Ocean container carriers will lose more than $300 million on trans-Pacific services in 2011 due to falling freight rates and shrinking traffic, according to Alphaliner.
Cargo demand this year will likely decline by 1 percent from 2010, compared with carriers’ forecasts of 7 to 8 percent growth, the container shipping analyst said.
“Peak season volumes have completely fizzled out and cargo volume growth has been negative since June,” Alphaliner said.
Attempts to impose peak season surcharges have failed completely and current spot rates are 36 percent lower than in the same period last year. Carriers are finally cutting capacity, “but the move has come too late to counteract the plunge in freight rates.”
Four Far East- U.S. West Coast “strings” are due to be suspended in the next two months, removing 17,000 20-foot equivalent container units of capacity, or 6 percent of current capacity on the route. This is on top of the seven services that have already been withdrawn since April, but the vessel utilization rate, currently estimated at 90 percent, is expected to keep falling until the end of the year in spite of the new cuts.
“Further withdrawals will be required before any rate recovery can be expected,” Alphaliner said.
Some smaller carriers will come under increasing pressure to withdraw or substantially scale back their presence in the trans-Pacific trades, Alphaliner predicted. Competition on the route has been particularly severe this year as the decline in cargo demand coincided with the entry of several new carriers and the introduction of new vessel capacity.
-- Contact Bruce Barnard at firstname.lastname@example.org.