Transpacific rates rise for the first time in a month
November 3, 2011
Rates on shipping’s transpacific trade rose this week for the first time in a month.
Drewry’s Hong Kong-Los Angeles container rate benchmark jumped US$65, putting transpacific prices back above $1,500 per feu.
But this is still well below the levels of 12 months ago, and there is market uncertainty about whether the rise will continue.
The slight gain in box prices, to $1,543 per feu, followed the Shanghai Containerised Freight Index posting a minimal increase on its Asia-US west coast trade rate, with talk of last-minute orders from retailers ahead of Christmas helping to boost volumes and demand on the major trade lane.
Other industry players have suggested the rise could, however, be a reaction to the large number of lines cancelling transpacific services, reducing capacity and, therefore, competition, on the route.
On Tuesday, Grand China Shipping became the latest in a growing list of casualties quitting the transpacific trade, due to unfavourable market conditions.
Horizon Line also quit this sector of the market last week, and a number of other lines are suffering from low freight rates and high bunker prices.
Lloyd’s List Intelligence market analyst Dimitris Morochartzis said that, to date, 14 services had been withdrawn from the transpacific this year, a reduction in weekly capacity of around 53,000teu.
He added that eight of these services had a weekly capacity of less than 4,000teu, which he said “was insufficient scale, combined with an initial broad miscalculation of base cost development, to have really forced this retreat”.
The handful of services of less than 3,000 teu still running could be in danger of becoming the next casualties on the trade, he added.
A report in IFW’s sister publication, Lloyd’s List, warns that reaction to the fall in capacity on the transpacific route could be short-lived, however, as increases in rates seen during May and August were quickly eroded.
Drewry’s benchmark stood at $2,179 per feu 12 months ago. The latest rate represents a 30% discount.
