Capacity on the Asia-Europe trade lanes could fluctuate by 20,000teu a week over the next three months, because operators are deploying different sizes of vessels on the same services.
 
Analysts at SeaIntel Maritime say the variation in vessel capacity could be large enough to affect supply and demand, and might also make it difficult to assess the impact of the container lines’ programme of General Rate Increases (GRIs).
 
More GRIs were announced last week, but the European component of the Shanghai Containerised Freight Index (SCFI) – a key indicator of Asia-Europe container prices – fell 6% on Friday.
 
Commenting on the capacity fluctuation, Lars Jensen of SeaIntel Maritime, said the variation was equivalent to the rapid phasing in, or out, of two super-post-panamax strings.

He added: “We have found that 22 [Asia-Europe] services have periods where the capacity on offer changes by more than 1,000teu from one week to the next – either up or down – while seven services exhibit capacity swings in excess of 3,000teu.

“These swings are of a sufficient size to directly impact the supply-demand balance in any given week – either in a positive or negative direction.

“This, in turn, means that if capacity becomes tight one week it cannot be taken as a sign of a stronger overall market. Conversely it is not possible to conclude that one week of poor vessel utilisation is an indication of an overall weakening of the market.
 
“For carriers and shippers alike, these swings will only serve to further complicate the game currently ongoing in terms of newly announced rate increases.”
 
The container lines, which lost billions of dollars last year and many of which are reporting further losses in Q1 2012, are struggling to lift rates to a profitable level against a backdrop of excess capacity.

Recent rounds of GRIs have found significant traction, but many market participants remain doubtful that rate increases will hold in the long term.
 
Container rate derivatives broker David Barnes, of Clarkson Securities, said: “Given that the SCFI Europe route showed such a strong decline this week, there is clear evidence of the still mismatched supply-demand fundamentals on this trade lane and the need to alter the balance to bring longevity to higher freight prices.”
 
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