Skip to main content

Ocean container carriers may struggle to push through freight rate hikes planned for January, according to the Journal of Commerce, citing Alphaliner.

The conditions that enabled container lines to sharply boost rates at the beginning of 2010 are “noticeably absent” for the next round of increases, the report said.

Carriers were able to push through rate hikes in January 2010 because deep capacity cuts on Asia-Europe and trans-Pacific routes coincided with a surge in cargo demand driven partly by inventory re-stocking in the U.S. and Europe.

A shortage of containers further tightened capacity, triggering a scramble for space that enabled carriers to push through a series of rate hikes that sparked the recovery in the container shipping market.

These factors are missing in today’s market as carriers prepare to lift rates by USD$500-$600 per 40-foot container on Europe-Asia routes and set a $400 per 40-foot guideline increase for the 2011/12 trans-Pacific contract season.

“Carriers have made only modest capacity reductions during the current winter period, and some even continue to add new capacity despite only moderate utilization levels,” Alphaliner was quoted saying.

The current weekly capacity on the Far East-Europe and Far East-North America routes is 19% higher than 12 months ago.

The idled box fleet currently stands at 147 container vessels with a combined capacity of 356,000 20-foot equivalent units compared with a peak of 1.5 million TEUs a year ago.

Meanwhile, inventory levels in the U.S. reached a new record high in November as stock replenishment appears to have reached a peak.

Shipping volume peaked early this year and no significant surge in cargo volume is expected in late December on the eve of the planned rate hikes.

Carriers are counting on a repeat of the market rally in January 2010 to reverse the steady decline in freight rates, which has seen spot rates from China dropping by 29% from their July peak.

But modest capacity cuts and high inventory levels “suggest that the carriers’ planned price increases will be less successful this time,” Alphaliner said.

Barring further capacity cuts there will be sufficient capacity in late January when shippers rush to move goods ahead of China’s Lunar New Year holidays which begin on Feb. – Source Journal of Commerce

Dishing

Dishing up export possibilities

Exporter Today Editorial TeamExporter Today Editorial TeamApril 16, 2012
minefield

What’s mine is not yours

Exporter Today Editorial TeamExporter Today Editorial TeamApril 16, 2012
25-countries

25 countries… and counting

Exporter Today Editorial TeamExporter Today Editorial TeamApril 16, 2012