Despite a blip, North Europe container spot rates are still heading south
The North Europe component of the Freightos Baltic Index (FBX) unexpectedly jumped 9% today. This propelled ...
Israeli ocean carrier Zim has finally axed its monthly ad-hoc sailings from Asia to North Europe, according to a report from Alphaliner, ending the restructured container line’s presence in the trade.
Severe losses, much attributed to the highly-competitive Asia-North Europe tradelane, obliged the ‘new’ Zim to suspend its liner service last April and terminate its slot charter arrangement with CSCL on the Chinese carrier’s AEX1 loop.
But, since June, Zim has been offering a ‘rogue’ sailing to North European ports every four to six weeks, using ships of between 4,600 and 10,000 teu that would otherwise have been idled.
Anecdotal reports suggest that Zim was pitching the most competitive rates in the market, perhaps unsurprisingly due to the ad-hoc nature of the service offered, and the carrier was obviously hitherto receiving enough support at a freight level.
However, Zim’s ‘advertised’ December sailing to North Europe was cancelled, together with scheduled departures this month and in February, as spot rates fell to a level that made the carrier’s desire to keep a ‘foot in the door’ on the tradelane no longer as rewarding.
Alphaliner notes that Zim has instead deployed its surplus ships to the Asia-US east coast trade, “taking advantage of the recent space shortage and surging spot rates on that route” no doubt caused by the congestion and uncertainty currently blighting the ports on the US west coast.
Indeed, according to the analyst, the 8,440 teu Zim Chicago is currently booking for an ad-hoc voyage from Chinese ports via the Suez Canal to New York, Savannah and Kingston, and this is scheduled to be followed by the 10,062 teu Tianjin in late January, just ahead of the Chinese New Year.
Elsewhere, another of Zim’s surplus ships, the 8,440 teu Zim San Diego, has been chartered to Taiwanese carrier Yang Ming for deployment within the CKYHE alliance Asia-USEC AWE 4 / NUE 4 service, where the members are currently experiencing strong forward bookings due to the worsening situation at ports on the west coast.
Meanwhile, the newly formed 2M and Ocean Three east-west alliances are in full swing and the desire to fill inaugural sailings has all but sunk the aspirations of carriers to implement mid-January Asia-North Europe general rate increases. And aggressive pricing by carriers with new or increased slot allocations following the alliance shake-ups is reported to be proving a drag on freight rates, despite the normally bullish market ahead of the Chinese holiday.
Moreover, the collapse in the price of oil, which has resulted in fuel costs plunging by more than 50% since July, has reduced the breakeven point for carriers deploying ultra-large containerships to below $600 per teu – thereby removing the urgency for new GRIs.
Indeed it is suggested that such is the cost-saving magnitude of half-price fuel that Maersk could more than mitigate the oil price dent to its energy sector by improving its group bottom line by as much as $2bn a year – that is of course providing oil prices remain at the current level.