Changes Coming to Asia-Europe

I spoke yesterday with Rolf Habben-Jansen, the CEO of Damco, the A.P. Moller Maersk Group-owned global forwarder and third-party logistics operator. He gave a terrific speech at our TPM Asia event in Shenzhen in October and I was following up with him about something he said at the conference, specifically that many BCOs ship cargo too early, clogging up the system and leading to it piling up at destination warehouses.

Also, they don’t in his view take nearly full advantage of the opportunity to flex between fast ocean, slow ocean and combined air-ocean shipping options as supply chain needs dictate. This will be the subject of an upcoming JOC column.

I also asked him about how he sees the immediate outlook, and his answer was interesting, particularly in light of the frightfully low rates in the Asia-Europe and trans-Pacific eastbound markets. His answer is below:

“All of us see the market as relatively soft right now. I would expect a fairly early pickup towards Chinese New Year,” which in 2012 will be very early: Jan. 23 (between 2007 and 2019 no Chinese New Year is this early. It will last up to 15 days through Feb. 6). Typically, in the run-up to the Chinese New Year, also known as the Spring Festival although it takes place in what for many is the dead of winter, there is a surge of cargo ahead of up to two-week factory shutdowns throughout China as workers make an annual migration back to their home cities, towns and villages.

“ I expect (the pickup in volumes) to come fairly early, and that of course will carry through January. It is very difficult to predict what is going to happen after Chinese New Year. The reality of it is after Chinese New Year there is a lot of uncertainly, around economic developments, and some uncertainty as to what is going to happen on the carrier side. With the rates at the level they are today, they are not sustainable, so at some stage there needs to be some rebalancing of supply and demand, and that should come after Chinese New Year. I would expect some rebalancing between supply and demand.”

In other words, so far capacity withdrawals on a large scale have occurred only on the trans-Pacific, which has seemingly arrested the rate decline in that trade. On the larger Asia-Europe trade, no significant withdrawals have occurred and rates have plummeted. I interpret Habben-Jansen to suggest that something will soon be happening on Asia-Europe.

-- 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.

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