Ocean carriers likely will secure only half of planned “massive” rate hikes on the Far East-Europe route in July based on current forward market rates, according to industry analyst Alphaliner.
The proposed increases of between $750 and $1,000 per 20-foot container for westbound shipments to Europe will be the largest ever announced, amounting to 180 percent for some carriers.
By contrast, spot rates have plunged from a peak of $1,800 per 20-foot equivalent last year to only $550 per TEU currently, with the recent slide since March the steepest the industry has experienced, Alphaliner noted.
Forward rates for July suggest carriers will only secure an increase of about $430 per TEU.
Alphaliner said, however, that the latest rate hikes have a better chance of success than the previous five failed attempts to increase prices since January, as they coincide with the start of the summer peak season in July and a likely tightening of capacity following the June withdrawal of the AEX2/CES2 service jointly operated by China Shipping Container Line, Evergreen and Zim Integrated Shipping Services.
“In addition, current freight rates are patently unsustainable, with base rates falling to negative levels since mid-May after deduction of carriers’ average bunker adjustment factor,” Alphaliner said.
Rates are expected to come under further pressure after July with no further service withdrawals expected this year.
Capacity upgrades on existing services, notably those by carriers in the G6 and CKYH alliances, will add 15 percent and 8 percent, respectively, to their weekly uplift in July compared to January.