New Hong Kong line finds niche in intra-Asia lane

Seeing a window of opportunity in intra-Asia routes, a new carrier, Great Eagle Shipping Lines, has entered the trade lane.

The carrier has launched a Hong Kong to Haiphong, Vietnam, service with the deployment of a 700 TEU vessel that turns around every five days, making six sailings a month.

"We are planning to expand very fast. We hope to start another service in another few weeks from China, Hong Kong to Philippines and another three or four services within the next six months in joint ventures with other companies,''said Igal Dafni, chief executive officer of Great Eagle Shipping. Dafni has been director of the Asian Shippers' Association (HK) since 2009, which he quit this May to launch Great Eagle Shipping.

Prior to that he was CEO of CNC, the Taiwian-based unit of CMA CGM that he joined in April 2007. Before that, he was president of ZIM Integrated Shipping Asia-Pacific.

The carrier has been overbooked since its first sailing on October 11, said Dafni. The main problem was containers.

"We are short of equipment so 70 percent of our lifting is SOC (shipper owned containers) and only 30 percent is our own cargo, mainly refills," said Dafni. Once the carrier gets its own equipment it hopes to change the proportion to 80 percent COC (carrier owned container) with 20 percent feeding. "We don't want to be a feeder line, we want to be a dedicated carrier in the intra-Asia market," said Dafini.

Reflecting the demand for refills, he noted there was a backlog of 10,000 containers in the last two months in Hong Kong, waiting to be shipped to Haiphong. The situation has improved since but Dafni sees trade picking up again and the problem repeating itself. Dafni was unfazed by the growing competition in the region with lines adding more loops or starting new intra-Asia services. He said there was more than sufficient cargo for all.

He remained confident of the line staying above the water line. "If we get 30 refills per voyage we are already in the black," he said. "The rates for the refills are quite good, although they do fluctuate a lot. For COC, it is over US$2,000 but sometimes it comes down to $1,500.

"Our total expenses per three-day voyage is $60,000, that includes charter hire, bunker and port costs, with bunker costs being the main expense at $30,000 for the 60 tonnes consumed per shuttle service. Charter for the 700 TEU ship is $5,200. Thirty refills bring in around $40,000 covering more than half our cost, and the balance is from other general cargo and slot arrangement with other shippers."

Dafni said all the cargo was transhipment consumer goods cargo from the US and Europe, which is dumped in Hong Kong by the shipping lines. The shipper then dedicates the refills business to a trader in Hong Kong, who then passes it on to a line to move it to Vietnam.

What is unique about this trade, he added, was that the final destination of the cargo was not Vietnam but China's Guanzi province. It goes overland through the border with Vietnam.

Regarding direct shipments by the main lines hurting the intra-Asia trade operators, Dafni admitted there were many lines doing direct shipments to Vietnam, with six transpacific main lines calling at Ho Chi Minh's new port Cai Mep and three from Europe - Zim Line, Hanjin and CMA CGM. But he added there was enough cargo to go around.

Using Cai Mep for direct service has hurt Singapore as well as Hong Kong, said Dafni. He said last month Singapore lost 100,000 containers that used to be transhipment cargo as it all went to Cai Mep. The same thing is happening with transhipment cargo to Hong Kong, he added.

It is very difficult to get equipment from the leasing companies as most of it is already leased out and newbuildings at this stage are too expensive, said Dafni.
(Source:www.cargonewsasia.com)