Excess vessel capacity and rate wars will doom liner efforts to hike rates on Asia-Europe services, said several shippers and forwarders.
Most major carriers have now announced either rate or surcharge hikes of $700 to $800 per 20-foot equivalent unit to be applied on Asia-Europe services, starting March 1. But liner customers doubt the increases that will double rates will take, even if lines more aggressively idle or slow vessels.
Alberto Innocenti, an analyst with trading and consulting firm TCL China, said lines were “delusional” if they thought shippers would accept the rate increases from March.
“My bet is we won't see relevant ‘all in’ freight changes in the next three to six months," he said.
Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics, said some carriers were already offering reduced rates for post-March 1 sailings. “I personally do not think this GRI will hold as the overall load factor is between 65 to 70 percent at the moment,” he said.
The chief procurement officer at one of the world’s largest shippers, who asked not to be named, also said there was “no chance the GRIs would stick.”
“If they can make more than $100 stick I’ll be surprised. The supply demand balance is just not there,” he said. “In the past if lines were looking to get a $100 rise they’d ask for $250 to $300. Now they announce $800 to get $100.”
However, Byron Lee, managing director of forwarder China Global Lines, said carriers were getting desperate after most reported deep losses last year. Although post-Chinese New Year demand had been “very slow,” he said financial necessity would force lines to take whatever measures need to push GRIs through, “including the mass idling of tonnage.”
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