Ocean carriers face an uphill struggle to push through steep and rapid rate hikes on the Far East-Europe trade this year as they did in 2012, according to industry analyst Alphaliner.
Hapag-Lloyd, which has just announced a rate increase of $750 per 20 foot container effective March 15, was the first carrier to file a similar increase last year, which kicked off a series of hikes that were “unprecedented in scale and haste.”
The cost of shipping a 20 foot container rose 170 percent from $700 to $1,900 between March and May 2012 following three back-to-back general rate increases.
“However, with current circumstances quite different from the situation last year, the likelihood of carriers successfully pulling off the move [in 2013] is low,” Alphaliner said.
The momentum is moving against carriers this year, with relatively weak load factors leading up to the Chinese Lunar Year and no capacity shortage.
Hapag-Lloyd’s rate announcement follows lackluster achievements in carriers’ last three attempts at boosting Far East-Europe rates.
Although cumulative rate increases were announced totaling $1,300, due to be applied on Nov. 1, Dec. 15 and Jan. 10, freight rates have risen by only $250 per TEU over the period, despite what is supposed to be a seasonal peak in the run-up to New Year holidays in the Far East.
The rate increases have been tentative, followed by rapid erosion as competition has forced carriers to scale back their announced level.
The latest general rate increase “can be viewed as a tactical defensive move by carriers to preempt further rate erosion after the holidays in mid-February,” Alphaliner said.
With current spot rates $500 per TEU higher than during the same period last year there is little to justify any significant rate hike this time, according to the analyst.