Tuesday, 23 July, 2024

Freight Rates On Long-Haul Routes Rise Due To Reduced Capacity


View on long-haul route prices have turned positive for the first time since August last year. The alliance will delete the EC4 US East Coast route in November, which will also help reduce the oversupply of the route. Despite the bullish market, Linerlytica stressed that the sustainability of freight rate growth depends on the capacity discipline of liner operators. The shipyard's shipping capacity remains stable. Currently, there are only more than 200 ships with a shipping capacity of 834,784 TEUs.

Views on long-haul prices turned positive for the first time since August last year. Vessel utilization exceeded expectations and Maersk had to deploy additional loader services.

THE Alliance will cancel the EC4 US East Coast route in November, which will also help reduce oversupply on the route. In Asia and Europe, a Bank of Japan rate hike helped push rates higher, supported by capacity cuts.


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The Shanghai Container Freight Index (SCF) showed that the Shanghai-US West Coast freight rate closed at $1,746/FEU, higher than the previous week's $1,735/FEU. However, the Shanghai-US East Coast freight rate is still under pressure, falling from US$2,230/FEU last week to US$2,198/FEU.

The Shanghai-Northern Europe freight rate also rose to US$581/TEU from US$562/TEU last week.

Consulting firm Linerlytica said in a report on October 23: "Market sentiment has turned positive for the first time since August last year, and freight rate increases are gaining momentum in November following the alliance's decision to suspend shipments to the U.S. East Coast via the Suez Canal. Capacity will be further reduced following the Coast's EC4 services. This comes after several shipping lines cut rates on USWC and European routes, which will help shipping lines recover their rates.

Despite the bullish market, Linerlytica stressed that the sustainability of freight rate growth depends on the capacity discipline of liner operators.

Statistics from Linerlvtica show that the idle fleet has declined slightly in the past week, with only 67 ships (265,591 TEU) currently idle. Several idle ships have returned to active operations, while four ships were scrapped in the past week.


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Linerlytica said: "In order to maintain prices, at least 1 million TEU of excess capacity needs to be removed in the next two months. This will make the task more difficult as more than 500,000 TEU of new ships will be delivered before the end of this year, which will require more Many ships are idle at the time of delivery.

The shipping capacity of the shipyard remains stable. Currently, the shipping capacity of Thousand Shipyards is only more than 200 ships, with a shipping capacity of 834,784 TEUs. Some shipowners are taking advantage of the current market slowdown to upgrade their fleets, with Maersk, MSC and Hapag-Lloyd all undertaking ship upgrade programmes.

Linivtica said: "The recent increase in dry docked ships has helped to eliminate some excess capacity, but it also means that even if the scrapping rate remains low, more refurbished ships will return to the market next year.

Guangzhou Shunhang International Freight Forwarding Co., Ltd. is a company specializing in international transportation business, providing domestic and foreign customers with sea, land and air import and export cargo transportation services, including booking, customs declaration, warehousing, delivery, insurance and many other services. The business covers general cargo, sensitive furniture, general chemicals, large engineering projects, large cargo transportation, etc.

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