Are You Ready For 2014?


In shipping industry the year is finished. We have one more calendar month ahead of us but we all know where we’re going to end up – good , bad, average… We are aware, every year has its own unique characteristics. 2013, as I had written in my article back on Jan 14th “We will again see General Rate Increases that will be implemented only for the purpose of ‘not letting the rates decrease further”, which was realized, and kept the rates on a lower median than in 2012 where the freight levels went up and down on that median line. On the export side, again as expected, the market was stable (since it was very low already), and carriers used certain opportunities of seasonal increases, deficit of equipment, to recover extra revenue from exporters.

According to HSBC Global Connections Reports dated Oct’13, “Conditions are improving for USA importers and exporters, with 67% of survey respondents expecting volumes to rise over the next six months. “, and according to Fed we are expecting a 2%-2.3% GDP growth for 2014. Will these increases/expectations be enough to fill the ships? The container capacity growth rate has risen to 7.6% for 2014 and 6.5% for 2015, with new deliveries expected to reach 1.59 million TEUs in 2014, and another 1.42 million TEUs in 2015 respectively. With the alliances formed and current developments on a possible P3, we will see smaller vessels shredding or at least out of their lanes, which will cut off some of the capacity. However, when you add everything up on the capacity side and reduce the expected demand, we will still reach a higher positive number for extra capacity in 2014.

So, what should we expect? For US Imports, I believe we will again have a year similar to 2013. We will see a push from the carriers side in the first quarter (before the contract season) to increase the rates, to go into the contract season strong. However, we will still end up with low rated/longer validity large BCO contracts, and higher – fluctuating- rate levels for the rest of the market on the import side. For US exports, I believe it will be an identical year with last year, where again rates will be stable (on the low side), and carriers will be trying to increase their revenues as the opportunities arise. Both for imports and exports, P3 might be a game changer if they get the green light from the authorities. With an alliance controlling, 40% of Trans-Atlantic and 24% of Trans-Pacific trade, it is not very easy to guess what is going to happen.

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M. Can Fidan
Can is originally from Turkey, where he got a Bachelor’s Degree in Economics at Koc University in Istanbul. After working 5 years at MTS Turkey, he moved to Hong Kong as an MTS Representative, where he stayed 2 years working on Asia Development of the group. After Hong Kong, he came to MTS New York. He is currently the Vice President of Business Development and Export Manager at MTS Logistics, Inc. Fun Fact: Can (read as John in Turkish) is a HUGE soccer fan, and Besiktas is his team. Despite the fact that he has been living abroad since 2005, he follows each and every game religiously!