Ocean-freight Market Update

For more than a year, the ocean freight markets have been under tremendous pressure, due to the economic downturn, resulting in unprecedented losses. Since then a lot of actions were taken :

• Reduction of capacity
• Service cancellations and optimizations
• Idling fleet
• Vessel scrapping
• Rate increases through :
Realigning bunker charges to real costs of fuel
Peak season surcharges
Rate increases on base sea freight

Recently carriers have announced their new schedules, resulting in further reduction of available capacity or introduced “slow steaming” dropping the vessels speed from an average of 25 knots to 15 knots or even lower, saving fuel costs but increasing the overall port/port transit times up to 7 days on certain routes.

At the same time , the whole shipping industry is confronted with an exceptionally strong demand, very strong inventory replenishment and a booking rush to avoid GRI’s on the main trades.

This situation has led to a constrained environment for space and equipment on the one side and a higher yield focus of the carriers on the other side. We expect that this situation will continue even after Chinese New Year. Capacity will remain tight as supply and demand will be managed in the same way and further rate increases are to be expected.

Especially the Transpacific trade is affected the most due to an overall capacity reduction of more than 50%.

How is Yamato Transport managing this situation?

• Our European offices are in close cooperation with the local Asian offices, monitoring daily the available capacity with our global strategic and preferred carriers;
• We continue to ensure that space is protected by our global strategic and preferred carriers in line with our past performance and new target/commitments;
• Additional space requirements, above the existing allocation, are prioritized per customer in view of past performance;
• The forecasted and received bookings are mapped to the protected space on a daily base and adjusted were needed;
• Priority booking lists are in place with first, second and third back-up carrier;
• We are actively “hunting” the spot-market for additional space on spot quote conditions (short term).
• We keep in close contact with carriers, in order to seek for additional space, even when this is only possible at “premium rates”.