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Container Freight Rates To Rise By Half?
Container freight rates on trans-Pacific services from Asia to the USA could rise 50% by
May this year if shipping lines succeed in pushing through planned rate increases,
according to the South China Morning Post.
Fifteen container shipping lines belonging to the Transpacific Stabilisation Agreement
(TSA) have recommended rate increases of US$ 400 per 40-foot container to US west
coast ports and US$ 600 per FEU to all other US destinations from April. Carriers like
the Tung-family controlled Orient Overseas Container Line and Cosco Container Lines
are advocating increases of US$ 800 per FEU for cargo shipped to the west coast and up
to US$ 1200 per FEU from Asia to other US cities.
Barclays Bank industrial analyst Jon Windham says container lines have been only
partially successful in lifting freight rates as cargo owners have resisted paying the full
increases sought. He estimates that cargo demand will rise by 6.3% this year while fleet
growth will lag behind at 5.8%, thus helping to ‘buoy’ freight rates. The latter figure
contrasts with the 9% growth in container ship capacity forecast by Alphaliner for this
year.
TSA’s Executive Administrator Brian Conrad comments: ‘It is essential to carriers’ longterm
viability that new contracts include rates that are more closely aligned with current
market levels.’
Will A Shortage Of Fiber Harm The Global Paper Recycling Industry?
A review of assessments by paper industry analysts shows growing concern about the
potential inability of the recycling industry in developed countries to supply enough fiber
to feed new demand in the developing world.
The key issue being debated by analysts in reports and presentations is the theoretical
limits to expanded recovery. For example, while the current fiber recovery level in the
U.S. is at a highly commendable 67 percent, this is actually below levels elsewhere.
"Japan has the highest recovery rate in the world at about 77 percent," says Bill Moore of
Moore and Associates. He notes that the Netherlands, Austria and Germany have similar
rates. Moore says that Japan topped at 80 percent before falling back. "Thus, I would say
80 percent is a good theoretical maximum."
Hannah Zhao, an economist with RISI, agrees. "Although we don't know the exact limit
on how high the paper recovery can go, we are almost sure that 80 percent is very close
to the limit," she concludes. She points out that all of Western Europe, including the three
countries listed by Moore, has a combined recovery level of about 75 percent.
At the same time, demand for recovered fiber continues to rise in the developing world.
Zhao points out that China added 6.6 million tons per year of new paper and paperboard
capacity last year. While some of these new machines replaced old, inefficient ones,
China's demand for bales continues upward.
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