Same Same, but different

Service withdrawal, vessel upsizing and additional loops are pinning rates down ahead of the traditional peak season on one trade, while tight capacity is forcing them up on another.

Overcapacity and falling rates on the transpacific trade have seen the 2M alliance pull one service between Asia and North America, but increasing ship sizes mean total capacity will increase, as lines continue to fight for market share.

Maersk and MSC have announced they will drop their TP1/Eagle service calling at Vancouver and Seattle from July.

MSC has blamed a “challenging operating environment” for pulling the service, which was the smallest of the five Asia-US west coast services operated by the 2M alliance.

The withdrawal of a service just ahead of the traditional peak season, when carriers sought to impose peak season charges, should have strengthened rates, yet spot freight rates have continued to weaken in the last two weeks.

Any success in securing the GRI’s the carriers are desperate for are likely be followed by rate discounting, as space remains available, even as the market heads toward its peak season.

In contrast…………….

On the Asia/Europe trade lines are increasing rates, as capacity tightens ahead of the peak season.

The signs are that the carriers are seeking to impose a substantial ‘freight all kinds’ (FAK) increase, possibly as early as this week, instead of incremental rises, before demand weakens as the peak season quietens.

Ironically the FAK announcements come as spot rates softened across all major trades last week.

In the longer term; nineteen new ships are destined to join the trade during 2019, adding a further 400,000 teu’s of capacity which, unless things change, will add further pressure to the market.