Freight rates tumbling in Asia as carriers prepare for the slack Chinese holiday period
Container spot freight rates from Asia to Europe collapsed this week with rates for North Europe plunging by 26% and rates for Mediterranean ports ping by 28%.
Today’s Shanghai Containerized Freight Index (SCFI) fell overall by 9.5% on the week, with all of the main routes showing decline.
But the most damage was felt in the world’s biggest tradelane, Asia-Europe.
Spot rates for the Mediterranean fell $240 per teu to $629, and for North Europe rates slumped by $195 to $545 per teu, having lost all the year-end gains that gave carriers some reason to hope for a recovery.
The late December improvement in spot rates gave container lines the confidence to seek a mid-January general rate increase (GRI) of an average $500 per teu. However, not only was this not implemented, but reports suggest that carriers have become so desperate for cargo that some volume shippers have been asked to “name their price”.
The situation is particularly worrying, considering that the trade should be seeing a peak in demand, prior to the Chinese New Year holiday, which begins on 8 February. Carriers are preparing for low demand during weeks 6-8.
Following last week’s announcement from the members of the G6 alliance, of a number of cancelled voyages, Maersk Line has advised that, with its 2M partner MSC, it will blank five sailings during the holiday period: its AE2 service on week 6; its AE1 loop in week 7, and its AE2, AE5 and AE6 strings in week 8.
G6 and 2M alliance partners will hope that taking out this capacity will halt the rapid decline in freight rates on this embattled trade. However, to be effective, it needs all lines to cut capacity but, at the time of writing, The Loadstar was unable to obtain clarification from members of the CKYHE and O3 alliances of their blanking strategy during the CNY holiday.
Meanwhile, the full extent of the freight rate carnage on carriers’ bottom lines – especially on the Asia-Europe tradelanes – in the final quarter of last year will not become apparent until lines start to report their Q4 and full-year results late next month. However, OOCL today released its Q4 operational performance result, which provides a flavour of its trading during the period.
On Asia-Europe, revenue was 36% lower than in Q4 14 and full-year revenue was down 25% on a 9% reduction in container liftings. Overall, OOCL carryings were flat at 5.6m teu, while revenue was off by 10.1% at $5.22bn.
Elsewhere, the SCFI recorded another big in spot rates for containers from Shanghai to Santos, which tumbled by 24% to $155 per teu on the week.