West Services News

What should have been acceptable ship utilisation figures last year didn’t prevent spot rates from falling to historic lows. Carriers will need to intensify their capacity management tactics in 2016 if they are to reverse the trend. The immediate answer is that they were actually pretty close to full with ship utilisation on headhaul East-West services averaging 87% over the course of the year. This was down on 93% ship utilisation for 2014 as reported in our most recent Container Forecaster report, but nonetheless the decrease was not of the magnitude that can fully explain the rates blood-bath that ensued. Considering the seasonal peaks in volumes, carriers did a reasonable job of matching supply with demand on a monthly basis.

Further widening of the supply-demand imbalance at the trade route level and insufficient measures to reduce ship capacity will lead to an acceleration of freight rate reductions and industry-wide losses in 2016, according to the latest Container Forecaster report published by global shipping consultancy Drewry. The decline in global container shipping freight rates is anticipated to have been as great as 9% last year and Drewry is forecasting that carrier unit revenues will decline further in 2016, albeit at a slightly slower pace. Excluding 2009, the past 12 months has seen the lowest spot rates in most major trade lanes and all at the same time. This is not solely due to fundamental supply/demand imbalances caused by weak volumes and over supply.

CMA CGM confirms its global development strategy and proposes a new and unique East-West network of services on the following trades: Asia-Europe, Asia-Mediterranean, Transpacific and Asia-United States East Coast. Pending authorization from the Federal Maritime Commission (FMC), the new East-West offering will provide four weekly services on the Asia-Europe trade, completing the two existing services, thereby offering six departures per week; four weekly services on the Asia-Mediterranean trade: two to the Mediterranean…

Although the number of vessels being scrapped this year has increased dramatically, and looks set to continue rising, it is having little impact on the current excess of supply over demand where it matters most – in the East-West trades, according to the latest edition of Drewry's 'Container Insight Weekly'. All of the vessels scrapped so far remain below 6,000 teu, whereas the worst excess is in the sector over 10,000 teu, where most vessels are deployed between Asia and Europe. This means that unwanted ULCVs will continue to be cascaded into other routes, thereby maintaining pressure on freight rates. Out of the 73 vessels scrapped up to the end of April…

Drewry Shipping Consultants, in its latest Container Forecast, concluded that 2009 will be the toughest test yet for the Container industry and further casualties are a real possibility. During the last quarter of 2008, carriers have been doing their best to reduce capacity through suspension of a number of high profile east/west services. However, Drewry argues that the gap between supply and demand is still too big. For the short to medium term, carriers can at best only stabilize freight rates that, on the Asia to Europe trade, have recently fallen to uncommercial levels. Drewry’s revised estimate for 2008 global container traffic growth is 152.8 million teu…

Hapag-Lloyd, which has so far focused mainly on East-West services, is expanding its African network by starting a service to South Africa in mid-October. “The southern and west regions of Africa represent an attractive market for container transport with considerable development potential. We will thus be serving all five continents for the first time in our company’s history,” commented Adolf Adrion, executive board member of Hapag-Lloyd AG, with reference to the start of a liner service linking Northern Europe with ports in South and West Africa. A total of four ships capable of carrying approx. 1,200 standard containers (TEU) and equipped with 200 reefer plugs will be deployed in the new fortnightly service.