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Friday, March 11, 2016
MORE BAD RATE NEWS FOR CONTAINER LINES
Freight Investor Services LEADING THE WAY IN FREIGHT AND COMMODITY DERIVATIVES
A new week, a new all-time low.
Rates have continued their unrelenting decline falling another $20 to $211 TEU on the Asia-North Europe trade, marking nine consecutive weeks of declines. As a result rates are 70% lower than the corresponding period last year highlighting just how far rates have collapsed over the past 12 months.
After the failed GRI attempt in March carriers have announced plans to increase rates on the Asia-North Europe trade effective April 1st. The increases range between $400-500 TEU with Hapag-Lloyd the notable outlier announcing plans to increase rates by $800 TEU.
Elsewhere the recent rally on the Asia-Santos trade, which occurred after rates hit an all-time low of $99 TEU, has subsequently collapsed. Rates have now declined $345 from their post GRI high of $817 TEU, suggesting recent measures by carriers to cut capacity have not been enough to sustain the increase.
The resulting declines across a number of routes covered on the SCFI has led to the comprehensive index falling to yet another all-time low of 404.18 points.
The rapid declines over the 2nd half of 2015 have been reflected in carrier financials. OOCL reported a profit after tax of $284m for the full year, however $238.6m of this related to the company’s first half results. Meanwhile the market leader Maersk Line recorded a loss of $182m in the final quarter of 2015.
With rates on key east-west trades struggling to get above their current lows carrier financials could take another hammering in Q1-2016 and place them on the back foot for the remainder of the year.
Elsewhere there have been questions raised over the decision by CMA CGM to deploy six 18,000 TEU vessels on the Asia-USWC trade where freight rates are already under pressure.
Rates declined a further $74 to $810 FEU this week and have struggled to gain meaningful ground since the start of the year. In fact rates have been under constant pressure since the beginning of 2015 despite the USWC trade reporting relatively strong full year import growth of 5.9% according to data from PIERS.