Disparity in earnings on transpacific and Asia-Europe hits historic highs

Date: Wednesday, September 9, 2020
Source: Splash 24/7

In arguably the strangest, most difficult to predict period in the 64-year history of containerisation, the disparity in rates on the two main east-west tradelanes has hit historic highs.

On the transpacific, spot rates hit new highs of $3,758 per feu on September 4. On Asia-Europe, however, spot rates rank the lowest in terms of revenue per nautical mile on all deepsea trades.

Alphaliner has crunched the numbers to highlight the huge disparity in earnings.

A spot transport of a feu from Shanghai to a North European base port such as Antwerp (10,624 nautical miles according to the Alphaliner distance calculator) would have resulted last week in a revenue of $2,084 all-in according to the Shanghai Containerized Freight Index (SCFI), which equates to $0.19 per nautical mile.

By contrast, carriers currently earn $0.64 per nautical mile if the same box is carried the 5,818 nautical miles from Shanghai to Los Angeles.

“The fact that earnings per nautical mile are more than three times as high on the Asia – USWC trade is remarkable as carriers need less resources (ships and equipment) on a shorter trade. A typical Far East-North Europe service requires the deployment of some twelve ships, whereas six ships are sufficient for a Transpacific Southwest loop,” Alphaliner noted in its most recent weekly report.

Andy Lane from Singapore-based CTI Consultancy has been doing his own investigations into the sizeable gap in earnings on the main two tradelanes. He told Splash today: “The differences are quite huge.”

Lane warned European shippers: “As push comes to shove for empty equipment in Asia, a lot of North European importers are likely to miss out if the lines play the yield priority game.”

Container shipping patterns have been very hard to divine throughout the pandemic this year with most analysts convinced carriers were on course to post huge losses back in April, only for them to reverse their predictions in recent months on the back of the successful blanked sailings strategy adopted by most liners.

[Read from the original source.]