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August 14 2023

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16 Journal of Commerce | A ugust 14, 2023 www.joc.com International Maritime enough capacity to move the needle on rates. Sea-Intelligence Maritime Analysis noted in its July 23 Sunday Spotlight newsletter that a lack of sufficient capacity management was a factor behind the weakness in Asia–Europe rates. "Unless the major carriers are intent on a price war, and hence giving up substantial amounts of the cash reserves from 2021–22, we would expect a substantial increase in blank sailings on all three east- west trades in the coming months," the analyst wrote. Blanked sailings on the Asia– Europe trades are at a two-year low this summer. Of the total capacity available on routes from Asia to North Europe and the Mediterranean, data from Sea-Intelligence shows 8.7% was cancelled in July, or 199,051 TEUs. To date, 6.4%, or 140,710 TEUs, are scheduled to be blanked in August and 2.5%, or 55,391 TEUs, in September. from Shanghai to La Spezia, Italy, to $1,850 per TEU. Platts, a sister company of the Journal of Commerce within S&P Global, noted late July in its weekly market update that carriers were signaling their intent to drive up FAK rates in a move to capitalize on any increased buying should a peak season emerge. While FAK increases seeking to boost rates above existing lev- els — which are based on supply and demand fundamentals — have typically struggled to succeed, a spokesperson for Hapag-Lloyd said he expected customers to accept the rate hikes that he called "indispensable" to offering a sustainable service. "The load factor in July is sta- ble, and we are sailing full without exception," he told the Journal of Commerce July 24, adding that there appeared to be "a certain level of market discipline" regarding the spot market. Insufficient capacity management But that discipline does not appear to extend to withdrawing OCEAN CARRIERS IMPOSED a range of rate increases early August on Asia to North Europe and Mediterranean routes, hoping the price hikes, combined with vessel capacity cuts, will compensate for underlying weakness in demand and a steady influx of new construction hitting the market. In a bid to move Asia–North Europe rates upwards from current levels of about $750 per TEU, Med- iterranean Shipping Co. from Aug. 1 increased its freight-all-kinds (FAK) rates on the trade to $925 per TEU. Maersk raised its Asia–Rotterdam rates to $1,025 per TEU and $1,900 per FEU, Cosco Shipping set its Shanghai–Rotterdam rate at $1,050 per TEU, and CMA CGM increased its Asia–North Europe rates to $1,075 per TEU and $1,950 per FEU. On the Asia–Mediterranean trade, where average rates were about $1,400 per TEU, MSC from Aug 1. started charging $1,762 per TEU from Asia to the West Medi- terranean, CMA CGM is charging $2,100 per TEU on the same route, and Cosco increased its FAK rates Righting the ship Container carriers look to steady sluggish Asia–Europe market By Greg Knowler Container ship orders extend to almost 30% of in-service fleet Top 10 carriers' current container ship fleet and newbuild capacity on order, in TEU, with percentage of capacity on order to existing fleet 28% 7% 25% 24% 40% 31% 19% 32% 12% 55% Ocean Network Express MSC A.P. Moeller - Maersk CMA CGM/APL Cosco/OOCL Evergreen Line Ocean Network Express Hapag-Lloyd HMM Yang Ming Line Zim L L 0 2,000,000 4,000,000 6,000,000 In service On order Source: Sea-web, S&P Global © 2023 S&P Global "Unless the major carriers are intent on a price war … we would expect a substantial increase in blank sailings." Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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