JAYA: Container shipping freight rates, which have shown signs of
recovery at the beginning of the year, are now back sailing on
choppy waters as rates continue to be battered by excess supply.
to CIMB Research, despite the gloomy rate environment, containership
newbuilding orders have zoomed ahead, with over a million
twenty-foot equivalent units (TEUs) ordered year-to-date from about
700,000 TEUs last year.
has tilted the equilibrium negatively and supply is now expected to
grow faster than demand in 2012 and 2013.” it said.
research house said it was bullish on the sector at the start of the
year based on a modest pace of newbuilding orders, but the dramatic
surge of orders had taken it by surprise.
are worried that liners are repeating the mistakes of the past,”
it said in a recent sector report.
said freight rates continued to be battered by excess supply, and
base rates for Asia to Europe are probably close to zero.
between China and Europe have declined 60% to US$874 per TEU, from a
peak of US$2,164 per TEU in March 2010, and are now close to zero
after deducting the bunker adjustment factor of around US$750 per
rates have declined despite higher bunker prices, exacerbating the
squeeze on margins,” said the research house.
Research expected rates could plummet below bunker costs over the
next month or two.
and MSC have already deferred proposed rate increases from June to
July on weak ship utilisation, which could prevent a sustained rise
in rates even during the coming peak season.
said the present situation was much worse than its expectation at
the start of the year.
to Alphaliner, weekly Asia-Europe (AE) shipping capacity was 21%
higher year-on-year (y-o-y) in May, substantially ahead of the 4%
y-o-y rise in head-haul trade volume in April.
economic indicators in Europe appear to be weakening, with a
flattish composite leading indicator for the big four European
economies, weak retail sales, and rising retail stock levels.
weekly expects carriers to begin cancelling services, redeploy
capacity to other trades, or lay up ships if the situation
the negative sentiment, according to CIMB Research, is Transpacific
rates, which had resumed its downtrend after making tentative upward
moves in April and early May.
Transpacific Stabilisation Agreement, a research and discussion
group of 15 major container shipping lines had recommended US$400
per forty-foot-equivalent-unit increase in contract rates from May,
but carriers likely lowered rates instead.
to Alphaliner, Transpacific capacity was 19% higher y-o-y in May
against a 7% to 8% annual demand growth,” it said.