Ocean container carriers pulled around 100,000 20-foot equivalent units of capacity from the Asia to North Europe route during the Chinese vacation week as freight rates decline rapidly on weaker-than-expected cargo demand, according to the Journal of Commerce citing Alphaliner.
The cuts, which will take effect from Oct. 1 during China's National Day Golden Week vacation, is equivalent to 40% of average weekly capacity on the trade according to the report.
At least 11 of the 29 Far East-North Europe carriers will skip one sailing during the week-long vacation from Oct 1 to Oct 6.
Some carriers have simply postponed their sailings with double sailings planned for subsequent weeks, according to Alphaliner.
Some of the sailing cancellations appear to have been made at short notice in reaction to a decline in cargo volume and are aimed at stemming the drop in ocean freight rates.
But spot market rates from China to North Europe have fallen further from the latest SCFI (Shanghai Containerised Trade Index) level of USD$1,690 (NZD$2,296) per TEU reported on Sept 17 with shippers saying rates of $1,500 or less are being offered, the lowest level since December 2009.
But carriers have not yet withdrawn services, likely to putting further downward pressure on freight rates in the run up to the winter slack season, Alphaliner said.
Maersk chief executive Eivind Kolding said this week the carrier will reduce tonnage from the beginning of October because there is "simply too much capacity in the market."
It is expected the capacity cuts, likely involving the temporary idling of ships, will initially impact the Asia-Europe trades.
– Source: Journal of Commerce