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Rates to plunge as regulators 'meddle' with South American trade
来源： 编辑：编辑部 发布：2018/03/20 14:47:41
BECAUSE of regulatory efforts to ensure freight rates do not rise too high, they may cause them fall below carrier profitability in the Asia-South America trade, says Alphaliner.
The Paris research house said the reorganisation of merged Maersk-Hamburg Sud services and the termination of its vessel-sharing agreements, Chinese and Korean regulators insisted on capacity limits before approving the merger.
China's Ministry of Commerce demanded that Maersk and Hamburg Sud's combined reefer slot capacity between Asia and Latin America, be reduced from a 45-50 per cent market share to 34-39 per cent within 90 days of closing the deal.
The intention is to open the trade to rivals by taking advantage of the capacity limits imposed on the Maersk-Hamburg Sud combination.
Container lines on the Asia-South America trade lane are preparing for a fight for market share, as capacity is set to rise 18 per cent year on year.
Recently the Santos component of the Shanghai Containerised Freight Index (SCFI) fell nine per cent to US$2,309 per TEU, but this matched the annual seasonal decline.
Looking back to January last year rates on the route had shot up to $3,100 per TEU from the severely loss-making lows of below $100 per TEU in 2015.
This was because of a radical 40 per cent reduction in services in 2016, as carriers abandoned the trade. But today supply swamps demand, leaving carriers to hope that rates do not plunge them into loss.
Alphaliner notes that Maersk has already acted to reduce the number of reefer plugs on vessels deployed on the trade lane.
Maersk Group CEO Soren Skou conceded the combined businesses are expected to perform "slightly below" market growth this year.
"We do expect some retention loss or some cargo loss as we add the two companies together," he said.
Historically, ocean carrier mergers result in a loss of business, and to retain customers being approached by rivals, freight rates are often discounted, said London's Loadstar.
Alphaliner says services restructuring caused by Maersk's purchase of Hamburg Sud, will reach 84,000 TEU capacity against 71,000 TEU a year ago.
The termination of Hamburg Sud's vessel-sharing agreements was part of the requirement imposed on Maersk by Chinese and Korean regulators, reported London's Loadstar.
Meanwhile, rivals see the takeover as an opportunity to grab market share as carriers begin a difficult transition of merging operations and assets.
Alphaliner notes, 105 ships aggregating to 893,000 TEU will be deployed on 10 loops between Asia and the west coast South America.
This compares with the current nine-loop offering by 95 vessels with a capacity of 775,800 TEU.
With more slots to sell, carriers will need to offer lower prices, and put a hold on rate increases.
It seems certain, therefore, that freight rates will come under downward pressure, at least until the new services are embedded.
The Paris research house said the reorganisation of merged Maersk-Hamburg Sud services and the termination of its vessel-sharing agreements, Chinese and Korean regulators insisted on capacity limits before approving the merger.
China's Ministry of Commerce demanded that Maersk and Hamburg Sud's combined reefer slot capacity between Asia and Latin America, be reduced from a 45-50 per cent market share to 34-39 per cent within 90 days of closing the deal.
The intention is to open the trade to rivals by taking advantage of the capacity limits imposed on the Maersk-Hamburg Sud combination.
Container lines on the Asia-South America trade lane are preparing for a fight for market share, as capacity is set to rise 18 per cent year on year.
Recently the Santos component of the Shanghai Containerised Freight Index (SCFI) fell nine per cent to US$2,309 per TEU, but this matched the annual seasonal decline.
Looking back to January last year rates on the route had shot up to $3,100 per TEU from the severely loss-making lows of below $100 per TEU in 2015.
This was because of a radical 40 per cent reduction in services in 2016, as carriers abandoned the trade. But today supply swamps demand, leaving carriers to hope that rates do not plunge them into loss.
Alphaliner notes that Maersk has already acted to reduce the number of reefer plugs on vessels deployed on the trade lane.
Maersk Group CEO Soren Skou conceded the combined businesses are expected to perform "slightly below" market growth this year.
"We do expect some retention loss or some cargo loss as we add the two companies together," he said.
Historically, ocean carrier mergers result in a loss of business, and to retain customers being approached by rivals, freight rates are often discounted, said London's Loadstar.
Alphaliner says services restructuring caused by Maersk's purchase of Hamburg Sud, will reach 84,000 TEU capacity against 71,000 TEU a year ago.
The termination of Hamburg Sud's vessel-sharing agreements was part of the requirement imposed on Maersk by Chinese and Korean regulators, reported London's Loadstar.
Meanwhile, rivals see the takeover as an opportunity to grab market share as carriers begin a difficult transition of merging operations and assets.
Alphaliner notes, 105 ships aggregating to 893,000 TEU will be deployed on 10 loops between Asia and the west coast South America.
This compares with the current nine-loop offering by 95 vessels with a capacity of 775,800 TEU.
With more slots to sell, carriers will need to offer lower prices, and put a hold on rate increases.
It seems certain, therefore, that freight rates will come under downward pressure, at least until the new services are embedded.