TRANS-ATLANTIC TRADE—Canadian shippers see further growth in trans-Atlantic trade

By: | at 08:00 PM | Channel(s): International Trade  Logistics  

By Leo Ryan, AJOTEven though Canadian trade with Asia has soared in the past few years, commercial exchanges and overall trans-Atlantic maritime trade with Europe have not stagnated: they have even maintained strong growth. This trend could offer opportunities for shipping lines as the impact of a growing European Union builds up momentum.
In the short term, however, some shippers acknowledge that it’s far from a perfect world in terms of booking slots in the wake of major carrier consolidations that have affected a number of services and increased charges.
The carrier consolidations that have impacted the most on shippers in the past year have been Hapag-Lloyd’s takeover of CP Ships and Maersk’s purchase of P&O Nedlloyd. Among recent developments is Hapag-Lloyd’s decision to raise rates, as of Feb. 1, for the North Atlantic, in response to such factors as new costs for bunkering, charters and additional security measures. The increase amounted to US$200 for a 20’ container and US$250 for a 40’ container. Hapag-Lloyd also slated the rationalization of ship capacities for 2007.
Looking at things from the point of view of a small niche importer is Olivia Johnson, traffic manager for Montreal-based Jam Industries, which distributes musical instruments, lighting and consumer electronics products across Canada.
“We import,” she says, “from countries like the UK, Denmark, the Netherlands, and sometimes from the Czech Republic, using such ports as Hamburg, Liverpool or Livorno. Most shipments go direct to Montreal. But there are space problems in Europe – there are fewer choices in getting shipments from Europe to Canada.”
No such capacity problems, notably eastbound across the Atlantic, exist for Cascades Inc. of Kingsley Falls, Quebec. Christine Lemieux, director of international operations, explained that the firm has a substantial network of mills in Europe to sell tissue paper, boxboard, and packaging products directly on the European market. “We move maybe one export container a month to Ireland today.”
Chris Gillespie, president of Gillespie Munro, who heads the Seafreight Committee of the Canadian International Freight Forwarders Association (CIFFA), feels that, so far, the rationalizations have had a bigger negative impact on services at staff levels than actual container slot capacity. “Traditional surcharges such as bunker and currency have long been accepted as a product of our times by most shippers, and the carriers are fairly sophisticated in their application of same – such that the transparency that exists seems to satisfy everyone as to the justification.”
On the other hand, Gillespie qualifies as “hard to swallow” newer surcharges like the security fees, especially when one does a quick calculation on the revenue generated at origin and destination on a per container basis.
Moreover, there is far from unanimity over the surcharge phenomenon as a whole in the Canadian freight forwarder community.
“Carriers, whether Conference members or not, have exaggerated on the quantity of surcharges applicable,” declares Jean-Paul Gobeil, director-international markets, Cyberfreight Systems Inc. “Often the surcharges will exceed the actual freight cost,” he said in an interview.
At present, the average cost of shipping a 20-ft container from Montreal/Halifax to Continental Europe is an estimated US$400, excluding the various surcharges. For a 40-ft container, the cost is US$500, plus the surcharges. In the westbound direction to Montreal/Halifax, the rates are much higher: respectively US$1,200 and $1,500, plus the surcharges.
Since freight rates are more than three times higher on imports entering Canada, Gobeil points out this means carriers are always competing heavily for any export traffic in order to reposition equipment into Europe. “It is my opinion that this is the driving force for the carriers and not ‘slot’ costs or cargo valuation.”
Halifax box equipment availability issueAccording to Gobeil, while the ports of Montreal and Halifax

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American Journal of Transportation