News / Asia-ECSA container trade shows cutting capacity can help rates, and carriers, recover

11/07/2016

Container spot freight rates between Asia and South America’s east coast have recovered from the depths at the beginning of this year, soaring by over 400% on the back of radical capacity cuts.

According to Drewry, the Asia-ECSA route is a trade currently “bucking the trend with an unparalleled spike in prices”.

Spot rates between Shanghai and Santos languished at a sub-economic $600 or less per 40ft through January and early February, according to Drewry’s Container Freight Rate Insight data, forcing carriers ...

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Orestis Katsoulas
July 11, 2016 at 3:27 pm
Wouldn’t the reduction in the Asia-ECSA services increase the number of idling ships and hence increase costs for the carriers? Does it depend on the trade-off between the higher freight rates against the cost of over-capacity such as in idling ships?

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- Mike Wackett
  July 12, 2016 at 10:13 am
  In theory yes.
  However, the carriers may be able to off-hire some chartered-in tonnage and / or redeploy the redundant vessels, together with owned ships, onto other trades.
  
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