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UPDATE - ASIA REGION - SEPTEMBER 2009
As provided by Grant Daly, Safmarine's Asia Region Executive
Note:
Safmarine's Asia Region covers 11 markets and is divided into three areas: GCA (China, Hong Kong, Taiwan), SEA (Singapore, Malaysia, Indonesia, Thailand, Philippines, Vietnam) and NEA (Japan and Korea).
General outlook:
- The decrease in 2009 in volume throughput of key Asian ports (such as Shanghai, Hong Kong and Singapore) has been well documented in the media and there remain many and divergent views and expectations as to a 'W' or 'V' shaped economic recovery.
- Safmarine has seen signs of improvement, in Q3, in the leading indicators such as continued PMI growth, as well as a volume and rate increases through the peak. (Unprecedented low inventory levels and the subsequent restocking orders have timeously coincided with the traditional peak season).
- Consideration must be given ,however, to the context of the falling market of this time a year ago, which influences the year on year results more positively. Despite the current volume surge through the peak, the market conditions for container shipping remain poor.
- Lines continue to withdraw capacity from particularly the East/West trades in line with the global decline in volumes (20% on Asia/Europe and 10.7% on Transpacific on a year on year basis-Sept (source: Alphaliner).
- Safmarine continues to deliver a positive year on year volume performance through the third quarter. Volumes have increased significantly on all trades through the peak. Revenues have increased via the rate restoration initiatives on all services, which has been supported by the volume surge.
- While we can only speculate as to the timing of the economic recovery, we can and do focus on the elements of our business that are within our control. These are our costs, our product, our service levels, and most importantly, our relationships with our customers. Our focus is on understanding our customers' individual business challenges and ensuring our levels of services are further improved. We believe this is an opportunity to demonstrate and further refine the personal attention and service that has been our key differentiator.
Trade Comment:
Asia-Europe:
-There have been a number of string reconfigurations and new VSA (vessel-sharing agreement) services implemented in the first half of the year 2009).
- Our AE12 service was recently reconfigured and now includes direct calls at Piraeus and Rijeka.
-The Mediterranean market remains generally more buoyant than the Northern European market at present
-The rates on the Asia - Europe services remain well below 2008 levels but show signs of stabilizing, and recovery.
-A number of GRI's have been implemented since April, and through the peak in Q3 which have been supported by continued strong demand for our services.
-Several lines are extending peak season surcharges through to end December.
Africa:
-Africa is a core area for Safmarine and whilst competition intensifies, Safmarine has placed significant attention on providing the most competitive and reliable product.
-South Africa(Safari): In July we launched a new Safari 3 service focused on direct calls into Mauritius, Madagascar and Mozambique. (See July 2009 press release on the SAFARI 3 service)
- Q3 volume growth has been significant following on a very soft first half of the year.
East Africa:
- We have consolidated and extended our Middle East/East Africa services, thereby facilitating improved connectivity and product for our Asian cargo via Salalah and Jebel Ali transhipments. The new services additionally offer improved frequency to the key East African ports.
West Africa:
- Our direct Asia/West Africa product has extended its Africa range, offering improved product from particularly China to Nigeria.
-Our focus is on offering shipping services that accommodate the challenges of trading with Africa. For example, where possible we limit the number of port calls on a particular string in order to minimise the impact port congestion in one port could have on the credibility/integrity of the entire schedule.
Multi-Purpose (MPV) services:
- Safmarine offers a regular multi-purpose service from Asia to Africa, primarily targeting China to West Africa. The service caters for the transportation of materials for infrastructure projects, production facilities as well as energy-related projects and services in Africa.
Middle East:
- A direct call at Bandar Abbas, to widen the coverage in the Middle East and to meet the market demand, was planned for mid September 2009.
- As of Q3, we have opened acceptance on a new direct product between China and Chennai.
Transpacific:
-A new all water east coast service via the Suez was deployed in May 2009.
-Two strings will be withdrawn in Q3 in effort to more closely align capacity with the market demand.
-Remaining services deployment will be reconfigured to ensure geographic coverage and port pair combinations will not be affected.
- Safmarine recently announced that we will continue to operate in the Transpacific trade through the 2009/2010 contract period, and will deliver the quality and consistent product offered to our customers that have contracted with us. We will, however, not pursue contracts beyond the current contract period however.
Comments on Imports and Exports:
-Africa has traditionally been the core focus area - and remains so.
-West and Central Asia has been the fastest growing trade.
-China delivers the largest share of business within the region.
-South East Asia is producing good growth off a low base.
-Imports are mainly from Africa and are commodity based.
Comments on Capacity:
-The optimisation of assets and deployment of capacity are aspects of our business which are constantly under review - especially in a market such as the one we have today.
-Services have been integrated with the aim of providing the most cost effective product possible.
-Our focus is on ensuring that our shipping services are as cost efficient and reliable as possible, matching them to the needs of our customers.
-New services and revised string deployments have been launched and implemented on most trades.
-We have also seen a significant amount of tonnage withdrawn from the market, particularly on the Asia/Europe service, which more closely reflects the market demand. The changes more accurately represent the balance of trade.
E-Shipping:
-E-shipping is widely used by Safmarine's customers in the Asia region.
-www.safmarine.com and www.inttra.com are the most frequently used e-business channels.
Comments on currency:
- Korea has been particularly affected by a weakening currency while the strengthening of the Japanese Yen (to the Dollar) has increased the export challenge.
Ends
September 2009
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