[170218.EN.BIZ] SeaIntel: Alliance Carriers Slow to Blank Sailings in Fourth Quarter

COPENHAGEN's SeaIntel analysts say the difference between last year's fourth quarter excess capacity and the nominal TEU offered shippers reached 1.1 million TEU on the transpacific and 1.3 million TEU on Asia-Europe trade lanes.

"This meant that vessel utilisation was down year on year on both trades in while rate levels were at or near the lowest fourth quarter levels in the 2012 to 2017 period," said SeaIntel's Sunday Spotlight report.

Thus, nominal vessel utilisation on the transpacific was 80.9 per cent in 2017-Q4, significantly below the 87.7 per cent from 2016-Q4, it said.

Monthly utilisation dropped steadily from 88.4 per cent in August 2017 to 75.9 per cent in November 2017, rebounding to 81.9 per cent in December.

This resulted in Shanghai Containerised Freight Index (SCFI) spot rates on Asia to North America west coast declining from US$1,426 per FEU in August to $1,240 per FEU in December.

Said SeaIntel CEO Alan Murphy: "Throughout the second half of 2017, we have been raising concerns over the lack of capacity reductions on the transpacific and Asia-Europe trades.

"Looking at the demand and freight rate data for 2017-Q4, we can see those concerns were fully justified. Since the launch of the new alliances in April 2017, carriers have been reluctant to blank capacity at the same level as in previous years," Mr Murphy said.

This resulted in 2017-Q4 demand on Asia-Europe dropping 10.5 per cent year on year while capacity was only reduced by 4.8 per cent, resulting in excess capacity of 1.2 million TEU.

That meant utilisation dropping throughout 2017, reaching just 74.7 per cent in 2017's fourth quarter, the second lowest fourth quarter since 2012.

Monthly utilisation also dropped steadily from 83.3 per cent in July 2017 to just 68.1 per cent in October 2017, with SCFI spot rates to North Europe falling from $927 per TEU to $658 per TEU in October.

"Nominal utilisation then improved back to 81.7 per cent in December, with spot rates to North Europe rebounding to $786 per TEU in December.

Source : HKSG.