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CMA CGM has announced a general rate increase on all containers carried between Asian and North European ports of $950 per teu for December 1, and rival carrier Hapag-Lloyd said it would also seek an increase on the same date of $650 per teu.

No doubt these new GRI attempts will be imitated by other Asia-Europe carriers in a desperate last-ditch attempt to push freight rates back up on the beleaguered tradelane and convince investors they are on the right track going into 2016.

A sequence of failed GRIs was briefly broken at the beginning of November as rates jumped by almost $1,000 per teu – only to quickly fall back by a third of the increase as spot rates sank as carriers scratched around for cargo to fill their ships.

The second half of 2015 has been a disaster for carriers plying Asia-Europe. Third-quarter liftings plunged by 7%, compared with Q3 2014, to 3.8m teu, according to the latest data from Container Trades Statistics – a downturn that continued into October. And anecdotal reports suggest that there has only been a slight improvement in demand this month.

Moreover, just to throw the supply-demand balance further out of kilter, ocean carriers have engaged in a race to operate the world’s biggest containership on the route, contributing to an estimated 9% of extra cellular capacity to the mix.

A strategy of achieving the lowest unit cost – and thus higher profit margins – only works, of course, if the ultra-large vessels deployed are sufficiently utilised. Filling the decks with spot cargo at less than $300 per teu is not going to make for a profitable voyage, even for the carriers with the lowest unit costs – however impressive the related PR.

There was no doubt in the mind of Maersk Group chief executive Nils Andersen on Friday of where things had gone wrong for the flagship carrier in Q3, forcing it to announce staff and service cuts and putting ultra-large ship order options on the backburner: it was all about rates, he said.

Elsewhere, tomorrow is a critical day for Hapag-Lloyd, which will present its Q3 numbers just a few days after the shares from its IPO began trading on the Frankfurt stock exchange.

An updated trading statement in the IPO prospectus showed the carrier had achieved just €2m of net profit in July and August, after posting a respectable €157m profit in the first six months. Enough to make potential investors nervous.

Hapag-Lloyd and its advisors had postponed the IPO by a week and discounted the offer range to €20 from the original €29.

Today the shares remain at about €20, with anxious investors hoping to hear some positive news from Hapag-Lloyd’s chief executive Rolf Habben Jansen in tomorrow’s presentation.

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  • John Roberts

    November 10, 2015 at 2:43 pm

    Ah yes, the totally outdated practise of shipping line GRIs. Isn’t it time these silly pricing folks worked out a more sensible way to make money rather than hiking up rates for a few days and catching out a few poor suckers then watching as the market rates go down on a daily basis back to where they were – or lower than they were in some cases.
    I can’t think of many other cases where prices for exactly the same service fluctuate so much for no reason whatsoever. Shipping rates don’t even seem to be linked to peak times any more, it just seems to be a game of putting rates up and down continuously. In my opinion, the lines are starting to look a bit clueless and foolish when they mention enormous increases that never stick.

  • chas deller

    November 10, 2015 at 8:42 pm

    K LINE just announced Dec 1 $2000 per 40ft gri on Asia-Europe