Ocean carriers’ bid to levy peak-season surcharges in Asia-Europe trades in June risk unraveling amid increasing signs of rate cutting, Alphaliner says.
Spot rates on the Shanghai Containerized Freight Index last week declined $116, or 6 percent, to $1,818 per 20-foot container, in the biggest weekly fall since October 2010, the container market analyst said.
Before the recent retreat, spot rates on the westbound leg from Asia to Europe had surged close to $2,000 per 20-foot equivalent unit from under $500 in December and are now above breakeven for most carriers following a series of successive monthly rate hikes after March.
While several carriers are targeting peak-season surcharges of $250 to $400 per TEU, the current forward rates from the Shanghai Shipping Exchange and the World Container Index show a moderate downward trend for the rest of 2012.
“This indicates the market’s lack of conviction that the peak-season surcharges will hold,” Alphaliner said.
Failure to implement the surcharges could have “significant negative ramifications” on carrier efforts to return to profit this year.
“With negative earnings expected in the first quarter, most carriers are banking on the successful implementation of the announced rate increases during the second quarter to return to profitability,” Alphaliner said.
First quarter results have mostly exceeded the losses sustained during the fourth quarter of 2011, despite the steep rise in spot market rates since late December.
Carriers pin poor results on higher bunker fuel prices, which topped $710 a ton in the first quarter, up 9 percent in the previous three months.
Contact Bruce Barnard at email@example.com.