11 Juni 2015

[110615.EN.SEA] Overcapacity, Cascading Push Asia-Europe Rates To Dangerous Lows

SPOT rates on the Asia-Europe trade continue their plunge to US$58 in the week to June 7 to $284 per TEU, barely covering fuel expenses.

Experts predict that if rates continue on their present course it will trigger a major sell-off of aging and less fuel-efficient tonnage.

Said analysts at Clarksons Platou: "The current spot rates only just cover the cost of fuel and no other operating costs."

They are now predicting a major sell off of tonnage to get rid of older less efficient ships that cannot compete in a market of hairline profit margins.

According to Lars Jensen from SeaIntel Consulting, "this development is driven by the overcapacity and cascading of ships. The key is to look at how to become profitable in these trades, rather than hoping to bring the rates back up," he says.

Source : HKSG.

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