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Box lines’ GRI attempt fails thrice   24/05/2023

Hopes of a rebound in freight levels continue to wane as mainline operators fail to implement general rate increases (GRIs) for 1 June, marking their third straight unsuccessful attempt following two flops this month.

The Shanghai Containerized Freight Index (SCFI) has lost 6% in the past month, erasing gains made in April.

Mainline operators have continued to add capacity to the Asia-Europe lane as they fight for market share, hindering any chances of halting the slide. Meanwhile, Transpacific capacity has eased as newcomers either withdrew or cut their deployment.

Linerlytica's latest report, issued on 22 May, noted that the 12 largest ocean carriers have added 5% more capacity since January 2022, when freight rates peaked.

On 19 May, the SCFI averaged US$869/TEU for Asia-Europe; US$1,329/FEU for Asia-US West Coast and US$2,365/FEU for Asia-US East Coast, down from US$883/TEU, US$1,633/FEU and US$2,510/FEU in April.

Some box lines want to move rates to over US$1,800/FEU for Asia-US West Coast, up from current levels of US$1,400/FEU, but have been struggling to fill their ships as supply exceeds demand.

ZIM Line increased capacity the most, at 34.5%, a move that resulted in a sharp drop in its first quarter earnings, with a net loss of US$58 million as its Asia-US West Coast and Asia-Australia services fell into the red.

Linerlytica estimates that current capacity stands at 5.56 million TEUs for Asia-Europe (including the Mediterranean) and 4.98 million TEUs for Transpacific lanes. This compares with 5.39 million TEUs and 5.67 million TEUs a year ago.

Asia-Europe capacity has continued to increase as more newbuildings are sent to this lane, with the 2M alliance assigning nine vessels from June. Despite slow-steaming, capacity will still increase due to the removal of blanked sailings.

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