With a majority of ocean liners poised to implement a GRI of up to US$600 per teu from the middle of the month on Asia-Europe tradelanes, market analysts are forecasting a push for fresh hikes in January, coinciding with capacity cuts.
Ben Gibson, a container freight derivatives broker at Clarkson Securities, told Lloyd’s Loading List.com that carrier moves to skip sailings on the Asia-Europe trades throughout January would “surely be followed by more rigorous GRIs than those announced for December".
With a majority of ocean liners poised to implement a GRI of up to US$600 per teu from the middle of the month on Asia-Europe tradelanes, market analysts are forecasting a push for fresh hikes in January, coinciding with capacity cuts.
Ben Gibson, a container freight derivatives broker at Clarkson Securities, told Lloyd’s Loading List.com that carrier moves to skip sailings on the Asia-Europe trades throughout January would “surely be followed by more rigorous GRIs than those announced for December".
The Grand Alliance (G6) is planning to skip seven sailings from Asia to Europe, starting on 9 January, running through to 15 February, and other carriers could follow suit.
"It would be normal and prudent action to pull these services after the Chinese new year, which starts on 10 February, but skipping sailings ahead of it is a sign of a pretty weak market," said Lars Jensen, CEO at SeaIntel Maritime Analysis.
"It reflects carriers’ need to bring some semblance of balance back into the market and allow them to achieve a degree of success with their GRIs.”
Gibson said carriers were "trying everything in the book" to get back to a market balanced in their favour.
"The last few years have shown the importance of Q1 in the full-year results, and this may be why we are seeing a push pre-Chinese new year."
However, he believes it is impossible to predict whether the January GRI will be successful.
He said: "We are unlikely to see a huge restocking surge in Europe of new orders from retailers. So if demand is not going to provide the balance, then it must (again) come from the supply side.
“A continuation of capacity management measures across the board will help boost the GRI’s chances. Current hedging activity shows that some shippers are willing to pay a premium on today’s levels to lock-in a rate."
So where does this leave the mid-December GRI?
Jensen stressed that from a cash flow perspective, carriers were rapidly approaching the same lowpoint as last year that prompted them to show collective discipline to obtain rate increases.
He said: "If they don’t push through a GRI on 15 December, they will certainly do so at the beginning of January. However, the increase will be an effect of carrier discipline, not of a balanced market."
Gibson said the 15 December would be fighting against an oversupplied market.
"It is likely that some of the increase will hit the spot market, but recent history suggests that there will be rate erosion immediately afterwards."
Idle Boxship Numbers Stay Steady At 6% Of Fleet
The number of idle containerships appears to have stabilised at around 6% of the total fleet over the last month, the first time since Lloyd’s List Intelligence launched its weekly report in March that volumes have hit a plateau.
According to the vessel tracking provider’s recently launched containership channel, there are 297 vessels from the total 5,037 boxship fleet idle at present, including 161 inactive for more than three months.
With the exception of 10 containerships in the 5,000-7,499teu size range and two vessels between 7,500teu and 9,999teu, the other 285 ships are feeder vessels and sub-panamaxes smaller than 4,999teu.
One-third of the vessels are between 1,000-2,999teu and another 30% are smaller than 499teu. As large newbuildings prompt lines to continue cascading ships down from deepsea trade lanes to coastal trades, smaller regional and coastal vessels have suffered from reduced employment opportunities.
Earlier this week, our sister publication Containerisation International reported that even on the Asia-Europe trade lane, which accounts for the largest proportion of box traffic globally, ocean carriers are increasing the frequency of blank or void sailings.
Vessels are sitting idle in Asian ports, and according to Lloyd’s List Intelligence, 44% of the 297 idle vessels are located in waters off China, South Korea and Russia’s Far East and a further 28% are located in Southeast Asia close to Vietnam, Thailand, Malaysia and Indonesia.
Recently, the G6 alliance announced that from January 9 through to February 24 it will cancel no fewer than seven westbound Asia-Europe sailings. Other lines have already culled voyages in December and more carriers and alliances are bound to follow the blanking trend.
This could mean that the 6% figure that has remained consistent for the last four weeks starts to increase towards the end of the month and into the New Year.
When Lloyd’s List Intelligence first started reporting idle fleet figures in March, 6% of the global fleet by number of boxships was inactive. However, this had fallen to 4.7% in early August before steadily rising from September until today.
For the smallest feedership class under 499teu, more than a quarter of the 354-strong fleet is inactive at present.
Overall, there is 506,166teu of capacity idle, according to Lloyd’s List Intelligence, accounting for just over 3% of the world’s 16.2m teu.
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