Spot Rates Slip as Container Ship Capacity Rises

Spot rates on key container shipping routes are weakening as growth in volume is outstripped by a 19 percent year-to-date increase in vessel capacity.

Drewry Shipping Consultants said its container rate benchmark of Hong Kong-to-Los Angeles spot rates fell 2.9 percent this week, the fourth consecutive weekly decline in spot rates reported by non-vessel-operating common carriers.

By The Numbers: Container Rate Benchmark.

The Drewry benchmark fell to $2,655 per 40-foot-equivalent unit, excluding terminal handling charges at Hong Kong. The index hit a 2010 peak of $2,824 per FEU in the second week of August, nearly double the depressed level of a year ago.

PIERS Global Intelligence Solutions, a sister company of The Journal of Commerce, forecasts U.S. containerized imports from China, Japan, Korea, Hong Kong and Taiwan will rise 9.7 percent this quarter and decline 2.3 percent in the fourth quarter after rising more than 20 percent in the year’s first half.

The Shanghai Shipping Exchange index of Asia-Europe rates has dropped 6.1 percent from its peak in early July, and carriers have been unable to make August peak season surcharges stick.

Paris-based information and consulting firm Alphaliner said in its weekly newsletter that carriers worldwide have added 2.24 million TEUs of capacity this year. Alphaliner said all major carriers except NYK have added capacity.

The largest increase is 282,000 TEUs added by Mediterranean Shipping Co., which has taken delivery of eight of 13 new 14,000-TEU ships scheduled to be delivered this year. Alphaliner noted that MSC’s fleet expansion will be mitigated by redelivery of 10 chartered 8,000-TEU ships during the next two years.

Alphaliner said idle tonnage, which exceeded 11 percent of global container ship capacity at the start of the year, has leveled off at 1.7 percent of total capacity.

-- Contact Joseph Bonney at jbonney@joc.com.