Drewry Maritime Research said the decision by ocean carriers to dump unwanted vessel capacity from their East-West schedules into North-South trade lanes "is now seriously hemorrhaging freight rate levels in North-South services. The scale of decline during 2Q13 suggests that ocean carriers are running out of options to soak up surplus vessel capacity."
In the most recent issue of its Contaner Insight Weekly
, Drewry said "Falling all-in prices from Asia to Australia, West Africa, South Africa, India and both the east and west coasts of South America, based on forwarder buy rates for spot cargo, took a significant turn for the worse during the period, according to Drewry’s Container Freight Rate Insight. Although there was a subsequent upturn from Asia to India and the west coast South America in July, it remains to be seen if the increases are sustainable as there have been many false dawns in other trade lanes."
Drewry said "the root cause remains the endless cascading of vessels out of the Asia/Europe trade lane."
For example, it said the average size of all vessels operating between Northeast Asia and Australia increased by another 8 percent in the 12-month period between the third quarter of 2012 and thirf quarter of 2013, up to 4,365 TEUs, on top of the 6 percent growth experienced between third quarter of 2011 and the third quarter of 2012. In the Asia/east coast South America trade lane, the corresponding changes were 13 percent on top of 13 percent, up to 5,848 TEUs, and between Asia and South Africa, the size ship increased 30 percent on top of 14 percent to 6,123 TEUs.
A positive for carriers is that that average vessel utilization from Asia to the North American west coast and Europe has usually remained above 85 percent since the second quarter of 2013, said Drewry, thereby helping to keep freight rates up. "It’s been a yo-yo ride, never-the-less, but freight rate levels are still a lot higher than they were at the beginning of the year," the London-based firm said.
Drewry said "Further alliance/consortia restructuring in North-South trade lanes appears inevitable, particularly as world fleet growth of just over 7 percent next year is again expected to significantly exceed cargo growth."