Shipping analysts are confident that a combination of blank sailings and a spike in demand pre-Chinese New Year will enable them to enforce January general rate increases and peak-season surcharges on Asia-Europe trades and help them claw back some of the ground lost on rates since last summer.
This year the official holiday for Chinese New Year falls on February 10-12, but factories usually close for at least a week as many workers return home. This generally prompts a rush of orders from overseas buyers in the preceding weeks.
“I believe we will see success on the GRIs leading up to Chinese New Year,” said SeaIntel’s Lars Jensen. “The carriers are showing prudent moves in terms of capacity reductions, and the uptick in rates on the Shanghai Containerized Freight Index last Friday was another positive indication - this momentum will assist the carriers in maintaining collective discipline.”
According to the SCFI, Asia-Europe and Asia-Med freight rates increased last week by $52 and $54 per TEU, respectively, while rates to the US West Coast held steady.
“[Lines] have the build-up to Chinese New Year 2012 fresh in their memory, when despite abundant capacity they surprised themselves by successfully pushing a pre Chinese New Year Peak Season Surcharge (PSS) through,” said Cherry Wang, an analyst with ACM/GFI. “That surcharge swiftly got absorbed into the freight rate, effectively changing it from a PSS to a GRI.
“This year they will be hoping for the same result.
“No doubt they’ll also be paying close attention to China’s Purchasing Managers Index (PMI) which stood at 50.6 in December, showing growth in manufacturing activity for the third consecutive month.”
Bonnie Chan, a senior analyst of the Asia shipping industry at Macquarie Securities, said a later Chinese New Year in 2013 — the holiday started January 23 in 2012 — could see the restocking cycle last into the first week of February.
But she warned there remained doubt about whether carriers would be able to maintain enough capacity discipline to push through rate hikes.
“There is a slight pick-up in demand and utilisation in the last couple of weeks, which is supporting spot rates,” she told JOC. “However, we have already seen some resumption of services by carriers as rates have stabilized.
“We believe the rate hikes will only be partially successful at this point.”
Contact Mike King at firstname.lastname@example.org.