The strong rally in ocean freight rates out of the Far East since the beginning of the year will likely peter out after the Chinese New Year next week, as capacity runs ahead of cargo demand, said Alphaliner.
Ocean freight rates and ship charter rates will then remain weak through 2012 as slowing demand growth in Europe and the U.S. and faster rising cargo capacity further offsets the supply-demand balance, the container market analyst said. Asia-Europe rates surged in early 2012 as European importers rushed to secure vessel capacity before the week-long factory shutdown in Asia.
Europe-Far East container traffic growth will slow to 1.5 percent this year from an estimated 2.8 percent in 2011 because of the weaker economic outlook in Europe. Far East-U.S. volumes will grow by “only” 4.6 percent in 2012 on improving economic indicators in the U.S. after shrinking by 0.8 percent last year when carrier originally estimated 7 to 8 percent growth.
The containership fleet, by contrast, is set to grow by 8.3 percent, leading to an oversupply that could boost idled ship capacity to 1 million 20-foot equivalent units by the end of 2012 from 595,000 TEUs at the beginning of the year.
The glut of capacity also will weigh on charter rates for containerships, with the 3,000-6,000 TEUs range taking the biggest hit. Many vessels in this size range are expected to be displaced by larger ships with no ready market to absorb this redundant tonnage, Alphaliner forecast.
Current forward freight rates for exports from Shanghai suggest there will be further rate weakness in the first half of 2012, Alphaliner said.
-- Contact Bruce Barnard at firstname.lastname@example.org.