Rates pressure on Asia-Europe increases as 2M loop returns

Moves by the 2M to reduce capacity on the Asia-Europe trade lane did little to improve rates. Now the reintroduction of AE2/Swan service could drag rates down further.

News ID: 80236

Date: 11 October 2018 - 11:18

Reintroduction of suspended service on Asia-Europe trade lane will add another 6% to the capacity of a market suffering reduced demand.

RATES on the Asia-Europe trade could come under increasing pressure when the 2M alliance of Maersk and Mediterranean Shipping Co reintroduce their AE2/Swan service following a three-month suspension.

The two lines had originally indicated that the service would not resume until the there was sufficient market demand, but the loop’s restoration is now planned for December 5.

“The 2M carriers’ action will add about 6% back to the total weekly capacity on the Asia-northern Europe route,” Alphaliner said. “This capacity increase will be made in spite of significant uncertainty over the strength of market demand.”

Capacity utilisation out of China dropped below 90% in September, without the usual pre-holiday rush to ship cargo before the Golden Week holidays that started on October 1, it added.

“As a result of this, spot freight rates from China have fallen by 26% at the end of September, down from a recent peak in August.”

Over the coming weeks, rates could face further downward pressure as carriers jostle for market share during the slack winter season.

Figures released this week by Container Trades Statistics show that Asia-northern Europe trade fell by 1.1% in the eight months to August 31 compared with the same period last year.

“Weak cargo volumes, combined with the carriers’ overall reluctance to withdraw vessel capacity from the Asia-Europe corridor for extended periods, could further drive down freight rates,” Alphaliner said.