Ocean freight traffic slowed over the past week across Asia due to the Labour Day holidays but average freight rates largely held their ground despite the continuing market turmoil triggered by the US tariffs. Transpacific rates bucked the downward pressure as carriers moved swiftly to remove excess capacity that allowed them to secure rate hikes in both the spot and contract markets, although the rate strength is due more to an anticipated cargo surge if a Sino-US trade deal could be reached.
However, the shifting of excess ships from US to Europe had a detrimental impact on Asia-Europe freight rates, with more downward pressure expected as more capacity shifts away from the US in the next 3 weeks.
The market turmoil failed to deter carriers from resuming new ship orders as 52 ships were added to the orderbook last month, with more than half at Chinese shipyards in defiance against US measures to counter China’s dominance.
Johnson Leung
Capacity shifts from US to Europe routes
Carriers have reacted swiftly to remove capacity deployed on the US trades, with 8.6% of FE-WCNA capacity removed just 1 month after the US imposed new tariffs on its imports. 27 ships for 200,000 teu have been removed from the West Coast since April, with the bulk of the surplus tonnage redeployed to the Asia-Europe and Med routes.
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