Party Ending for Asia-Europe Carriers

Freight rates in the key Asia-to-Europe container trades appear to have peaked after a nearly fourfold increase since December, according to Alphaliner.

After carriers successfully pushed through four increases in the first four months of this year — spot pricing reached $1,934 per 20-foot equivalent unit in late April from $490 in December — forward rates traded on the Shanghai Shipping Exchange dipped last week.

It’s just one sign that the truce in the rate war between ocean carriers could be coming to an end, the Paris-based analyst said, as cracks begin to show in carriers’ united front to control capacity.

New ships are entering the market, despite no clear signs that demand is recovering strongly in the world’s second-largest trade lane.

Carriers can’t seem to agree even on the state of the market. Zim Integrated Shipping Services, for example, on May 1 said there were positive developments in the market to justify the relaunch of its joint AEX2/CES2 Far East-Europe service with Evergreen and China Shipping. A day later, however, the G6 alliance — APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line and OOCL — said it would not relaunch one of its seven Far East-Europe loops because its members haven’t seen any improvements in the current market environment.

Carriers are under pressure to deploy their new 10,000-plus-TEU ships, most of which would enter the Far East-Europe trade. Carriers took delivery of 26 new ships of this size during the first four months of this year, with 29 more due in the next eight months.

In addition, two idled 10,000-TEU ships are being reactivated. Altogether, this will add 280,000 TEUs of capacity to the trade at a time when weak demand resulting from the European recession is eroding westbound vessel utilization rates.

Contact Peter T. Leach at pleach@joc.com. Follow him on Twitter @petertleach.