Rising China Orders May Support June GRIs Carriers on the Asia-Europe trade will have growth in China’s new export orders and growing factory output for support as they try to levy general rate increases in June. New export orders in China hit a three-year high this month to boost manufacturing, according to the HSBC flash purchasing managers’ index. Asked whether the rising orders and factory output would increase the chances of successfully implementing the planned rate hikes, OOCL director of trades Stephen Ng said: “Yes, those are positive [factors].” “Volume is increasing, but at this point we are not sure if it is caused by a rush due to labor negotiations that could slow down later on,” he said. U.S. shippers have accelerated some of their shipments ahead of the expiration of the International Longshore and Warehouse Union contract with West Coast employers at the end of June. A recent JOC survey of shippers found that two-thirds of respondents had plans to divert at least some cargo from the coast, and responses indicated that they were shipping earlier as well: Comments included “pulling orders forward early into June” and “ordered heavy to have goods arrive early.” The Asia-Europe spot rate has declined a total of 32.7 percent since Jan. 1 and is down a total of $577 per TEU. The spot rate is, however, still better than the same week last year, showing an 85 percent increase from 2013. Jean-Marie Lamay, head of commodity and freight solutions at HSH Nordbank, told the JOC that the loss was predicted, but the drop may have been more than most liners expected. Lamay said he doesn’t expect next week’s spot rates to go down any farther and pointed toward a planned general rate increase for June 1. Ten carriers — including Maersk, MSC, CMA CGM, CSCL, OOCL, Hanjin Shipping, APL, Yang Ming, UASC and Evergreen — plan to implement GRIs of $300 to $600 per TEU in the Asia-North Europe lane, effective June 1. Maersk Line hopes to boost rates on its Asia-Europe routes, excluding Japan, with planned hikes ranging from $300 to $600 starting June 1. For shipments to the Mediterranean, Maersk’s increase will be $400 per 20-foot container and $800 per 40-foot, 40-foot high-cube and 45-foot container. Hapag-Lloyd is also planning a GRI of $750 per TEU in the trade lane starting June 9, and NYK Line aims to boost rates by $940 per TEU and $1,880 per FEU beginning June 15. The improving China PMI saw Citi Research vice president of Asia-Pacific transportation research Michael Beer striking an optimistic tone in a report this week. “Both external and domestic demand appear to have improved, possibly benefiting from recovery in advanced economies and a slew of targeted supportive policies introduced by the government in the past few months,” he said. “The rising new orders and production needs seem to have prompted producers to pile up raw material goods. On the other end, finished goods inventory declined, suggesting a better turnover as a result of improving demand.” Beer estimated export and import growth would be more than 7 percent year-on-year and headline export growth would improve significantly from May. “Since processing trade accounts for over 30 percent of total trade, faster exports would also lead to stronger import growth,” he said. In volume terms year-on-year, China’s commodity import growth of raw materials for manufacturing was strong in January-April: up 20.7 percent for iron and ore, up 11.5 percent for crude oil, and up 41.1 percent for copper. The May HSBC manufacturing flash PMI reached a five-month high of 49.7, beating market expectations of 48.3. Citi expects the PMI to climb to 50.6 on rising factory output and improving demand. Qu Hongbin, chief economist for China at HSBC, warned that downside risks to growth remain, and more policy easing is needed “to put a floor under growth” in the coming months. “The improvement was broad based, with both new orders and new export orders back in expansionary territory,” he said. JOC
Posted on: Sat, 31 May 2014 06:35:03 +0000
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