News / Desperate carriers slash ocean rates to fill empty slots

© Tatyana Klimenko

Ocean-going carriers are slashing rates in a desperate bid to attract cargo before the Chinese New Year holiday next month.

On Friday, the Shanghai Container Freight Index showed Shanghai-North Europe down 5% on the previous week, to $1,595 per teu, or $2,607 per 40ft.

Shanghai-US West Coast rates also corrected by 5%, to $2,084 per 40ft, while a steeper decline, of 9%, was seen for Shanghai-US East Coast rates, which averaged $2,896 per 40ft.

Linerlytica said this week that delaying the resumption of Red Sea transits was unlikely to help long-haul freight rates recover, as shipping lines had walked away from plans to hike rates on 1 February.

The shipping consultancy also noted that real-time Asia-North Europe rates were hovering at $2,500 per 40ft, as liner operators discounted to fill empty slots.

Linerlytica said: “Further weakness is coming, with rates slipping further, to below $2,200 per 40ft, as carriers eager to build up cargo roll pools ahead of the Chinese New Year holiday abandon plans for a rate hike on 1 February.”

As rates are trending south, shipping lines are having a tough time convincing shippers to pay higher contract rates for year-long volumes.

Meanwhile, the Houthis have threatened to resume attacks on ships transiting the Red Sea, and CMA CGM will reroute ships on two Asia-North Europe services, FAL 1 and FAL 3, as well as its Asia-Mediterranean MEX service, through the Cape of Good Hope.

Linerlytica explained that the French line’s move was not due to security concerns, but a lack of incentive. CMA CGM has completed seven Suez sailings on the three services in the past month, mainly to bring ships and empty containers back to China to fulfil the anticipated cargo rush before the holidays.

It said: “As subsequent sailings from Europe will no longer be able to reach China in time for the new year, there is therefore no incentive for CMA CGM to continue with these eastbound voyages via Suez.

“But a larger imperative is to signal to its rivals to delay any large-scale return to the Suez due to oversupply concerns.”