Asia-Europe container trade to see more capacity reductions

The traditional seasonal slump in Asia-Europe container freight rates could be avoided this year, as carriers prepare to pull huge amounts of capacity from the trade via void sailings.

According to container freight pricing platform Xeneta, carriers will this week reduce capacity by 33% on the westbound Asia-Europe trade, with full capacity reduced next week by 43% capacity,. There will be a further 8% reduction the week after that.

“That’s some 200,000 taken out of service,” Xeneta chief executive Patrik Berglund told The Loadstar.

“This means container lines are taking stronger measures to try and keep rate levels up, which makes a distinct difference with this period normally. Rates traditionally slide in the aftermath of Chinese New Year.

“This year, however, there is a stronger chance rates will stay at the levels we have seen recently, and may even go up.”

The implication for long-term contracts on the trade is a big variation in rate levels, said Mr Berglund.

“Normally one would see contract rates across the trade cluster around a given level, but this year the spread is so wide that we have become very cautious about making any sport of predictions as to what would be an average Asia-Europe annual contract rate level,” he said.

Read the original story in full on the Load Star website here