Middle East shippers are enjoying a brisk trade in container traffic as consumer demand returns and companies restock their shelves before the busy shopping season of Ramadan. The local shipping industry, made up of shipping lines, port operators, freight forwarders and warehousing and logistics companies, says all roads in the global economic recovery lead to China and its huge exports of manufactured goods.
"The container lines are smiling for the first time in a long time," said David Barker, the executive general manager of Kanoo Shipping in Dubai, which acts as port agents for container ships and chemical and oil tankers. "The container sector has shown a remarkable recovery in the last few weeks and China's exports are absolutely booming." Shippers were starting to become selective again and add some surcharges, Mr Barker said.
China's economic growth surged by 11.9 per cent in the first quarter. Mana al Mana, a shipping consolidator who buys space on container lines, said rates for a 20-foot equivalent units (TEUs)container from Shanghai to Dubai cost between US$700 (Dh2,570) and $800 a few months ago, but had since risen to at least $1,200. "Everybody wants to ship their goods before Ramadan," Mr al Mana said. This had created a capacity constraint and freight rates had increased dramatically, he said.
This return to activity is a welcome departure from the lull sparked by the global downturn, which caused the first drop in seaborne trade last year since containers were introduced in the 1950s. In the downturn, container shipping rates fell by about 50 per cent while drybulk and chemical tanking charter rates fell even more. Keith Nuttall, the commercial manager of the Sharjah-based port operator Gulftainer, said that last year as many as 600 ships were "laid up" at ports around the world and reduced to skeleton crews to cut costs.
Gulftainer, the second-largest port operator in the Emirates, with terminals in the Gulf and on the UAE east coast in Khor Fakkan, saw container traffic rise 10 per cent to 2.7 million TEUs. That was due to the popularity of Khor Fakkan as a transit hub for forwarding cargo to smaller vessels bound for Saudi Arabia, Iraq and Iran. Mr Nuttall said Gulftainer expected a similar rate of "healthy growth" this year. Rates in the shipping sector had improved because shippers reduced capacity by taking vessels out of operation, he said.
"In the Gulf, it is better than the real horror of early 2009 when everyone was running for cover and there was too much capacity on the market," Mr Nuttall said. "Now the capacity is much less, in line with demand, and rates have stabilised." But few are willing to declare an end to the troubles from the global economic downturn, saying commodities have not had the same recovery as containerised goods. "There may be pent-up demand for consumer goods but industry is probably not as excited," Mr Barker said, saying demand for seaborne transport of steel, timber and iron was quiet.
Part of this is due to the construction sector, with residential and commercial developments in the region yet to resume the heavy activity seen before the downturn. The slumping Dubai property sector and the resulting decline in project cargoes was a significant factor in the port operator DP World's 46 per cent drop in net profits last year, officials said. @Email:igale@thenational.ae