Liner carriers in the Asia-South America trade have had a difficult time enforcing planned rate increases, according to research from the maritime analyst SeaIntel.
In its weekly Sunday Spotlight
report, SeaIntel noted that less than 25 percent of the rate increases announced by carriers on the trade since the start of 2012 have stuck.
“In total the spot rate in the Asia-to-East Coast South America market has increased by $929/TEU since the market bottomed out in December 2011,” the report said. “This is certainly a highly significant increase. However, in total the carriers have announced increases adding up to more than $4,000/TEU. This illustrates that despite the actually achieved increase, it has not been straightforward to obtain.
“Based on the numbers, we conclude that the rate-discipline across the carriers is weaker in the Asia-East Coast South America market than in the main east-west markets.”
The Asia-to-South America trade is one of the strongest performers globally this year. According to the consultancy Seabury, container demand is projected to increase by 12 percent in 2012, stronger than any trade other than the Asia-to-Africa trade.
In an American Shipper webinar
last week with the global business advisory firm AlixPartners, it was noted that carriers are struggling for profitability in north-south trades that have normally been consistent sources of revenue.
“In the past, the north-south corridors were major stable drivers of profitability for most of the big lines, so they would take significant losses followed by significant profits in the major east-west routes, but they could always count on making healthy returns in the north-south routes,” said Esben Christensen, director at AlixPartners’ maritime practice.
“What we’re seeing now, with the delivery of these big post-Panamax vessels that most of these carriers are ordering, is a cascading of equipment from larger trades to smaller trades. And that is increasingly putting pressure on some of these trades that, traditionally speaking, were cash cows for some of these carriers.” - Eric Johnson