Mike King, Special Correspondent | Jun 25, 2012 10:35AM EDT
Leading forwarders say sea-air volumes remain stable despite the double dose of fuel surcharges levied on users.
Shipping lines and air carriers have increased fuel surcharges this year to recoup rising operating expenses. However, even though sea-air shippers are forced to pay the surcharges, the benefits still outweigh the extra cost for most users, a spokesperson for Swiss forwarder Kuhne + Nagel said.
“It’s not just a matter of surcharges going up but also of the low rates in air freight,” she said. “For customers having used sea-air in the past, it’s still attractive to use this mode of transport since it’s less costly than pure air freight but faster than pure sea freight.”
David Goldberg, senior vice president for ocean freight Asia Pacific at DHL Global Forwarding, said the rising cost of fuel surcharges have become a more important part of overall rate discussions but have not become disincentive. “Even with the surcharges, sea-air is still cheaper than pure air freight,” he said. “Demand is still OK on Asia-Europe and on the trans-Pacific.”
Peter Kjaer Jensen, Damco's chief operating officer, said the company is seeing more interest in sea-air options both as a cheaper replacement for air freight and to speed up shipments because of slow-steaming by container lines.
Goldberg said there are two types of customers for sea-air. “One plans their supply chain around the use of sea-air, so they don’t care how the markets are in air or ocean, they still ship using sea-air,” he said. “The other predominantly uses air freight, but when the cost of air goes up, they can manage longer lead times and use sea-air.
“Air freight rates are still in the range for sea-air to make sense to Europe and Latin America so volumes are steady compared to last year.”
Despite recent declines in bunker prices, some lines still plan to increase fuel surcharges later in the year. Mediterranean Shipping Co. said it would implement a new bunker adjustment factor on all container shipments from the Far East to both coasts of the U.S. on July 1. A surcharge of $1,086 per 45-foot container will be charged on shipments to East Coast ports, for example.
“In a similar manner that they do not achieve full bunker adjustment factor recovery, lines certainly do not pass on the declines easily,” explained Rahul Kapoor, a Singapore-based shipping analyst at RS Platou Markets. “So operating margins tend to expand in the current scenario, and vice versa in rising bunker price environment as seen in the first quarter of 2012.”
Contact Mike King at michael@borderline.eu.com.
