For the first time since the start of the year, growth in transport volume in the global container shipping industry has slipped into negative territory. There are several reasons for this.
Firstly, the main reason for this trend is the cancellation of sailings (so-called ‘blank sailings’) by the major shipping lines – due to ‘Golden Week’ in China. Added to this is an increase in the delivery of newbuilds. The most significant reason, however, is the fact that, despite renewed Houthi activity, more ships are once again passing through the Suez Canal on the Asia–Europe route.
In its report published today, the consultancy firm Linerlytica explained that, in response to the decline in Chinese exports during the week-long National Day celebrations (starting 1 October), several long-haul sailings were cancelled – particularly on the Asia–US East Coast, Asia–Europe and Asia–Mediterranean routes.
“The return to the Suez route poses the greatest threat to shipping lines’ efforts to halt and reverse the three-month-long decline in freight rates on the Asia–Europe route,” the firm commented. “All shipping lines are making concerted efforts to raise rates from the end of October; MSC recently announced new FAK (Freight All Kinds) rates for the Asia–Northern Europe route, which will apply from 19 October and stand at $3,150 per TEU and $4,500 per FEU.”
Freight rates on the Asia–Northern Europe route have fallen by 60 per cent since July, as the early start to the peak season failed to materialise; by 2 October, rates had fallen to below $2,200 per TEU and $3,400 per FEU respectively.
The pace of new vessel deliveries also picked up slightly: in September, capacity of almost 200,000 TEU was brought into service, whilst not a single vessel was scrapped during the same period. Linerlytica added that the market barometer is now negative, as shipping activity is likely to remain subdued over the next two weeks.
However, the accelerated return to the Suez route remains the biggest obstacle to shipping lines’ efforts to raise freight rates.
ONE is the latest shipping line to resume use of the Suez Canal, joining CMA CGM, Maersk, MSC, Hapag-Lloyd and Cosco/OOCL, which are already sailing this shorter route again. The ‘ONE Continuity’, with a capacity of 8,110 TEU, which operates on ONE’s route between South-East Asia and Northern Europe, will make the crossing later this month.
Whilst other members of the Premier Alliance have not yet taken this step, citing safety concerns, demand for freight transport continues to decline.
