'Well prepared' K+N weathers tough first half, and sees a brighter H2
Kuehne + Nagel today put a brave face on lower first-half revenue and profit on ...
The Ocean Alliance is to cancel four Asia-Europe voyages early next month – two North Europe loops and two Mediterranean loops – as the peak season ends.
The lines concerned, OOCL, CMA CGM, Cosco and Evergreen, said the blanked sailings were in response to “expected weak demand” after the China National Day “Golden Week” holiday from 1-8 October.
So far, the 2M and THE Alliance members have not announced similar moves, but it is anticipated that they will follow suite shortly. After what looks like being one of the best peak seasons for several years the carriers want to protect as much of of their rate gains as possible.
Indeed, a few weeks of soft demand and consequential plunging spot rates could put the container lines serving Asia to Europe on the back foot as the contract negotiation season draws near.
Although they have loaded a much higher percentage of contract cargo this year than spot traffic, the latter is still regarded as a market influence on contract rate negotiations, so it is in carriers’ interests to keep these as high as possible.
In this respect, there may be some concern in boardrooms at the trickling erosion of spot rates during the peak season and the inability to get 1 September increases in FAK (freight all kinds) rates to stick, despite high vessel utilisation levels.
This week’s Shanghai Containerized Freight Index (SCFI) records a 2.4% fall in spot rates to North Europe, to $886 per teu, and a 4% decline to Mediterranean ports, to $791 per teu. At the beginning of August, spot rates as recorded by the SCFI were $963 and $883 per teu, respectively.
Nevertheless, today’s spot rates to Europe are somewhat healthier than a year ago, when the SCFI reading stood at $695 per teu for North Europe and $553 per teu for the Mediterranean.
Meanwhile, there are mixed signals coming from the transpacific market. For the second week running, the Asia -US components of the SCFI recorded spot rate slippages for both US east and west coast routes.
The SCFI recorded a spot rate of $1,495 per 40ft for the west coast and $2,280 per 40ft for east coast ports – a decline of 3.8% and 3%, respectively, on the week and follows big falls of 7.1% and 6.7% respectively the week before.
Despite apparent strong demand on the transpacific, resulting in containers being rolled onto other sailings, carriers were unable to convert this supply/demand fundamental into higher rates and cancelled GRIs planned for mid-August and 1 September.