Freight rates on the Far East-Europe trades will face renewed downward pressure in March due to ocean carriers’ reluctance to make “meaningful” capacity reductions to match sharply lower demand after China’s New Year holiday, industry analyst Alphaliner warned.
Carriers are planning to cancel at least 15 sailings on the route in response to weak demand following China’s Lunar New Year, which falls on February 10. This will cut capacity by 20 percent and 47 percent in the seventh and eighth weeks of 2013 respectively.
“However, with regular weekly sailings to resume in March, the demand and supply balance on the trade is expected to weaken further,” Alphaliner said.
But the alliance’s capacity with five loops will still be higher by the end of March than it was a year ago when it was operating six weekly sailings, because its member carriers are phasing in new ships with capacities of 13,000 to 14,000 20-foot equivalent units to replace 8,000- to 9,000-TEU vessels.
The average size of ships deployed will rise to 11,000 TEUs by the end of March from 8,900 TEUs when the G6 services were launched in March 2012.
Maersk Line also resumed its AE-9 service in late December, even though it had publicly suggested it is losing money at current freight rates, Alphaliner noted.
“Excess capacity continues to be the main challenge for carriers on the Far East-Asia route,” the analyst said.
Fifty-one ships with capacities greater than 10,000 TEUs are scheduled for delivery in 2013, with the vast majority earmarked for the Far East-Europe trades.
Far East-North Europe forward rates on the Shanghai Shipping Freight Exchange for the first half of 2013 are trending below current spot rates.