The two alliances had decided to join their services on Asia Mediterranean and Asia Europe trade lanes last year, as a response to Maersk Lines’ October launch of their Daily Maersk service, which the alliances had feared would eat away at their market share.  The G6 Alliance members include Hapag-Lloyd, APL, MOL, NYK Line, Hyundai Merchant Marine, and OOCL.

In March this year, container imports rose by 11 percent year over year, partially as a result of the time of the Chinese Lunar New Year. The New Year had been late the previous year, so figures for February were strong and March 2011 US imports were weak. The Chinese New Year celebrations tend to last for a week or two, during which factories in Asia shut down. This year the New Year celebrations were early, so there was a drop in February imports, while March import figures were strong.

Exports rose by 2 percent year over year in March. Exports in the United States have remained consistently strong over the last two years.

On a year to date performance basis, ports on the West Coast are running a bit ahead as compared to the previous year. Overall container volume from January to March rose by 2 percent. Exports rose by 3 percent while imports went up by 1 percent.  Around 50 percent of the containers moving about in US ports are handled by West Coast ports.

Macquarie’s analysts pointed out that the economic indicators of the Organization for Economic Cooperation and Development, which are typically ahead of Chinese exports by around six months, reached the lowest in September 2011. The analysts also noted that the sub indices for new exports and orders were buoyant as far as the latest Chinese Purchasing Managers Index is concerned. They also noted that the indicators for US retail sales, housing sector as well as consumer confidence are on the rise, suggesting acceleration in trans Pacific demand.

The opening report of the China Port Sector said, “Container ports offer direct exposure to trade flows, which we believe will have a cyclical upturn from the second quarter of 2012.” The China Port Sector report examines the value of top Chinese port operators like China Merchants Holding and Cosco Pacific.

The report further said, “Although Asian exports to Europe may stagnate in 2012, we expect the U.S. to pick up the slack and intra-Asia to continue to post strong growth. We therefore forecast higher-than- consensus throughput growth of 9 percent this year.”

Macquarie said that rising private demand in the US for containerized imports, with furniture and auto parts (which accounts for 25 percent of import volumes in the US) leading, would be strong.

This year, after recovering, China’s growth in exports will stay healthy during the next 3 to 5 years, with a 7 percent to 9 percent expected annual growth rate, powered by trade between the Chinese and other emerging markets like ASEAN, India as well as the Middle East.

The report said, “China has grown less reliant on developed markets for export growth since the global financial crisis.” It further added, “Since 2009, containerized trade between India and China has grown at a CAGR of 14.7 percent, while the overall throughput growth was just 4 percent.”

Chief Operating Officer for the New York based carrier, Rudy Mack said, “We had to pull the plug because there was not enough volume on the service.” He further added, “You need a certain cash flow to run this service. We don’t have it today. We won’t have it tomorrow.”

Mack went on to say that the German investors, who had assisted in launching the company during the previous year, were not willing to subsidize American Feeder Lines’ money losing operation any longer. “So we decided to close it. Otherwise it would be irresponsible to bleed money away without the hope to break even within the near future,” Mack added.

The earlier suspension of services by AFL had come a few weeks after Nova Scotia extended a loan guarantee of $500,000 on April 5 for supporting its weekly service. The reason cited for the suspension of services was restructuring of the company.

American Feeder Lines had launched the service in July last year, with AFL New England, a chartered vessel with a 700 TEU (20 foot equivalent units) capacity. The service was started to fill in the gap left by the Iceland based Eimskip carrier, which ended its weekly containerized shipping service between the ports of Halifax, Portland, Maine, and Boston in 2008.

AFL had hoped to set up as many as 10 container ships in the United States for launching weekly short sea services, which would link around 18 ports as per the Jones Act.

Mack said, “The short-sea, Jones Act idea has died.” He further added, “If you can’t run a feeder service from Halifax to Boston and Portland, how will you be able to run other short-sea services?”

The Danish carrier announced a freight rate increase of $100 per container for cargo shipments destined to ports in the Middle East, the Indian Subcontinent as well as the Red Sea area, from the US, effective May 15. The Indian Subcontinent region will include ports in Pakistan, India and Bangladesh.

Maersk Line also hiked its rates by $150 per TEU (20 foot equivalent unit) container and by $300 on every 40 foot or 45 foot high cube container on shipments destined to Pakistan and India, from Far East Asia, starting on May 15.

Freight rates for dry cargo destined to the Caribbean and Central America from the Far East will go up by $560 per TEU and by $800 for every 40 foot and high cube container. These rate increases will also come into effect on May 15.

Maersk’s also proposed a general rate increase of $200 per TEU on dry cargo shipments destined to East Africa from Far East Asia, starting from May 16.

