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NORTH-SOUTH rate war is breaking out as
east-west capacity is cascaded down to lesser
trades, causing rates to plunge, says Dewey's
Maritime Research.
In
July and August carriers maintained June's
eastbound capacity levels at 1,167,000 TEU
in July, cutting one per cent in September
to 1,146,000 TEU through the cancellation
of 12 sailings in September against two
in August.
Drewry
noted that cascading of unwanted Asia-Europe
vessels appears to have stopped, as the
average vessel size - 6,175 TEU - has remained
constant.
New
to the transpacific will be the arrival
of Mac's two 14,000 Tenures into the Pearl
River Express, run with CMA CGM, in October.
These, the biggest ever on the transpacific,
will replace a 12,400 TEU ship and a 13,100
Truer.
Westbound
boxed exports to Asia increased 11.6 per
cent in July to 487,000 TEU, compared to
May and June's average of 436,500 TEU, but
year-to-date volume fell three per cent
year on year.
US
exporters of waste paper and scrap plastic
more than held their own against European
suppliers in the second quarter, according
to Global Trade Information Services. US
exports of meat to Japan also increased
volume between the first and second quarter,
despite Japan's 20 per cent currency devaluation
in March.
"This
situation helps to explain why ocean carriers
appear to have returned to war with each
other over market share between Asia and
Europe since August," said Drewry analysts.
"Cascading
is seriously haemorrhaging 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," said the
report.
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, declined
significantly, according to Drewry's Container
Freight Rate Insight.
The
average all-in spot rate from Shanghai to
Santos in July was 51 per cent lower compared
to January. Shanghai to Lagos was six per
cent lower, while the corresponding decreases
from Shanghai to Durban was down 19 per
cent and to Melbourne off 32 per cent.
"The
root cause remains the endless cascading
of vessels out of the Asia/Europe trade
lane. The average size of all vessels operating
between NE Asia and Australia increased
by another eight per cent in the 12-month
period between 3Q12 and 3Q13, up to 4,365
TEU, on top of the six per cent growth between
3Q11 and 3Q12.
In
the Asia/ECSA trade lane, the corresponding
changes were 13 per cent on top of 13 per
cent, up to 5,848 TEU, and between Asia
and South Africa, they were an even more
startling 30 per cent on top of 14 per cent,
up to 6,123 TEU," said the report.
The
one exception noted was between Asia and
west coast of South America and West Africa
with South America rates increasing two
per cent on top of 34 per cent growth.
Drewry's
latest Container Forecaster shows 14 newbuilds
averaging 12,713 TEU were delivered into
existing Asia/North Europe schedules in
2Q13 with replaced vessels averaging 9,782
TEU. They were cascaded down into other
trade lanes, such as Asia-Med and transpacific.
Some
of the 22 vessels averaging 9,366 TEU, which
were replaced by existing vessels averaging
10,357 TEU, were also cascaded down into
other trade lanes, which meant that the
overall average capacity of all vessels
operating between Asia and North Europe
increased by 1.7 per cent between 1Q13 and
2Q13 to 10,456 TEU.
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