The maritime analyst SeaIntel said the current pricing environment on the Asia-Europe and transpacific trade bears the hallmarks of the rate wars that broke out in the second half of 2011.
The projections puts a potential dampener on solid, if unspectacular financial results from most lines in the second quarter this year.
“The data show that the underlying rate erosion - and hence daily price discipline across the carriers - is now at a level much worse than seen during the rate war in 2011,” SeaIntel said in its Sunday Spotlight
The report indicates that carriers’ pricing discipline has only been evident when major rate increases are announced.
“When we analyze the underlying week-on-week trends in ‘normal’ weeks where increases are not pushed through, we find a rate erosion which is not only worse than the height of the rate war in 2011, it is also accelerating,” SeaIntel said. “The rate decline seen in Asia-North Europe in the past four weeks is unprecedented in the history of the spot rate index. The underlying trend is now showing a rate erosion from Asia to North Europe on the order of $100 per TEU every week."
SeaIntel said the spot rate erosion is bleeding into contract rates on Asia-Europe, a trade where several carriers have recently announced they will skip sailings in October.
“The increase in week-on-week rate erosion is also seen to have filtered through to the contract rate index for the Asia-Europe trade, and hence the data appear to signal a potential re-ignition of the rate war,” the report said. “It is very likely that the carriers will only be able to halt this development by pulling substantial amounts of capacity from the trade in the near-term future.” - Eric Johnson