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The world’s biggest ocean freight forwarder, Kuehne + Nagel, said this week it had “given back” around 120,000 teu of business between Asia and Europe this year, because the margins were too low.

This statement by KN chief executive Detlef Trefzger at its third-quarter results on Tuesday revealed that it is not only carriers which suffer from freight rates sinking into sub-economic waters.

And spot rates from Asia to Europe continued to fall this week, with the Shanghai Containerised Freight Index (SCFI) declining another $26 per teu for North Europe, to $233, and by $49 to $195 per teu for Mediterranean base ports.

This represents another new low for Asia-Med, where rates are informally reported to have fallen below $100 per teu in recent days, and is just $26 from a record low for North Europe.

In fact, the all-time low for North Europe seems already to have breached, according to The Loadstar sources, who report carriers from the four alliances scrapping for cargo and offering rates as low as $200 per 40ft with a two-week validity to October 31, with shippers set to enjoy another fortnight of rock bottom rates.

Carriers have announced November 1 general rate increases (GRIs) between Asia and North Europe, ranging from $750 per teu proposed by MOL to $1,200 from K Line.

And carriers have also withdrawn around 170,000 teu of capacity over a three-month period, which they hope will cut supply sufficiently to improve their prospects of securing a significant percentage of this latest GRI.

It is important for the carriers to force rates back up ahead of negotiations with shippers over new annual contracts. Quite frankly the November GRIs have to succeed.

Clearly the current situation is unsustainable, for both carriers and shippers. The danger for the latter is that services will be culled overnight by container lines in financial difficulty, resulting in considerable disruption to supply chains.

The serious damage to the bottom lines of carriers caused by depressed rates on a number of routes was evidenced this week in Hapag-Lloyd’s IPO prospectus, which gave a snapshot of the impact low rates were having on its profitability – presumably the same is true for its peers.

In providing information for potential investors, the company was obliged to give an update on trading since the carrier’s first-half result that saw it turn a net profit of $175m following three consecutive years of losses.

But in July and August – normally regarded as peak season months when container lines enjoy full ships and higher rates – Hapag-Lloyd struggled just to break even, reporting a net surplus of just €2.1m in the two months as average rates per teu tanked.

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