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Gold Star Line could handle a record 1 million teu this year    12/05/2018
Hong Kong-based intra-Asian carrier Gold Star Line is on course to handle a record 1 million teu this year amid soaring regional Asian trade and the launch of new services.

Gold Star's operated vessel Erato

Gold Star-operated vessel Erato. Credit: Malte Schwarz

“We are budgeting to do 850,000 teu this year but I think we will reach 1 million. We are operating in the largest market in the world. It’s much bigger than the trans-Pacific or Asia-Europe trades,” said Danny Hoffmann, Gold Star Line managing director.

But while volumes are growing, the carrier is finding it difficult to contract adequate chartered-in tonnage.

Yanir Landenberg, director of finance and administration, said the company was using chartered tonnage rather than acquiring its own vessels to handle the growth in volumes but that it was finding this challenging due to the high demand for mid-sized ships.

Six- to 12-month charter rates for a 4,400 teu container ship are about USD13,000/day, the highest since August 2015, according to Clarksons.

“Box ship supply remains thin and, although the erosion of freight rates seen in recent months had started to worry some market watchers, in recent weeks main-lane spot rates have showed some signs of upwards movement," it said in a commentary on 4 May. "Against this backdrop, carriers appear increasingly unable to dictate terms, with guideline charter rates for ‘standard’ ship types increasing during the month.”

“We prefer a three- to six-month charter but all owners are pushing for a one-year charter,” Hoffmann said.

Gold Star Line, which celebrates its 60th anniversary this year, has launched what Hoffmann described as two-and-a-half new services, the half being its CTI China-Indonesia service using its own 4,000 teu vessels from 12 May to replace what was previously a slot charter agreement.

It launched its GCX service with six 6,500 teu ships late last year. This links China and southeast Asia with Sri Lanka, Pakistan, and the Middle East. It is also launching services between Asia and South Africa.

This comes as total intra-Asia container volumes are set rise by about 5% a year, topping 31 million teu this year and climbing to about 34 million in 2020, according to IHS Markit forecasts.

But Hoffmann said Gold Star Line was seeing the market grow by about 6% a year due to a raft of factors.

“A lot of factories are moving out of China to other southeast Asian countries due to the cost of labour and land. China also understands it has a problem with the US so they are moving manufacturing of solar panels for example to countries such as Malaysia that don’t have quotas with the US,” Hoffmann added.

Other countries are also moving production to southeast Asia, while domestic economic growth among nations in the region is fuelling inbound and outbound container volumes.

“We are facing more activity in intra-Asia. Vietnam is a growing producer of white goods in the region. South Korean firms Samsung and LG are there. Bangladesh volumes are moving up year-by-year,” Hoffmann said.

Hong Kong-headquartered manufacturing and trading firm Li & Fung highlighted Bangladesh’s growth in a research report on Thursday. It said Bangladesh saw export earnings rise 6.3% to USD27.45 billion in the nine months to March, according to official data from the Export Promotion Bureau. Manufactured goods accounted for 96.8% of the total, while fishery and agricultural exports rose 6.6% and 15.5% respectively during the period.

Gold Star Line has also seen growth in perishable and high-end cargoes, which finance director Landenberg said was due to a rising middle class in Asia. “A lot of fruit is moving in the area – durians, dragon fruit. We carry durians from Thailand to China. Vietnam is similar with lychees. During the orange season we’re taking oranges from Xiamen to Karachi,” Hoffmann said. “Every week we’re carrying 40-50 export reefers.”

The growth in reefer cargoes has caused equipment shortages so Gold Star Line has invested in new reefer containers.


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