News / Intra-Asia ocean freight rates soften, forcing carriers to reduce capacity

Drewry recorded a 12% drop in average intra-Asia container freight rates in the first two weeks of October, compared with the final fortnight in September.

According to its Intra-Asia Container Index, rates averaged $487 per 40ft in the first two weeks of October, this was also down, 3%, year on year.

It appears that increased capacity had limited success to intra-Asia operators’ attempts – including blanking sailings – to drive up rates ahead of China’s Golden Week holiday, in the first week of October.

The blanked sailings cut Far East-South-east Asia capacity by 80,000 teu.

According to Xeneta, Shanghai-Ho Chi Minh rates are currently at $786 per 40ft, having fallen 40% since June. Chief analyst Peter Sand told The Loadstar intra-Asia rates had been volatile.

He added: “But we also measured a record-high actual transit time between Shanghai and Ho Chi Minh City. At 8.4 days, this was more than two days above the announced transit time. Reliability is also low, at 17%.”

Mr Sand also said the increased capacity on the Shanghai-Nhava Sheva trade – which stood around 68,000 teu in early October – proved unsustainable.

He said: “Spot rates dropped significantly, prompting carriers to stop increasing capacity.”

Freight rates originating from South Korea also showed weakness. The Korea Ocean Business Corp’s Composite Container Index showed that for the last three weeks of September, South Korea-South-east Asia rates averaged $910 per 40ft, down 33% from $1,357 in the same month last year.

Alphaliner attributed this softening to significant growth and reshuffling among the leading intra-Asia players.

Alphaliner said: “The region remains one of the most dynamic and competitive shipping markets, with 69 active carriers and a strong 13% year-on-year capacity increase, bringing total deployed tonnage to 2.4m teu.”

Maersk Line added 100,000 teu to its intra-Asia lanes, to reach 298,134 teu, nearly closing the gap with market leader Cosco, which has 300,491 teu.