The market from Far East Asia has been extremely volatile of late, rates have been at extremely low levels for most of 2015/2016, despite small increases and reductions over this period, including increases from 1st September, 2016. The driving factor on rates throughout this period has been availability of space of the trade, offering far too many vessels and excess capacity.
In recent months, one international line has been forced to refinance their business in order to survive and in the last 2 weeks, Hanjin Line, the Korean based global carrier (7th largest in the world) has announced bankruptcy. The line is now in the hands of Administrators and many vessels are tied up off international ports or in some cases, under arrest for non-payment of port and associated charges.
GPSM were alerted to their financial situation some 6 weeks ago, there were rumours in the trade that Hanjin were having financial difficulties, so we ceased any support of them immediately, and we are happy to say that we have had no containers tied up on any Hanjin vessel. Many of the LCL consolidators continued their support of Hanjin and have numerous containers detained at present. Most of the slot-charterers on the Hanjin vessels have also managed to obtain release of most of their containers by guaranteeing payment to the various port operators.
The results of the bankruptcy will be an issue for many importers/exporters while the Administrators try and resolve the payments due to various global ports, many traders will have stock delayed for quite some time. The more important situation moving forward is that the Australian trade will lose a large space capacity, it is reported that Hanjin were operating 13 vessels on our trade with capacity of approximately 65,000 container slots.
It will take quite some time to replace this capacity, one carrier has been reported as being interested in taking over the Hanjin vessels but that could take months before the vessels are available and placed into service.
We have been advised to brace for increased freight rates, the demand will be extremely high through the traditional “peak” season of October through December. Already we are seeing notices from lines that rates will increase by USD 500.00/20ft and USD 1,000.00/40ft. Fortunately GPSM have some very close associations with some of the carriers and while we can see rates are expected to increase, we believe that we will be able to negotiate far better rate levels for our clients on the major carriers.
We are not trying to alarm anyone, just reporting the facts as we know them today, so we would suggest that you be prepared for cost increases, something we have not had to consider in any great amount over the past couple of years.
GPSM will naturally keep you updated with latest developments as soon as possible.