With no significant peak season in evidence and despite record-breaking deliveries of new container ships, the three biggest carriers have announced General Rate Increases (GRIs) effective from the 1st August.
Maersk led the way, last Monday, announcing a substantial increase in its FAK spot rates, in an attempt to end heavy rate discounting and it warned that other routes may also be subject to increases, as it reassess rate structures across its network.
The day after Maersk’s surprise increase, CMA CGM followed suit, with broadly similar GRIs, while MSC blanked that week’s sailing of the MSC Rifaya from Shanghai due to “slowing demand” and has since announced its own GRI.
The following lines (so far) have announced FAK rate increases of $200-300 per TEU (double for FEU) effective from 1st August 2023
Maersk | CMA | MSC | HMM | Evergreen | OOCL
Rate erosion on the Asia – Europe trade has been accelerating, virtually halving since the beginning of the year and with supply continuing to outweigh demand, rates will stay soft.
The traditional start to the peak season has been beset by continuing weak demand for Asian exports to the US and Europe, while the delivery new ultra-large container vessels (ULCV) onto the European trade-lane adds even more capacity.
THE Alliance FE3 loop will shortly receive four 24,000 teu ships and the two other east-west vessel-sharing alliances have also upgraded their Asia-North Europe loops with bigger ships, with MSC’s new-build MSC Irina and MSC Loreto, both of 24,346 teu now the ‘world’s largest container ship.
Announcing rate hikes, at a time of depressed demand and particularly as new capacity is added, will only work if there are significant capacity reductions in the form of slow-steaming, diversions, blanked sailings and suspended services
There remains a temptation for some carriers to undersell their space to gain more volume, but when the full financial impact of a damaging second quarter for carriers is revealed we could see more carriers follow Maersk’s lead with their own increases and bringing an end to sub-economic trading may see the lines return to more disciplined volume control.
The sea freight market – and particularly from Asia – is fluid and action by any carrier or alliance can have a profound impact on the competitive dynamics of major trade-lanes, which is why we work closely our carrier partners in the UK, EU, US and Asia, to stay ahead of developments, to protect and identify opportunities for our customers.
If you have any questions or concerns about the developments outlined in this story, please EMAIL Andy Costara, for the latest insights and intelligence.
