MSC Withdraws $300 Asia-Europe Surcharge

MSC has withdrawn a US$300/teu Asia-Europe peak season surcharge (PSS) which was to have taken effect at the end of last week
“Presumably, they’ve decided that there’s a better chance of achieving a rate hike at the beginning of March,” broker GFI said in an indirect reference to Hapag-Lloyd’s recent announcement to levy a $750/teu Asia- Europe rate increase on 15 March.

MSC has withdrawn a US$300/teu Asia-Europe peak season surcharge (PSS) which was to have taken effect at the end of last week
“Presumably, they’ve decided that there’s a better chance of achieving a rate hike at the beginning of March,” broker GFI said in an indirect reference to Hapag-Lloyd’s recent announcement to levy a $750/teu Asia- Europe rate increase on 15 March.
When contacted by Lloyd’s Loading List.com, a spokesman for Switzerland-based MSC confirmed that the PSS had been withdrawn, but did not elaborate on the reasons behind it.
He also declined to comment on the possibility of MSC seeking a GRI on the Asia-Europe trade in March.
Benjamin Gibson, a container freight derivatives broker at Clarkson Securities, said there was a precedent for carriers withdrawing or postponing surcharges when it looked as though they would not be successful.
“On the evidence of the SCFI, the market is not tight enough to take an increase this side of Chinese New Year [February 10], and since when is January a ’peak season’?”
Martin Dixon , Research Manager, Freight Rate Benchmarking, at shipping consultant Drewry, said:?“Anecdotal evidence suggests that the market is not accepting the PSS as there is not sufficient demand relative to the available capacity.”
But whether MSC’s decision to withdraw the PSS will see other carriers follow suit remains to be seen. CMA CGM has told Lloyd’s Loading List.com that it is maintaining its $250/teu Asia-Europe surcharge effective since Monday.
Quizzed on the prospect of other carriers following Hapag Lloyd’s lead and looking for a March GRI, Clarkson Securities’ Gibson said: “This was what happened last year, so it’s a logical hypothesis.
“However, circumstances are different in 2013 and it is possible that there will be less unity among carriers as a result of the less-severe market conditions this time round.”
He argued that the chances of a March GRI sticking would depend on how strong demand growth would be after the Chinese holiday, and also whether carriers could effectively manage any overcapacity in order to raise utilisation.
“While capacity cuts are expected over the Chinese new year holiday, schedule patterns, as they stand, show it returning to current levels in March, which is a threat to GRI plans.”