Date: Tuesday, December 6, 2022
Source: Splash 24/7
The new entrants on the main east-west container trades are hurting, hit hard by plummeting spot rates and sky-high charter rates.
CU Lines has given notice for the early termination of the charter of 12 panamax ships that it currently deploys on routes to the US and Europe. It follows the termination of the China-Europe service of UK-based operator Allseas Global Project Logisitcs which, according to Linerlytica filed for insolvency in October after failing to meet its commitments on the charter of six ships that it had deployed.
The Shanghai Containerised Freight Index (SCFI) slid another 5% week-on-week as of December 2. In Q4-to-date, on average, the SCFI has dropped 68% year-on-year. According to a new report from HSBC should the SCFI decline at 7.2% per week – the average decline in the past four weeks – it would hit 2019 levels in just four weeks by the end of this year and perhaps even go below that level during the seasonally weak Lunar New Year holidays in China in late January.
Experts at Denmark’s Sea-Intelligence suggest spot rates are now below pre-pandemic levels on both the transpacific to the west coast as well as the Asia-Europe tradelane.
“The floor is going to be determined by the complex competitive game between the carriers. When will they all – individually – decide that enough is enough? Given the massive cash piles they all sit on, all it takes is for one or two major carriers to keep pursuing volume and there is – quite literally – no lower limit, as to how far this can go before rates bottom out,” Sea-Intelligence mused in a recent report, which will make for tricky reading for smaller, niche carriers being elbowed out of the main markets.
Drewry is forecasting liners will idle as much as 1.5m teu of tonnage next year as the container market eases with analysts warning images of boxships in lay-up could become commonplace once again.
Freight rate platform Xeneta is forecasting ocean freight volumes to drop by around 2.5% next year.