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However,
Alphaliner is not optimistic about the prospects
for the industry for the remainder of this
year. It anticipates that carriers' operating
performance in the second quarter will deteriorate
because volumes are weaker than expected
in the transpacific and Asia-Europe trades,
the two largest trade lanes in the world.
As
a result, freight rates have fallen to a
new low for the year.
Alphaliner
believes that the difficult operating environment
has triggered a rate war on several key
routes.
According
to Drewry's new Global Freight Rate Index
(GFRI), the average global freight rate
fell to a 15-month low in April. The GFRI
is a weighted average of freight rates across
600 trade lanes excluding intra-Asia.
And
rates of more than one third of global trade
routes are currently below the levels of
2012.
Drewry
said that as the freight rates for more
than half of the 600 trade routes decreased
in April, the global freight rates dropped
12 per cent to reach its lowest level since
February 2012, and fell 18 per cent since
the outset of the year to $2,065 per FEU.
The
fragility of rates has been seen in both
Asia-Europe and transpacific trades since
March.
In
April, the average rates on both trades
continued to plummet 12 per cent each, due
to the declining rates on headhaul trades
from Asia to Europe and North America, said
Drewry.
Entering
June, the decline of rates has shown no
signs of faltering. The Shanghai Containerised
Freight Index (SCFI) spot rates on Asia-Europe
trade dropped to $558 per TEU on June 7,
falling $40 per TEU from $598 per TEU recorded
a week ago. This is a new low since December
2011. The SCFI Asia-Europe rates hit the
rock-bottom rate of $490 per TEU on December
9, 2011.
Meanwhile,
the SCFI Shanghai-US west and east coasts
rates have also shown their softness. The
SCFI Shanghai-US west coast rates declined
$59 per FEU to $1,949 per FEU on June 7,
and the Shanghai-US east coast rates also
shrank $74 per FEU to $3,102 per FEU.
As
the global economy remains sluggish, especially
in the European market, carriers are expected
to face another harsh year in 2013 beset
with low margins, overcapacity and weak
demands.
Operating
in the black is only for a handful of top
carriers now. This is definitely not a healthy
situation for the industry.
Rates
on the major trades are now well below breakeven.
Given that the lines with bigger vessels
are able to reduce their unit costs, they
are more likely to fare better than their
smaller counterparts, in terms of overall
losses.
In
this case, bigger is indeed better it would
seem.
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