Ocean carriers must cut capacity on the Far East-Europe route by a further 30,000 20-foot-equivalent units over the next two months to shore up planned rate hikes in November, according to industry analyst Alphaliner.
Freight rates have plunged by over 40 percent on the route over the past five months as carriers failed to maintain the momentum built up by four successful rounds of rate increases between late December 2011 and May 2012.
The lines have failed to implement three subsequent rounds of rate increases and peak-season surcharges since June.
Carriers, which plan to boost rates by between $500 and $550 per TEU on November 1, are reducing capacity through October, but “it is not yet sufficient to prevent further rate falls,” Alphaliner warned.
Despite a combined market share of 46 percent, the top three carriers, Maersk Line, Mediterranean Shipping Co. and CMA CGM, have been unable to check price competition between the 19 lines on the route even after two carriers — CSAV and HDS Lines — pulled out in the past year.
The new carrier alliances formed since early 2012 — including CMA CGM / MSC and the G6 Alliance — have also failed to moderate individual lines’ market share ambitions amid weakening European demand for Asian products.
Ten of the 19 carriers have boosted their capacity in the 12 months to September, led by Hanjin Shipping, Hyundai Merchant Marine and Evergreen, which are up between 16 percent and 32 percent.
This has reduced the top three carriers’ market share from 53 percent in April to the current 46 percent, according to Alphaliner.