TPM Asia Shenzhen Oct 2012

Transcription

1 Intermodal Rail : Finally an Opportunity for South China Shippers? TPM Asia Shenzhen Oct 2012 Speaker : Sunny Ho Executive Director The Hong Kong Shippers Council

2 Shippers are getting more and more dissatisfied with the traditional mode of ocean shipping. Freight costs are very unstable long transit time e.g. over 30 days from a Far East port to first port of call in Europe, and then add on top of that the time required to move the freight inland unreliable shipping schedule

3 Shanghai Containerized Freight Index - Rates to U.S. West Coast & East Coast Ocean freight rates to the west and east coast have softened by about $300 since the August 10th peak. The rates remain well above 2011 rates and slightly lower than 2010 peak pricing levels. The Shanghai Containerized Freight Index for west coast ports was $2,490 per FEU and to east coast ports was $3,720 on September 7. The indexes bottomed out in December of 2011 and have risen 76% and 48% respectively since the low point. That is an increase of $1,000-$1,200 per box. Source : Shanghai Containerized Freight Index - Shanghai Shipping Exchange, The Journal of Commerce, Transplace analysis.

4 World Container Index s Shanghai-Rotterdam Container Freight Rate In 2011, shipping lines got into a price war that drove rates down well below break-even. In 2012, it is reported that the lines have been successful in managing capacity by taking ships out of service and adopting further slowsteaming. Even after their recent falls, shipping rates are still substantially higher than they were a year ago at the peak of the shipping season.

5 Drewry HK-Los Angeles Container rate benchark The TPS trade is relatively more stable. Most shipping lines have completed their service contract negotiations in end May 2012 and the rates were on the rise since June. In August, the highest Drewry s Hong Kong-Los Angeles benchmark container rate reported was $2,880/FEU, 88.9% higher than the rate reported on the Drewry index 12 months ago.

6 Numerous surcharges Many are unusual and never-heard-of Heavy Fog Surcharge Source : SeaNews Turkey June 1, 2012

7 U.S. Labour Strike Surcharge Source : South China Morning Post Sep 14, 2012 Late B/L Redemption Charge Emergency Bunker Surcharge to be paid only at Chinese ports

8 Slow steaming deliberate reduction of vessel cruising speed reduces the cargo capacity of a fleet as ships are at sea for longer utilising additional capacity, helping to maintain freight rates During the recession in 2009, many ocean container carriers have accelerated the practice of slow steaming to absorb surplus capacity and cut fuel cost.

9 Some shipping lines cut speeds from around 20 knots to around 17 knots to save fuel. Extra vessels are added to the "string"so that the same level of service can be provided. Some lines have even opted for "super slow" steaming, which means 15 knots or less. According to Alphaliner (source : Lloyd s List Sep 5, 2012) : On the Asia to Europe strings that have adopted super-slow steaming : vessel speeds of less than 14 knots can be seen on certain routes extended the average rotation : Asia to North Europe loops : from 8.2 weeks in 2007 to 10.5 weeks in 2012 Asia to Mediterranean loops : from 7.4 weeks in 2007 to 9.9 weeks in 2012

10 increases the shipping time, so that shippers have to plan for a longer transportation lead time for their goods. Heavy inventory cost and capital cost are incurred. shippers have to worry about delays in delivery little adjustments in Bunker Surcharges

11 Comparing the advertised transit time before slow steaming : Port Year Southampton 27 days 30 days Rotterdam 23 days 26 days Hamburg 21 days 24 days

12 More still, schedules are not reliable. Source : 大公報 Aug 7, 2012

13 High volatility and erratic situation in sea freight and air freight in recent years is pushing shippers to explore alternative modes for the transportation of goods

14 Is Intermodal Rail : Finally an Opportunity for South China Shippers? Rail / Land alternative

15 Why land bridge operations failed in the past? Railway bridge on the Trans-Siberian across the Kama River near Perm

16 Before the Soviet Union disintegrated in December 1991, there were regular rail services (from Mainland China through Manzhouli, Manchuria), sea-rail services (feeder to Vladivostok) to mainly Eastern Europe (the Trans-Siberian Rail-road). Problems frequently encountered were : Loss of cargo Pilferage Taken by Customs and other authorities Manzhouli, China's oldest and busiest rail gate to Russia

17 Total freight costs have to include the cost of containers Railroad companies usually did not provide containers SOC (Shipper-owned containers) were used Containers would never return Tracking was difficult

18 Unreliable schedule Different track gauges Soviet Union : 1,520 mm China & rest of Europe : 1,435 mm Very time consuming for changing the bogies or transferring the goods Extreme temperature conditions Priority was not with containerized cargo Insufficient infrastructure & handling equipment The small volume of containerized cargo did not justify heavy investment

19 When the Soviet Union disintegrated, these problems multiplied.

20 Why there is a higher chance of success now? China, Russia, Eastern & Central Europe countries are eager to develop the land bridge services Strategic consideration High level commitment Followings are the extracts from Wikipedia : The western border point (Zabaykalsk/Nanzhouli) and the line connecting it to the Trans-Siberian main line, are now being upgraded, with the goal of enabling the railway by 2010 to pass 30 freight trains in each direction across the border... The eastern border pointer of the former Chinese Eastern Railway, at Suifenhe/Grodekovo, sees significant use as well, with over 8 million tons of freight crossing the border there in

21 In January 2008 China and Germany inaugurated a long distance freight train service between Beijing and Hamburg.. In 2010 and 2011, China announced plans to finance expansion of the rail systems in Laos, Thailand, Myanmar, Cambodia, and Vietnam and connect them to China's rail system via Kunming. The plans include construction of a high-speed rail line from Kunming to Vientiane, beginning in April 2011, with a possible future extension to Bangkok On 15 February 2011, the two companies who own the line, Northeast Asia Railway Group, a Chinese company, and JSC Golden Link, a Russian company, signed an agreement to resume operations on the line in May Another test run, from Chongqing to Duisburg via Alashankou crossing, Kazakhstan, Russia, Belarus, and Poland took place in March April 2011

22 Multiple links are connected North Central South Silk Road trading routes Source :

23 Dedicated operators Block train services COC (Carrier-owned Container) services Much Greener than ocean transport Lower Carbon footprint cost More balanced trade Both-way traffic

24 Joint venture railroad would foster development of integrated services & efficient operations

25 THANK YOU!