Container lines operating on Asia-Europe trades are “taking stronger measures” than usual to maintain the recent recovery in ocean freight prices by making major cuts to capacity in the weeks after Lunar New Year, according to ocean freight rates benchmarking specialist Xeneta.

And it appears that lines’ efforts to prop up ocean freight prices have been successful – so far. Since towards the end of 2016, the market has experienced a strong and sustained recovery, with container rates around 125% higher than they were around this time last year for Asia-Europe routes, Xeneta said.

But with overcapacity still not fully addressed, there are still uncertainties if the market is to return to being “truly a seller’s market”, the company noted. But reports from its sources indicated that carriers “are taking stronger measures to deal with overcapacity to make sure the market stays up”, Xeneta said. Xeneta sources are reported that lines were attempting to prop up prices by reducing westbound sailings by 33% in the week immediately after Lunar new year and by around 43% from full capacity next week.

“Whether this will keep the rates up, is still to be seen. However, liners are, for sure, taking ‘extra-than-usual’ measures to make sure the market remains in their favour,” Xeneta said. This behavior from carriers may mark a distinct difference compared with this period normally in previous years, when rates traditionally slide in the aftermath of Chinese New Year (CNY), the company added. “As we have reported earlier, long-term rate negotiations have been stalled or pushed from late last year as shippers are waiting to see how the market weighs out. Carriers have accepted this delay with perhaps strong confidence that CNY would not make much of a huge difference than pre-holiday.”

These reports from Xeneta’s sources on lines’ capacity management efforts supports this latter idea that lines will be successful in keeping rates relatively strong and stable in the coming weeks. “The weaker lines in the new alliances to start this year will also be able take advantage of the stronger alliances’ more efficient capacity management measures,” Xeneta noted. “It may stay a seller’s market after all – at least for some time.” Recent figures from the Shanghai Containerised Freight Index (SCFI) also support this conclusion. Spot rates on the major east-west container shipping trades have seen a rare period of stability in 2017 so far, with Asia-Europe and transpacific trades rates on the Shanghai Containerised Freight Index continuing to hold firm in the first week of February.

The latest SCFI, which uses Shanghai as a base origin port, shows rates to the US east coast from Asia at $3,639 per feu, have climbed by a marginal 0.1% over the previous week, while those to the US west coast fell by 0.7% to $2,092 per feu. And thanks to a spike in cargo ahead of an early Chinese New Year helped and carriers managing capacity much better than in the past, spot rates on the Asia-northern European and Asia-Mediterranean trades were also largely unmoved, falling 1.7% to $1,023 and rising 0.2% to $988 per loaded 20ft unit, respectively, Lloyd’s List reported.


BIFA - Industry News

Heathrow confirms planning application

The consultation will run from April through to June ensuring that communities can review and feedback. Heathrow will be writing to local authorities in the coming weeks with more information,...


UPDATE: Importers of HRFNAO from outside the EU must use TRACES NT from tomorrow

This means you will not be able to raise a new CED in TRACES Classic for HRFNAO and must instead complete the new CHED-D in TRACES NT - please read the below additional guidance before you do this....


Government launches consultation to introduce Freeports

In doing so, the government wants freeports to generate employment opportunities to the benefit of some of our most deprived communities around the UK. The government has the following objectives...


Corvid 19 (Coronavirus)

At BIFA we are receiving a significant number of enquiries regarding Corvid 19, and its impact on supply chains. We have received many requests for information regarding the virus itself. Please...


Moveable barrier to keep Kent’s road network moving

government and Highways England develop long-term solution to handle traffic disruption in Kent new moveable barrier could be deployed using a specialist vehicle within hours less disruption than...


Importers of HRFNAO from outside the EU must use TRACES NT from next week

As you may recall, while the regulations came in on 14th December 2019, the switch from pre-notifying on TRACES Classic to TRACES NT was delayed. Information received from Defra advises that the EU...


Multimodal 2020: Don't delay register today

Asked why individuals should register now, Rob Jervis, Logistics Portfolio Director, Clarion Events said: “Registration in advance will enable anyone planning to attend Multimodal 2020 to avoid the...


HS2 must deliver its promises on rail freight

HS2 has the potential to deliver significant benefits for rail freight by releasing capacity for new services on the existing network. With each freight train producing 76% less CO2 than the...


AAI Group Login

Cookies are small text files downloaded to your computer each time you visit a website. When you return to websites, or you visit websites using the same cookies, they accept these cookies and therefore your computer or mobile device.