CARRIERS are resorting to removing significant swathes of capacity on key trade routes to protect vulnerable spot rates in the face of weak demand, says rate-tracking Xeneta.
Some 517,300 TEU - or 25 per cent of the initial capacity offering - has been removed from the Far East to US west coast corridor over the last five weeks, Oslo-based Xeneta says, reports the American Journal of Transportation.
'That's a total of 63 sailings,' said Xeneta CEO Patrik Berglund, 'a huge amount. After such a protracted period of strong fundamentals for the industry, this shows both a softening of the demand picture, as well as a strengthening of carrier resolve to protect the healthy spot rates which have served them so well.
Mr Berglund points out that spot rates on this trade have remained from April 4 to May 8, despite the fact that this route experienced the largest decline in demand in Q1, falling by 3.5 per cent year on year.
The other main corridors - Far East to US east coast and Far East to North Europe - removed less capacity and, it appears, have paid the price.
'The Far East to North Europe trade had the largest fall in spot freight rates, down $770 per FEU,' Mr Berglund said. 'Although a significant number of sailings were blanked - stripping away 13 per cent of capacity (223 000 TEU) - this was clearly not enough to counteract weak demand.
'We should also note that capacity this year has been higher than in 2021, and this obviously has a knock-on effect.
Strong demand on the Far East to US east coast trade led to the smallest number of blanked sailings, amounting to 263,500 TEU, or 10 per cent of capacity.
'Volumes on this trade are at a record high,' Mr Berglund said, adding that the initial catalyst for this was the switch away from west coast ports to avoid chronic congestion.
'However, the capacity here is now so significant that spot rates are under pressure, with a fall of $380 in the five weeks to 8 May. That said, current spot rates of $11 600 per FEU are certainly robust, but will they stay that way?
'The only way to know for sure is to keep up to date with the very latest market intelligence. Do that and you should be in a strong position to achieve optimal value in negotiations.'
Xeneta's platform compiles the latest ocean and air freight rate data aggregated worldwide to deliver unique market insights. Companies participating in the benchmarking and market analytics platform include names such as ABB, Electrolux, Continental, Unilever, Nestle, L'Oreal, Thyssenkrupp, Volvo Group and John Deere, among others.
SeaNews Turkey
Some 517,300 TEU - or 25 per cent of the initial capacity offering - has been removed from the Far East to US west coast corridor over the last five weeks, Oslo-based Xeneta says, reports the American Journal of Transportation.
'That's a total of 63 sailings,' said Xeneta CEO Patrik Berglund, 'a huge amount. After such a protracted period of strong fundamentals for the industry, this shows both a softening of the demand picture, as well as a strengthening of carrier resolve to protect the healthy spot rates which have served them so well.
Mr Berglund points out that spot rates on this trade have remained from April 4 to May 8, despite the fact that this route experienced the largest decline in demand in Q1, falling by 3.5 per cent year on year.
The other main corridors - Far East to US east coast and Far East to North Europe - removed less capacity and, it appears, have paid the price.
'The Far East to North Europe trade had the largest fall in spot freight rates, down $770 per FEU,' Mr Berglund said. 'Although a significant number of sailings were blanked - stripping away 13 per cent of capacity (223 000 TEU) - this was clearly not enough to counteract weak demand.
'We should also note that capacity this year has been higher than in 2021, and this obviously has a knock-on effect.
Strong demand on the Far East to US east coast trade led to the smallest number of blanked sailings, amounting to 263,500 TEU, or 10 per cent of capacity.
'Volumes on this trade are at a record high,' Mr Berglund said, adding that the initial catalyst for this was the switch away from west coast ports to avoid chronic congestion.
'However, the capacity here is now so significant that spot rates are under pressure, with a fall of $380 in the five weeks to 8 May. That said, current spot rates of $11 600 per FEU are certainly robust, but will they stay that way?
'The only way to know for sure is to keep up to date with the very latest market intelligence. Do that and you should be in a strong position to achieve optimal value in negotiations.'
Xeneta's platform compiles the latest ocean and air freight rate data aggregated worldwide to deliver unique market insights. Companies participating in the benchmarking and market analytics platform include names such as ABB, Electrolux, Continental, Unilever, Nestle, L'Oreal, Thyssenkrupp, Volvo Group and John Deere, among others.
SeaNews Turkey