Separately, the Danish carrier said that it will be applying a GRI of $500 per TEU and $1,000 per 40 foot container, on cargo destined to Australia from Southeast Asia, beginning from May 1.

The Danish carrier said, “In order to continue offering our broad portfolio of services and high level of reliability, it will be necessary for us to implement a number of rate increases/restorations.”

In the week ending April 23, diesel prices had dropped at the sharpest pace since mid-December, falling by 4.2 cents as oil prices declined by over $1 a barrel. The last time prices of diesel had dropped at such a pace was during the week ending on December 19, when diesel’s cost per gallon had plunged by 6.6 cents.

The average price of diesel now stands at $4.073, which according to the US Energy Information Administration is 5.1 cents down from the same period for the previous year. Prices are however, 7.6 percent or 29 cents up from the year’s beginning.

Diesel prices dropped in all areas, except for the state of California, where diesel prices rose to $4.396, an increase of 1.2 cents. The sharpest decline was witnessed in the West Coast area (excluding California), where diesel prices dropped to $4.252, a fall of 4.7 cents.

Crude oil for June delivery dropped to $104.21 per barrel, a fall of $72, on the New York Mercantile Exchange. Expectations of economic growth slowing down in the United States and China, dampened investor optimism.

The Drewry Container Rate Benchmark went down by 2.8 percent last week, settling down at $2,337 for moving a 40 foot container to Los Angeles from Hong Kong. The Drewry benchmark signified that spot rates for eastbound shipments are maintaining the ground they covered in the week prior to the last, after the member carriers of the Trans Pacific Stabilization Agreement implemented a general rate increase of $400 per FEU (40 foot equivalent unit) from April 15.

Last week’s spot rate was 30.2 percent higher as compared to the spot rate benchmark for the same week during the previous year, when it stood at $1,795 per TEU. It was also 62.7 percent higher as compared to the spot rate benchmark during the last week of the previous year (2011), when it stood at $1,436 per 40 foot equivalent unit.

Shipping carriers have been hiking up freight rates this year so as to prevent renewed losses, which have been estimated to be at over $6 billion worldwide, for the last year.

The port stated, “Protecting and retaining discretionary cargo market share in the face of changing economic conditions and intensifying competition is the key to the future of the port and the region.”

Ports on Canada’s Pacific Coast are aggressively encroaching upon the US West Coast ports’ market share (including the Port of Los Angeles), by offering competitive intermodal services destined towards the Midwest. Ports on the Gulf Coast and the East Coast are also planning similar development projects, once the expansion of the Panama Canal is completed by early 2015.

According to PIERS data, the Port of Los Angeles, in 2011, managed 6,034,474 TEUs (20 foot equivalent units). The port handled around 21 percent of the total container volume in the US, last year.

The Port of Los Angeles stated that development of infrastructure has been the main reason for the port’s success and it will remain an essential factor for differentiating LA from other ports as far as discretionary cargo is concerned. The port will be spending over $3 billion during the next decade for developing marine terminals, intermodal connectors, on dock rail yards along with other transportation infrastructure.

The Journal of Commerce economist, Mario Moreno said that although the economy was showing indications of deceleration, he thought, “it will be momentary as the Fed has made it clear it is prepared to do more if conditions worsen.” He further added, “Imports growth should regain speed in the second half of the year.”

The top gains in March were furniture, which went up by 15 percent/18,377 TEUs; drums and empty containers, which went up by 178 percent/16,873 TEUs followed by auto parts, which rose by 15 percent/8,052 TEUs.

The sales of already existing homes dropped for the second straight month in March, which is a matter of concern for short term import outlook for furniture along with other home goods. Solid gains were witnessed for miscellaneous plastic products, which was up by 17 percent; bananas, which rose by 12 percent as well as miscellaneous metal ware, which went up by 18 percent.

London based Drewry Supply Chain Advisors’ director, Philip Damas, said that the sharp rise in spot rates demonstrates that the general rate increase of $400 per container, announced by carriers for April 15, is sticking. The April 15 increase came after an increase of $300 per box on March 15.

However, Damas voiced his fears that the latest increases might encourage carriers to bring back their inactive vessel capacity into service, and thereby weaken the carriers’ discipline in pricing in the trans Pacific, “at least as far as the spot market is concerned.”

The Drewry Container Rate Benchmark is based on research conducted by the Drewry Shipping Consultants and derived from non vessel operating common carrier (NVOCC) shipping to Los Angeles from Hong Kong. The rate is specified in dollars and is based on full 40 foot container load, not taking into account the terminal handling charges at Hong Kong.