Seatrade-Maritime: Container spot rates stall as Gulf tonnage returns

Published by Seatrade-Maritime

Added capacity and intense competition on the major trades has contributed to the stalling of spot rates as tonnage is released from the Middle East and new tonnage is delivered.

Hong Kong consultant Linerlytica said in its latest weekly bulletin released today that the trapped tonnage in the Arabian Gulf was down from a high of 490,000 teu to 30,000 teu, with nearly 170,000 teu also delivered over the last month.

“Carriers failed to hold on to the early July rate hikes as rates receded across the board, said Linerlytica, adding: “Carriers are still pushing for two more rounds of rate hikes on 15 July and 1 August, [but] rates appear to have peaked for now with space constraints starting to ease with new deliveries and capacity evacuated from the Persian Gulf.”

Typhoon Bavi disrupted Chinese port operations, particularly in Shanghai and Ningbo ports, creating a backlog of vessels queuing to be handled, which Linerlytica says will take some weeks to clear. Even so, the analysis shows a 4.3% drop is a signal that rates, up 70% since April, have peaked.

Even with congestion in Asia, Linerlytica said Pacific rates were “dragged down” as the Gemini Cooperation and Premier Alliance carriers’ slashed rates to the US West Coast to $5,300/feu, up to $1,500/feu lower than a week earlier.

On the European trades from Asia, spot rates were again cut substantially by Gemini triggering a rate war, according to Linerlytica.

“Current carrier rate offers range widely from $4,500 to $7,000/feu but is on a clear downward trajectory as EC freight futures are betting on a drop of 60% between now to November,” said the consultant.

In the longer term, there is likely to be chronic overcapacity as the container ship orderbook hit 1,712 vessels totalling 13.72 m teu, comprising 40% of the current fleet, all set to be delivered by 2030.