Home >> News Room >>Carriers suspend trans-Pacific rate hikes after Chinese ministry comments

News Room

Carriers suspend trans-Pacific rate hikes after Chinese ministry comments

Author:   Posttime:2020-09-18

COSCO Shipping and Hong Kong's Orient Overseas Container Line (OOCL) have suspended planned September 15 general rate increases (GRIs) on the eastbound trans-Pacific trade while other major container lines are pushing forward with GRIs that are slightly lower than they had announced.

The move comes after Chinese regulators last Friday encouraged major container lines to add capacity and be less aggressive in raising their rates as US imports from Asia continue to rise.
Excluding Cosco Shipping and OOCL, both controlled by a Chinese holding company, carriers reduced GRIs by US$100 to $250 per FEU from their original plans, container lines, and non-vessel operating common carriers (NVOs) told IHS Media.
The sources who spoke with IHS Media - two from non-Chinese carriers and five from NVOs - did not want to be identified and responded to the suggestions made last week by Chinese regulators saying that "government entities or regulators shouldn't interfere in the free marketplace".
One liner executive said, "This sets a dangerous precedent" noting that the Chinese Ministry of Transportation and Communications did not get involved in pricing at times when spot rates were sinking rapidly.
Rate sheets that NVOs shared with IHS Media show that most carriers in the eastbound trans-Pacific are posting GRIs of about $50 to $100 per FEU to the West Coast, and slightly higher to the East Coast, effective September 15. This week's rates are in the range of $3,900 to the West Coast and $4,700 to the East Coast, according to another executive with a European carrier.
Spot rates have been setting records almost each week since late June, when US imports from Asia began to surge as the economy reopened from lockdowns implemented at the outset of the coronavirus disease 2019.
Carriers had prefiled GRIs with the US Federal Maritime Commission that would have increased the spot rates above $4,000 to the West Coast and $5,000 to the East Coast. Because those levels will most likely not be reflected in the SCFI posting on Friday, attention is now turning to GRIs that carriers have pre-filed for October 1, an NVO source said.
The second carrier source said the rate increases that liner companies are seeking are transparent and reflect current market conditions, which are expected to last at least through October, regardless of what any government entity is saying.
"This is a strong market. Our rates are fair and explainable. They reflect supply and demand," the source said. He added: "We don't like to see governments interfere with the market."
Carriers and NVOs say they would not be surprised if rates in the eastbound trans-Pacific continue to increase into October as manufacturers rush to move their shipments out of China before factories close for the Golden Week holiday October 1-7.
Carriers have announced several blank sailings for the weeks of October 11 and October 18, although capacity to the West Coast will still be about 9.5 per cent higher than for Golden Week 2019, and about 12.1 per cent higher to the East Coast, according to the Sunday Spotlight published by Sea-Intelligence Maritime Analysis.
Alan Murphy, CEO, Sea-Intelligence, said: "Despite seeing a capacity injection for the Q3 peak cargo season, carriers have been more cautious with their capacity deployments for Golden Week."
On Asia-North Europe, capacity is also slated to be up compared to the same period last year, by 5.9 per cent. On Asia-Mediterranean however, the four-week capacity is currently scheduled to contract by -1.4 per cent year on year.
"All that said, in terms of the capacity reductions compared to the previous years, carriers are already slated to take out a higher percentage of capacity on both Asia-Europe trade when compared to 2019 as well as when compared to the 2014-2019 average percentage reductions.
"On Transpacific, current percentage of capacity reductions are higher than the 2014-2019 average, whereas, if compared to 2019, carriers will need to blank another 2-5 sailings in the upcoming weeks," Mr Murphy added.
 

source:Schednet

Related posts