Weak euro = weak cargo demand= rates curbed

Weak European cargo demand is the prime cause of current rate collapse, according to the French shipping consultants, Alphaliner.

And this drop in demand on the Far East to Europe trade has been 3.3%, according to the latest available statistics from Container Trade Statistics (CTS).

Alphaliner’s weekly newsletter cited a weakening of the euro, which has depreciated 20% against the dollar so far this year, as a forecast of an ongoing brake on European imports.

It recorded that total westbound traffic for January to April fell that 3.3% to 4.71 million TEUs, compared to 4.87m TEUs in the same period last year.

And the capacity supply factor is taking an upward turn at the same time, with a total of 51 new ships of 13 800-19 000 TEU due to be delivered in 2015. And 26 of these vessels are already deployed on the FE-North Europe route.

“The pressure will continue in 2016, with a further 46 units of this size due to be delivered,” said Alphaliner.

It added that weak capacity utilisation on the FE-Europe route – 80%-85% in recent weeks despite multiple sailing cancellations - was the main reason for the failure of June 1 rate increases, mirroring the five previous failed attempts to raise rates so far this year.

Sources: Alphaliner, CTS and Shipping Gazette