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Lloyds 1/2/12
EVERGREEN is seeking rate increases of up to $900 per teu for Asia to Europe cargo as all container lines engage in a major push to restore revenues after a drive for market share last year erupted into a devastating price war.
As global carriers release 2011 results that confirm their slide deep into the red following record profits in 2010, so they are announcing ambitious rate restoration programmes in an effort to reverse the price collapse.
The Asia-Europe trades are uppermost in their sights, but with the rate increases they are seeking varying considerably from line to line.
Taiwan�s Evergreen will be asking shippers to pay another $600 per teu on March 1 for cargo moving from the Far East and Indian subcontinent to northern Europe and the Mediterranean, followed by a further $300 per teu increase on April 1.
That announcement followed an advisory from CMA CGM of a $750 per teu adjustment, consisting of a proposed $200 per teu rate restoration and an interim fuel surcharge of $550 per teu, effective March 1, for cargo moving from Asia to northern Europe, the Mediterranean, Black Sea, and North Africa destinations.
In a notice detailing the recovery programme, the French line said the tendency to quote all-in rates, including bunker and currency adjustment factors and Suez Canal surcharges, �has left carriers without any proper coverage of these costs�.
Furthermore, because of delays caused by adverse weather and congestion in some Asian ports, ships sailing westbound have had to speed up to meet berthing windows in Europe and Suez Canal convoys, so offsetting any benefits of slow steaming on the eastbound leg.
�The present level of freight rates is insufficient to cover ship costs including port and Suez Canal costs as well as bunker costs,� said CMA CGM whose notice to shippers followed rate announcements from several other lines.
Maersk Line, one of the carriers blamed by many others for particularly aggressive pricing last year as the Danish line defended its market position, has told customers that it wants to hike rates in the Asia to Mediterranean and north Europe trades by $775 per teu, for both dry and refrigerated cargo, on March 1.
Also setting a high target is Hapag-Lloyd, which advised shippers a few days ago that it plans to raise most Asia to Europe rates by $750 per teu on March 1.
Cosco Container Lines, on the other hand, has planning a two-stage programme of general rates increases, with the line hoping to lift prices by $300 per teu on March 1, followed by another $300 increase on April 1.
More modestly, Hong Kong�s OOCL has announced a general rate increase of $200 per container from February 15, but with further increases to be applied during the course of the year.
After the ravages of 2011,which saw spot rates in the Asia to Europe trades plunge from $1,400 per teu to less than $400 before a rally to around $700 in the closing weeks of last year, there is now cautious optimism about prospects for some trade lanes.
With Maersk and CMA CGM�s joint Asia-north Europe service disappearing as the French line teams up with Mediterranean Shipping Co, more capacity will be removed from the route. Others have suspended services during the slack season. Containerisation International estimates that 8% of capacity was removed from the Asia-north Europe trades between November and early January.
On the other hand, very large ships are now being switched to the Asia-Mediterranean and Asia-Middle East trades.
China Shipping, United Arab Shipping Co and CMA CGM will deploy seven vessels of between 12,500 teu and 14,400 teu capacity in a new Asia-Middle East loop that replaces two existing services, and which starts tomorrow. CMA CGM notes that this would be the first time that such big ships have been deployed in trades other than the Asia-Europe route.
�This opens new perspectives of employment for this type of big vessel,� the line said.
Meanwhile, carriers are also starting to prepare for the annual round of contract negotiations covering the transpacific trades amid further evidence that spot rates have stabilised. Drewry�s latest Hong Kong-Los Angeles benchmark remained unchanged for the fifth consecutive week at $1,832 per 40 ft loaded container. This level is 12% down on a year ago, but a considerable improvement on late 2011 rates, which slumped close to $1,400.
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