Tweeting Transparency

Twitter may be an unparalleled tool to toss out a short thought, idea or a headline, but to say it tells half the story does it too much justice; it tells a much smaller fraction of the story. Below are a few of my tweets or re-tweets from this month’s TPM Conference with a bit more than 140 characters of explanation:

RT @PeterTLeach: Maersk CEO Skou expects 10-11% growth in new vessel capacity in 2013, while global demand will grow 4-5%. #TPM2013

Maersk hasn’t just embraced social media; that’s just a subset of a larger push toward transparency in general by the world’s largest carrier. On Twitter @MaerskLine will regularly re-tweet downbeat articles on the container markets, and Skou’s dire supply-demand projection for 2013 falls squarely into this category. It’s why Maersk’s Twitter feed has credibility and more than 40,000 followers (unlike marketing-dominated feeds such as @ThePanamaCanal).

This is a fundamental shift. In the past, carriers would berate The Journal of Commerce for articles about falling rates. Now a carrier is taking the lead in calling attention to market conditions, whether they’re favorable to its bottom line or not. I’m not sure what the aim is, but it represents a re-imagining of the role of information in the container sector and has the potential to move the industry beyond its fixation with commodity pricing or at least to alter the conversation. For carriers whose pricing is being reduced to the weekly SCFI, that wouldn’t be such a bad thing.

@MaerskLine CEO Skou tells #TPM2013 that shift in Asia-US East Coast services from Panama to Suez routing is “a real trend”

Maersk also said that as of April it would shift all of its Asia-U.S. East Coast deployments to the Suez route, which allows it to use 9,000-TEU ships. Skou told TPM that in 2008, 90 percent of U.S. East Coast coverage was via the Panama Canal, with that share likely to drop to 60 percent this year. Given the excess of 8,000-TEU ships being cascaded off the Asia-Europe trade as 13,000- to 18,000-TEU ships come into service — and likely to become the stable ship size in the Asia-East Coast market — the Panama Canal had the right idea to expand, but it’s a few years late.

How many of those ships deployed in the Suez services will switch to a Panama routing after the canal’s 2015 expandsion? Quite a few, probably; the Suez route has always been available to carriers, but the Panama Canal route has long been preferred because of its six- to seven-day faster transit time. It’s only been the excess of post-Panamax tonnage, not some huge shift in the origin of cargo from China to Southeast Asia, that has breathed new life into the Suez route, and that development could be short-lived.

Skou of @MaerskLine: German KG bankruptcies shows investment fleeing box sector, which will eventually bring supply-demand balance #TPM2013

Skou echoed a point I’ve heard numerous times over the past year-and-a-half: Overcapacity is a phenomenon that will disappear in a few years as retrenchment in container shipping investment  manifests itself.

Skou noted the container ship order book as tracked by Alphaliner has dropped from 60 percent of the existing fleet to about 20 percent. This is occurring as European banks that traditionally provided ship financing withdraw or scale down in the sector, as German KGs go bankrupt and as new financing sources in Asia fail to emerge quickly to take their place.

Maersk is a case in point, given its decision not to pick up options on 10 18,000-TEU Triple-E ships. As Skou said at TPM, “We are investing less as an industry, and I expect that trend will continue, also because growth is coming down. Over time, this will balance supply and demand better.”

Even in a receiving US economy, box imports from China up 0.6% in 2011, down 0.4% in 2012. How times change. @MarioMoreno_JoC tells #TPM2013

Indeed. While China may be holding on to its huge gains in outsourcing market share, as the JOC’s Mario Moreno pointed out, it’s not growing. This because of continuing rapid escalation in labor costs and changes in Chinese society that make it not nearly as well positioned as it was to gather up the world’s manufacturing. Mexico, Vietnam and others have taken its place, making for heady days in supply chain management as companies must rethink everything from sourcing to transportation options.

As Jeffries’ Johnson Leung said, growth in trans-Pacific eastbound container volumes is tracking below growth in U.S. retail sales. “That is a structural change,” he said.  

Peter Tirschwell is senior vice president of strategy at UBM Global Trade. Contact him at ptirschwell@joc.com and follow him at twitter.com/PeterTirschwell.