Main trade ships sailing at 80% below-cost rates

The liner services on the Asia-Europe trade are being forced to carry containers at spot rates more than 80% below breakeven as capacity supply far exceeds market demand.

So bad is it that freight rates on the route dropped below shipping companies’ fuel costs this week for the first time in two years, reported the Wall Street Journal.

According to the French shipping analysts, Alphaliner, freight rates on the route have dropped to their lowest levels on record as “carriers face-off in a damaging rate war amidst weak vessel utilisation”.

In its June 12 report, the Shanghai Containerised Freight Index (SCFI) spot rates from Shanghai to North Europe reached an all-time low of US$243/TEU. And they could fall further, according to the Journal of Commerce, with rates as low as $150/TEU reportedly offered by carriers.

This is well below breakeven levels, estimated at about $800/TEU based on Alphaliner’s calculations.