Analysis of spot rates on the two key east-west trades shows that carriers will have to shelve capacity in the coming months, according to the maritime analyst SeaIntel.
After deducting the effect of rising bunker fees, SeaIntel found rates on the transpacific and Asia-Europe trades are roughly analogous to levels during the 2009 global economic crisis, despite repeated attempts by carriers to hike base rates.
“We find that spot base rates from Asia to North Europe for the past two months have been lower than the base rate levels seen in the crisis year 2009, clearly illustrating the unsustainable market conditions in this trade presently,” SeaIntel said. “For Asia to the U.S., we find that base rate levels have not yet fallen to the levels seen in 2009, although the level now is only $156 per TEU higher than the bottom in 2009.”
SeaIntel noted that transpacific carriers have made three efforts between December and August to increase rate levels, but none have stuck. An increase of $600 per FEU announced in December yielded an average increase of $193 per FEU, and the increase was gone within five weeks.
A second increase in spring, also $600 per FEU, yielded increased rates of $235 per FEU, but that increase too was wiped away in eight weeks.
In August, a peak season surcharge of $400 per FEU helped carriers increase rates by $200 per FEU for two weeks, but an average of only $22 per FEU of the surcharge has stuck at present.
“These three attempts have resulted in a freight rate development with a ‘see-saw’ pattern, illustrating short-lived attempts at increasing rates, followed by further declines,” SeaIntel said.
On the Asia-Europe trade, rate increases have been even less successful. In December carriers increased rates by an average of $68 per TEU, but that lasted only three weeks. In August carriers increased rates by $39 per TEU, but three weeks later that increase was eliminated.
“From the data it is therefore clear that carriers have indeed tried, but failed, to implement rate increases on these trades on several occasions,” SeaIntel said. “This further demonstrates that the rates are driven by the underlying supply/demand forces, and it is simply not possible to ‘talk rates up.’ With the current lackluster outlook for demand, it also illustrates that rates in these two main trades will likely only be restored once sufficient amounts of capacity have been removed.”
Another maritime analyst, Alphaliner, said this week
that pending service suspensions on the transpacific have come too late to save transpacific carriers from incurring losses on the lane this year.