ACL: flying high

Westbound: best rates and volumes

Mr Abbott continues, “We all thought the North Atlantic was experiencing a quick surge and would quickly go back to pre-pandemic volume levels again. But the market volume kept growing, and we had no place to put all the cargo that was being offered to us. Here we are, eight months later, and we are still struggling to accommodate all the cargo on the westbound leg. It is hard to believe that nothing has slowed down yet.”

He said the increased volume situation is affecting almost every commodity on the transatlantic trade. Looking at the reasons for the trade explosion, Mr Abbott said, “The Atlantic is not big on consumer products; it is mostly industrial, but everything is booming. The US is bringing in stuff from everywhere.”

The largest consumer commodity on the trade is alcoholic beverages. Beer, wine, and spirits are having a record year, probably because the pandemic has stopped people from travelling and going out, so they drink and party more at home. Furthermore, the surge in US trucking volume combined with a trucker shortage has led to a significant growth in truck sales, so parts have been flowing heavily, says Mr Abbott.

The eastbound market has picked up as well, but not as strongly as the westbound trade. While westbound volumes “doubled overnight,” Mr Abbott says this was not the case on the eastbound trade, which he estimates is up 15-20% year-on-year.

He sums up, “Rates in the westbound direction have climbed dramatically – the best combined volume and rate year we have ever seen on the Atlantic.”

Nevertheless, the booming trade has also led to the challenges of port delays and container shortages. Mr Abbott says, “The ports and truckers were already flooded with Asian imports, so when westbound European cargo took off, terminals were already jammed and there were not enough trucks to handle the increased cargo. Containers coming into North America are still getting hung up on the terminals or waiting for space to free up in the customer’s own warehouses. This has led to delays in getting the empty boxes back to us. Furthermore, European importers are hanging on to inbound eastbound containers as well, leading to container shortages in Europe. It is a perfect storm that makes any available boxes as good as gold.”

Last year, ACL placed an order for replacement containers but cancelled the order due to the terrible market outlook. Mr Abbott comments, “six months later the market exploded, and when we tried to re-order, the new container prices had skyrocketed, and the lead time had grown to one year. Nobody saw this coming. Too many things were happening at same time.”

On the issue of port congestion, Mr Abbott points out that North American east coast ports have not suffered from the severe congestion that has plagued some ports on the US west coast because the ships calling east coast ports are much smaller. “On the US east coast, port congestion is certainly much worse this year than ever before, but any delays are usually only one to two days. Our terminal operators have done a good job moving all the cargo, so we rarely wait around much more than that.”

A bigger challenge on the transatlantic this year has been the severe weather issues. “Usually, from May until November we gain a day on crossings because the Atlantic calms down and we get faster speeds. During the winter months we generally lose a day or more because of the current and stronger headwinds. This year, the poor winter weather lingered on until May, and ships were riding lower in the water with increased cargo on board, so extra speed was very hard to come by. We only started to see the weather improve in June. Our schedule, therefore, was a mess earlier in the year, but now our ships are all finally back within a day of schedule.”

Due to the uncertainty of trade during the pandemic, ACL does not plan to make any changes to its fleet, trading area and port coverage. Rather, it is focused on fine tuning its operations in its core trade.

Benefits of ACL’s conros

ACL’s relatively new fleet of five G4 conros carry 3,800 TEU of containers, 720 TEU of roro and 1,000 cars. The company started phasing the new vessels in at the start of 2016. The new fleet is more fuel efficient and is much greener than the company’s previous G3 fleet. While there were some early technical problems, these were “teething” issues that have all been solved.

Mr Abbott comments, “The ships are working really well now; we are very happy with the whole fleet. The secret was getting the right technical management to fix them and the right officers to run them. Great people always make the difference.”

The shipping line has been enjoying a host of benefits with its new conro fleet. The vessels have the same dimensions as their predecessors but double the capacity due to their innovative configuration of placing roro cargo in the centre of the vessels with containers fore and aft, as opposed to the normal configuration of stowing roro freight under deck and containers above deck.

The ACL ships also have strong energy and environmental benefits. The company carried 41 TEU for every tonne of fuel burned with its previous ships on its transatlantic service. But the new vessels achieve 90 TEU per tonne of fuel, with faster speeds and twice as much capacity. Emissions per TEU are reduced by 65% and ACL’s environmental footprint has gone down by more than 50% for every container carried.

The new ships have been fitted with Alfa Laval scrubbers, so they do not need the more expensive low sulphur fuel oil when steaming. Mr Abbott says, “The scrubbers have been fantastic. We had some speed and power issues early on because they restrict the exhaust, but our technical managers worked with the engine settings and overcame the earlier problems.”

Asked about his thoughts on further cutting emissions, and the best way to go about it, he argues that scrubbers are the “only technology solution that works so far. Everything else you read about is still in the experimental stage.”

He adds, “All the continuing discussions at IMO are confusing our customers. Lots of people are talking in circles about the viability of different propulsion systems, but they are all on the drawing board. While we wait to see something concrete in action, we are already ahead of the curve [with scrubbers], and we get to learn from the experiences of everyone else.”

He singles out the big benefits of having European shipping company Grimaldi Group as ACL’s parent company and the advantages when it comes to pursuing new fuels and alternative propulsion systems to cut emissions. “Grimaldi ships must be pristine when it comes to green operations because many of their services stay within European waters. They are doing a lot of research and development in this area, and we get a bird’s eye view of what they have success with. Grimaldi keeps building new ships that push the technology envelope. ACL can watch, see what works the best and see what gets approved by the authorities before moving forward.”

Moving to what is expected in terms of trade conditions for the short- and medium-term, Mr Abbott says “Every indication we get from our major customers is that the market will stay strong into 2022.

Several big manufacturers have complained to us about shortages of parts from Asia holding up current production and order fulfilment and are already looking to secure additional space for 2022 to accommodate their order backlog. Based on that, what we are booking and the forward projections from our biggest customers, we see at least six more months of status quo.”

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