Despite attempts by carriers to pull capacity from east-west trade routes, significantly weaker cargo volumes have limited the success of their attempts to lift freight rates for any sustainable periods, according to Drewry Maritime Research's latest Container Forecaster report.
Since the huge overnight success of the March 2012 general rate increases (GRI) implemented by shipping lines to bring rate levels back above break-even, there have been a further seven attempts to lift rates – equating to a total of around $2,800-$3,000 per FEU on the Asia-to-North Europe trade. During this period, average headhaul freight rates have actually declined from about $2,700 in early March to $2,400 as of early January 2013.
While this is not a disaster for the carriers, it proves that there is a fundamental weakness in the market compounded by low volumes on the back of a non-existent peak season last year. Coupled with a marked reluctance by carriers to pull enough capacity, particularly in the Asia-Mediterranean trade, average headhaul load factors have remained in the 75-percent to 85-percent range for most of the second half of 2012 and the strategy of missing sailings has proved to be insufficient to lift freight rates for any sustainable period. With another 40 ships of at least 10,000 TEU due for delivery this year, carriers will have a very difficult time deploying them without doing further damage to the supply/demand balance. Operational alliances across virtually all global trade lanes will certainly increase.
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