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Big shipping lines announce rate restoration programme

DUBAI — A surge of cargo to the Middle East region from the Far East and South East Asia has prompted major shipping lines calling Dubai ports to announce a rate restoration programme on these routes with effect from July 1.

The member lines of the Informal Rate Agreement (IRA) covering trades from the Far East to destinations in the Middle East have hiked rates by $300 per TEU (twenty foot equivalent unit) and $600 per FEU (forty foot equivalent unit).

The rate increase will be applied on top of ongoing market rates and will apply for all equipment types to the Middle East. All ancillary charge applicable at time of shipment will be assessed on top of quoted ocean freight rates.

The scope of export areas, for which the rate increase will apply, includes Korea, China, Hong Kong, Taiwan, the Philippines, Vietnam, Singapore, Malaysia, Thailand and Indonesia. Destinations in the Middle East covered under IRA include the UAE, Saudi Arabia Gulf ports, Bahrain, Qatar, Kuwait, Iraq, Iran and Oman.

IRA member lines include American President Lines, CMA, CGM & ANL, Cosco Container Lines, Evergreen Marine Corporation, Hyundai Merchant Marine, Hapag Lloyd, Islamic Republic of Iran Shipping Line, Maersk Sealand, MOL, Nippon Yusen Kaisha/TSK, Norasia Container Lines, Orient Overseas Container Line, Pacific International Lines, P&O Nedlloyd, Senator Lines, United Arab Shipping Company, Wan Hai Lines Ltd and Yang Ming Marine Transport Company.

Shipping industry sources in Dubai said that this was the second rates hike this year as part of the IRA’s yearly business plan, which envisages four rates increases. The earlier hike in April this year did have a “limited success”, they said, due to a minor oversupply of large vessels in the market.

“The market during the first quarter of the year is normally soft,” one major

line representative said. “There is always disruption due to numerous new year celebrations throughout the Far East and South East Asia, but starting from the second quarter business goes back to normal,” he explained.

“Although we expect this rate restoration programme to work, because volumes from those routes to this region are extremely high, prices this year will never reach the last year’s levels,” he said, adding, however, that this year is also expected to be “good” in terms of business scope and rates levels.

Rates from China to Dubai currently stand at $950-$1,000 per TEU and $1,900 to $2,000 per FEU, while last year the rates in this sector were quoted at $1,100 for 20 feet container and $2,200 for 40 feet box. The sources said the rates are expected to partly recover this year, while a full recovery is expected by the middle of next year or even later.

Cargo volumes moving into the Gulf are strong and the trade seems to be very positive for the months to come. Overall, there is a GDP growth in the Gulf region and the buying capacity of the AGCC countries has grown thanks to high oil prices, they said.