Sluggish volume on all-water routes between Asia and the East Coast of North America “does not bode well for this year’s peak season” and may force carriers to cancel sailings later this year, Drewry Maritime Research warned in its current Container Insight Weekly.
Asia-to-North America rates “will continue to remain under pressure right through the end of the year unless a significant amount of capacity is withdrawn in September,” Drewry said.
The report said month-to-month volume from Asia to the East Coast of North America was virtually flat from April through June. Vessel utilization rates dropped to 81 percent in July from 89 percent in June as capacity rose 7 percent.
Utilization on routes from the East Coast of North America to Asia slipped to 46 percent in June from 49 percent in May, “compelling ocean carriers to continue fighting for whatever cargo they could get via more aggressive pricing,” Drewry said.
Carriers canceled only five sailings from May through July, but more will presumably be dropped “should this year’s peak season fail to live up to expectations,” Drewry said.
Spot-market indices suggest that a July 1 general rate increase of $600 per 40-foot container has stuck, but that a hoped-for Aug. 1 GRI of $400 per FEU “has yet to materialize.”
Drewry said the differential between East and West Coast ports for Asian imports rose from approximately $1,200 per 40-foot container in May to $1,450 in the first two weeks in August, but that “importers that have a reasonable choice … are clearly still uncomfortable with the premium to be paid for East Coast ports.”
A big question is how the newly announced P3 Network alliance of Maersk, Mediterranean Shipping Co. and CMA CGM will affect capacity and rates when it takes effect next year. In the meantime, other carriers may be forced to trim service, Drewry said.
“Increased eastbound sailing cancellations should be expected from September onwards to help carriers better balance supply and demand. Any more than this is unlikely until the P3 alliance’s interests become clearer,” Drewry said.