white goods in the region, with companies such as South Korean Samsung and LG already present there. Volumes from and to Bangladesh have been increasing year-on-year as well, with export earnings estimated to have moved up more than 6 per cent year-on-year, mainly driven by increasing volumes of manufactured goods.
The rising middle class in Asia has also meant higher demand for perishable and high-end cargoes for carriers such as Gold Star Line. Fruits have been moving in the area, from Thailand and Vietnam to China and then from China to Pakistan. This growth in reefer cargoes also caused equipment shortages for several local carriers, such as Gold Star Line, which already invested in new reefer containers.
Not a member yet? To access you will need to login or signup
OceanHub is the Ocean Space knowledge community, where you can: