Asia-Europe container shipping rates despite declining demand

Although import demand from Asia is falling sharply in European countries due to the blockade by the 2019 Corona virus pandemic (COVID-19), container shipping rates in recent weeks have remained stable at levels. higher than last year's price.

One analyst pointed out the possible reason for the recent merger between shipping lines - which has led to fewer shipping lines in the three alliances - to provide better management and response in cut capacity when demand is quickly reduced.

The market price was assessed by the Shanghai Container Freight Index (SCFI) at US $ 725 per TEU on April 17, 10% higher than the same period last year. In fact, the market price has dropped by only US $ 79 per TEU for the past seven weeks, which is unusual for such a large volatility.

Freight rates on CCFI, an indicator also managed by the Shanghai Transport Exchange but only counting exports out of China, show a similar picture. Average freight rates for the past six weeks are 11% higher than the same period last year.

The rapid decline in demand can be seen in the notice of weekly canceled trains by carriers trying to adjust freight capacity to match lost cargo volumes. . According to maritime analysis unit Alphaliner, more than 250 trains will be canceled in the second quarter, pushing idle vessel capacity to over 3 million TEUs and being withdrawn to 30% of transport capacity on the Asia-Asia route. Europe to June.

Canceled trains will result in the withdrawal of large service chains throughout the second quarter, Alphaliner noted in his latest newsletter. The most severely cut shipping capacity comes from the 2M Alliance, including Maersk and MSC, with AE2 / Swan service, which has deployed 12 23,000-TEU ships on the Asia-North Europe service.

The consolidation between container shipping lines has recently been effective

Shipping consulting firm Sea-Intelligence believes that the stability of Asia-Europe freight rates against declining demand indicates that the consolidation of shipping lines has finally paid off. Over the past five years, the merger, acquisition and bankruptcy have reduced 20 global shipping lines to 10, giving the container shipping industry the ability to address demand crises. If this did not happen, it would have been out of control.

"Despite difficulties from the market, shipping lines have been able to maintain very high levels of stability on freight rates. This also signals their ability to avoid catastrophic losses in shipping." 2020, "wrote Alan Alan Murphy, CEO of Sea-Intelligence, in a recent Sunday newsletter.

Container lines are clearly not interested in a freight war, and it is difficult to know if freight rates can avoid a continuous drop due to sustained declining demand. Only with the first expected actions taken in some European countries to reduce orders, IHS Markit economists forecast a severe recession in Europe and there were very little resilience to shipping volume on Asia-Europe routes.

Phaata (Source JOC)

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