Carriers control Asia-Europe rates, but that's prone to change: Drewry
A COMBINATION of fortuitous circumstances - more luck than judgment - have kept vessels well utilised from Asia to north Europe right up to the beginning of September, but the situation is prone to change, says Drewry.
According to the industry feedback collated by Drewry Maritime Research in London, this year's peak season from Asia to north Europe got off to a slow start in July. But there is an optimistic view that it is only running late.
Exports from Asia to north Europe in the second quarter were only the same as the same period last year, with year-on-year growth in the first seven months of the year rising only one per cent, said the Drewry report.
July's traffic of 829,000 TEU was 4.5 per cent higher than that of June, and everything appears to have been heading north since February, including Europe's economy. But the picture is clouded by a six per cent VAT tax on freight payable in China.
This went nationwide on August 1, encouraging shippers to bring shipments forwards to escape it.
The average utilisation of all vessels sailing from Asia to north Europe climbed from a healthy 96 per cent in May to 97 per cent in June, and then on to 101 per cent in July, taking freight rates with it.
According to industry feedback, the situation was "more manageable" by the middle of August, and that by early September when average utilisation had fallen back to 90 per cent due to the absence of a peak season. a mini-boom was expected just prior to China's Golden Week holiday at the beginning of October.
Cargo from north Europe to Asia remained lacklustre in July, falling by two per cent to 390,000 TEU compared to June. This took the year-to-date increase down to three per cent.
The change between the first two quarters of the year was also three per cent, said the report, ascribing the cause to a cooling of China's overheating economy, combined with poor exports to Europe and the US, which require the import of raw materials from the same regions.
The capacity of all vessels sailing from north Europe back to Asia increased 2.1 per cent in June, up to 593,657 TEU, which after a brief standstill in July, increased 3.5 per cent in August.
This meant that average eastbound vessel utilisation remained between a poor 65 per cent and a slightly less poor than the 67 per cent scored between May and August, putting ocean carriers' sales reps in a tough position.
Ocean carriers will need to start cancelling sailings soon to ensure that average vessel utilisation remains high enough to retain control over westbound freight rate levels. Several carriers have already announced this intention during week 41, in preparation for China's Golden Week holidays that begin from October 1.
A COMBINATION of fortuitous circumstances - more luck than judgment - have kept vessels well utilised from Asia to north Europe right up to the beginning of September, but the situation is prone to change, says Drewry.
According to the industry feedback collated by Drewry Maritime Research in London, this year's peak season from Asia to north Europe got off to a slow start in July. But there is an optimistic view that it is only running late.
Exports from Asia to north Europe in the second quarter were only the same as the same period last year, with year-on-year growth in the first seven months of the year rising only one per cent, said the Drewry report.
July's traffic of 829,000 TEU was 4.5 per cent higher than that of June, and everything appears to have been heading north since February, including Europe's economy. But the picture is clouded by a six per cent VAT tax on freight payable in China.
This went nationwide on August 1, encouraging shippers to bring shipments forwards to escape it.
The average utilisation of all vessels sailing from Asia to north Europe climbed from a healthy 96 per cent in May to 97 per cent in June, and then on to 101 per cent in July, taking freight rates with it.
According to industry feedback, the situation was "more manageable" by the middle of August, and that by early September when average utilisation had fallen back to 90 per cent due to the absence of a peak season. a mini-boom was expected just prior to China's Golden Week holiday at the beginning of October.
Cargo from north Europe to Asia remained lacklustre in July, falling by two per cent to 390,000 TEU compared to June. This took the year-to-date increase down to three per cent.
The change between the first two quarters of the year was also three per cent, said the report, ascribing the cause to a cooling of China's overheating economy, combined with poor exports to Europe and the US, which require the import of raw materials from the same regions.
The capacity of all vessels sailing from north Europe back to Asia increased 2.1 per cent in June, up to 593,657 TEU, which after a brief standstill in July, increased 3.5 per cent in August.
This meant that average eastbound vessel utilisation remained between a poor 65 per cent and a slightly less poor than the 67 per cent scored between May and August, putting ocean carriers' sales reps in a tough position.
Ocean carriers will need to start cancelling sailings soon to ensure that average vessel utilisation remains high enough to retain control over westbound freight rate levels. Several carriers have already announced this intention during week 41, in preparation for China's Golden Week holidays that begin from October 1.