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Wednesday, 07/12/2022, 21:29 (GMT +7)

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Small shipping lines exit main markets after just entering during pandemic

Small, niche carriers that have joined the main east-west container shipping routes during the pandemic are facing many difficulties, hit hard by the sharp drop in spot rates and sky-high charter rates.

Container ship CU Lines

Container ship CU-Lines (Photo: Cyberlogitec)

CU Lines has announced the early termination of a lease contract for 12 panamax vessels that it is currently deploying on routes to the US and Europe. It follows the termination of the China-Europe service by UK-based Allseas Global Project Logisitcs, which filed for bankruptcy in October after failing to meet contractual commitments chartered six ships it has deployed, according to Linerlytica.

The Shanghai Container Freight Index (SCFI) is down another 5% week-on-week since December 2. On average since the beginning of the fourth quarter to date, SCFI has fallen 68% year-on-year. According to a new report from HSBC, if the SCFI falls at 7.2% per week – the average drop over the past four weeks – it will hit 2019 levels in just four weeks of the year and may even drop below that level during the low season of the Lunar New Year in China in late January.

Experts at Denmark's Sea-Intelligence say spot rates are currently below pre-pandemic levels on both the trans-Pacific to the west coast as well as the Asia-Europe trade.

“The floor is going to be determined by the complex competitive game between the carriers. When will they all – individually – decide that enough is enough? Given the massive cash piles they all sit on, all it takes is for one or two major carriers to keep pursuing volume and there is – quite literally – no lower limit, as to how far this can go before rates bottom out." This will make the situation difficult for small shipping lines, specializing in niche markets that are being pushed out of mainstream markets, Sea-Intelligence said in a recent report.

Drewry forecasts shipping lines will have excess capacity of up to 1.5 million TEU next year as the container shipping market shrinks.

Freight platform Xeneta is forecasting ocean freight volumes to drop by around 2.5% next year.

capacity operated on transpacific and asia-europe trade

Source: Phaata.com (According to Spash247)

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Small shipping lines exit main markets after just entering during pandemic

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