Mediterranean Shipping became the second carrier after Maersk Line to announce a second rate hike this year of $400 per 20-foot container on the westbound leg of the Asia-Europe trade.
MSC, which plans to charge an extra $750 per 20-foot container from Asia to Europe tomorrow, March 1, will seek to implement the second increase April 1. Maersk, which is raising westbound rates by $775 per TEU Thursday, last week told shippers of a second $400 increase in April.
MSC’s April hike will apply to all cargo from Asia to northern Europe, Scandinavia, the Baltic Sea, the Western and Eastern Mediterranean, the Black Sea and North Africa.
The move by the world’s two largest carriers is expected to trigger similar rate increases by rival lines, which are also hiking rates Thursday, as the industry strives to stem losses on the world’s busiest shipping lane. Chinese carrier Cosco announced at short notice on Monday a further $230 per TEU general rate increase from March 10.
If the higher rates stick, shippers will have to pay almost $1,200 more to ship a 20-foot container from Asia to Europe. Carriers have also raised eastbound rates but by a much smaller amount because of lower traffic volumes and slower growth. More recently Hapag-Lloyd announced a $225 per TEU increase effective March 19.
There are doubts, however, that carriers can push through the all of the planned rate hikes amid an excess of capacity and slowing trade growth. Carriers are expected to obtain over half of the $700 to $800 hikes on March 1, with forward rates at $1,200 to $1,300 compared to $700 to $800 spot rates for February, according to Alphaliner.
“However, rates are expected to soften slightly in March before carriers attempt to raise them for a second time in April,” the container market analyst said.
The ability of carriers to raise rates further will depend on maintaining capacity discipline in the coming months, Alphaliner said. While service withdrawals have removed 14 percent of capacity on the Far East-Europe route since last June, much of the culled cargo space likely will return by the summer. Up to six new “strings” could be introduced on the route, threatening a rerun of last year Asia-Europe price war.
-- Contact Bruce Barnard at firstname.lastname@example.org.