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Early
January |
Dear Customer: It has been a while since I last wrote to you and, unfortunately, I am once again the bearer of bad news. Container rates from the Far East/China to the U.S. are going up effective January 1, 2008. Ocean carriers have implemented an Emergency Bunker Surcharge (EBS) like they have done a few years back when the price of oil drastically increased for the first time in a long time. For all our main contract carriers we have been able to mitigate this process by having negotiated the following EBS rates: US$ 160/20 200/40 225/40HQ and 253/45 - $ 4.00/cbm for LCL These compare to the official schedule as follows: US$ 240/20 300/40 340/40HC 380/45 I would like to give you some background as to what is going on in the trade in general which may assist in better understanding the carriers rationale and resolve. Carriers have been used to double digit growth from the Far East to the US for many years. Accordingly, they have ordered new and larger ships and deployed them in the Far East/US trade lanes. However, the year 2007 saw very slow to no growth which resulted in rates being more or less the same as in 2006. At the same time the cost of oil has risen for sea voyages as well as for on-carriage by rail and truck. Since the 2007 contracts have mainly been signed with Fuel Surcharges already included in the rates, it has left the carriers to absorb the costs. Another problem is the weak dollar which has considerably reduced the value of US$ freight rates in a world economy. Carriers have mitigated these factors, at least in part, by re-deploying vessels in other trade lanes such as Europe where imports from China have exploded. It has never been cheaper in Europe to buy Chinese products because the Chinese RMB is linked to the US$ and with that has depreciated against the EURO and other European currencies. In addition ocean carriers have taken some vessels out of rotation altogether and slowed cruising speeds to conserve fuel. The picture does not look any better for carriers in the Trans-Atlantic trade as the weak dollar made it too expensive for many to import from Europe and as a result volumes have been shrinking overall yet operating costs have skyrocketed. Looking into the future of 2008 carriers felt that they had to start either recovering cost or withdraw from the market completely in order to maintain viability. By artificially reducing capacity they have created a field in which they can start recovering the increase in fuel cost by implementing the EBS. As always, we thank you for your support and pledge to do everything in our power to keep pricing as competitive as possible. With our partners in Asia and Europe we have over 200,000 containers under contract which positions Seajet perfectly to do just that. If you have any questions or would like to discuss this further please feel free to contact me at any time. Best regards,
Andreas
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Seajet Express Inc., 46 Arlington Street, Chelsea, MA 02150 - Telephone 617.884.0991 - www.seajet.com |
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