[290816.EN.BIZ] Drewry Mystified: Rates Remain Low Despite 90pc Capacity Utilisation

CONTAINER shipping freight rates remain low despite headhaul load factors on the main east-west trades rising to 90 per cent in the second quarter, up from 86 per cent in the same period last year.

"When load factors are at 90 per cent or above, we would normally expect carriers to have more success in raising freight rates. While rates are trending upwards, their slow pace indicates that supply and demand alone is not dictating pricing and that shippers and forwarders are still the beneficiaries of predatory commercial strategies on the part of carriers," said Drewry.

Carriers had been adapting to the current relatively low-growth environment by raising ship utilisation on most trades despite the heavy influx of mega ships, through selective use of missed or void sailings in weak-demand months, as well as more intensive scrapping of smaller ships, said Drewry.

Earlier this month, Alphaliner said average Asia-Europe headhaul capacity utilisation in the third quarter of the year had been hovering in the mid-90 per cent range, with only Asia-Mediterranean routes at below 90 per cent.

But despite reports of improved utilisation levels, relatively weak peak season demand has contributed to double-digit percentage declines each week on Asia-Europe ocean freight spot-rates since the start of August.

After pushing rates back up above the US$1,000 per TEU level initially through August 1 rate rises, Asia-Europe spot prices have slipped to US$600-700 per TEU.

Source : HKSG.