Carriers return to profit on Asia-Europe trade, transpacific soon to follow, analysts say /09.04.2010

SHIPPING lines are already back in the black on the Asia-Europe trade, according to analysts, as freight rates have reached levels commensurate with those in the lead up to the financial crisis.

Transpacific services are still in the red. However, this is expected to change once the annual contracts are signed in the coming months. Estimates on the rate of increase currently range from US$400 to $600 per FEU, according to various sources. Volumes on both the transpacific and Europe trades have held up well in the post-Chinese New Year period, according to analysts from UBS Securities.

But despite the positive news, there are indications that the rates that have held up so well, particularly on the Asia-Europe trade, are beginning to soften as shipping lines begin to reintroduce idle tonnage back into the market. The fear is that with more tonnage coming on stream throughout the year, this will see rates decline even further…

According to the China Containerised Freight Index (CCFI), rates fell in the first two weeks of March, after having risen by 50 per cent since June 2009. The Shanghai Containerised Freight Index also saw Shanghai-Europe rates drop by $95 per TEU to $2,000. Spot rates on the Shanghai-US west coast trade declined by $37 per TEU to $1,022. Rates to the US east coast also dipped by $29 per TEU to $1,540, according to RS Platou Markets. Alphaliner recently reported that idle ship capacity has also fallen from 1.24 million TEU to 1.22 million TEU in recent weeks. CCB International said in a recent report on the industry that they were holding to a more cautious view of the market, given the fact that rates had increased, based solely on the artificial tight space environment carriers had created through ship layups.

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