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September 3 2018

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32 The Journal of Commerce | September 3 2018 www.joc.com Roll-On, Roll-Off Shipping: North America Outlook Special Report all going up and at same time cus- tomer requirements are even more demanding." Carriers will seek freight in- creases and bunker fuel recovery: some have already instituted bunker adjustment factor (BAF) increases. "Rates are going to have to go up, no doubt. That's the ro-ro environment today," Cooper said. In the ro-ro market, "global de- mand has caught up with supply. We are balanced in most trade lanes," WW's Batista said. A surge in vol- ume that began in 2017 caught Wal- lenius Wilhelmsen, along with other carriers, by surprise. The strong up- turn is causing some capacity issues, as few vessels were ordered during the slow market between 2012 and 2017. Back then, "we were recycling old vessels. Results were not great. Rates had dropped, and the industry held back on ordering new vessels. Now we are seeing the results from scrapping, and the orderbook is low." The International Maritime Organization's (IMO) pending emis- sions regulations, set to kick in Jan. "If global economic growth is closed down, we've all got a prob- lem," said Patrick Cooper, Hous- ton-based area manager for NYK Line's Ro-Ro Division. Tariffs are not the only poten- tial storm on the horizon for ro-ro carriers. During Wallenius Wilh- helmsen's second-quarter earnings report, CEO Craig Jasienski said that despite rising cargo volumes, freight rates are at the lowest levels the carrier has seen in decades. Cooper said there has been an erosion in rates to all areas, even as costs rise: "All the cost components for carriers are increasing: sulfur emissions compliance, terminal costs, cyber protection, landside staff costs, canal charges; these are auto sales were European imports. Meanwhile, contentious North American Free Trade Agreement (NAFTA) negotiations continue, disconcerting but not yet disrupting a healthy trade. Because threatened and already-enacted tariffs include automotive parts and steel, as well as vehicles, whether from Europe, NAFTA, China, or elsewhere, auto- makers and manufacturers of high and heavy rolling stock in the United States will be affected by higher costs, and industry members expect prices to rise whether or not finished vehicle imports are taxed. According to the US Department of Commerce, imports of passenger cars and light vehicles, land and ocean, totaled 8.3 million units in 2017, worth $191.7 billion, while exports of just under 2 million units were worth $57 billion. During 2017, the United States imported 2.4 million vehicles from Mexico, worth $46.9 billion, and 1.8 million from Canada, worth $42.5 billion. US exports to both countries totaled 1 million units, worth $26 billion. "Rates are going to have to go up, no doubt. That's the ro-ro environment today." Longshoremen prepare to discharge automobiles from the Asian Emperor at the Port of Hueneme. Eukor

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