Rates rise and ships grow but no end to pain in sight

As expected, rates have continued to decline with those from Asia to NWE falling $122 to $816 per TEU this week and sentiment indicates that the planned GRI of around $750 per TEU effective mid-March stands little chance of being a success. Carrier UASC has announced plans to implement a general rate increase from April 1 of $950 per TEU, suggesting that the planned March increase may well get pushed back into next month.

This week also saw Maersk Line finally confirm that its Daily Maersk service – in which the carrier committed to fixed delivery days and dates – did not see enough demand to make the premium service financially viable.

With the major east-west trades highly commoditised it is evident that it has become increasingly difficult for carriers differentiate their services, something this latest admission reinforces.

That being the case is it about time carriers took lessons from other more efficient commoditised markets? It doesn’t appear as if the rush to lower unit costs will end anytime soon, with MOL confirming orders for four 20,150 TEU vessels, which will eclipse the record currently held by MSC Oscar.

Over the pond USWC rates declined $88 to $1,921 per FEU, whilst the TSA has now confirmed its intention to implement a further GRI of $600 per FEU effective April 9th. The USEC market also declined falling over 4% or $206 to $4,740 per FEU. Rates are therefore retreating from the all-time highs that were recorded during the middle of February at the peak of the US congestion disaster.

Major increases have also been announced for trades on the east coast of South America with carriers looking to significantly increase rates from their current level of $706 per TEU. The trade has been in constant decline and has shed $500 per TEU over the last seven weeks.

March 9, 2015