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The Loadstar recently reported on a new analysis from Alphaliner revealing that a freight rate war is unfolding on Asia-Europe trade lanes, even as vessel capacity remains constrained. According to the consultancy, the 31 Asia-Europe services covering both Asia-North Europe and Asia-Mediterranean routes would require 461 vessels to maintain uninterrupted weekly schedules. However, only 425 vessels are currently deployed, leaving a shortfall equivalent to around 500,000 TEU of missing capacity.

Despite this tight capacity, freight rates have continued to decline. According to Container Trades Statistics (CTS), shipments from the Far East to Europe increased by 9% year-on-year in July. Yet, the CTS freight rate index for this trade lane has nearly halved, dropping from 181 last year to 96. Alphaliner attributes the decline to aggressive pricing strategies among carriers, with spot rates from Shanghai to North Europe falling by 45% over the past 10 weeks, including significant drops in the last three weeks.

Lars Jensen, CEO of Vespucci Maritime, noted that while rates are nearing pre-Red Sea crisis levels, they have not yet reached their lowest point. Current spot rates are slightly above the lows seen in December 2023, just before the Red Sea disruptions began. However, he cautioned that the market remains much weaker than in recent months.

The capacity gap varies across carrier alliances. Ocean Alliance, particularly its Evergreen-operated NEU7 service, faces the most significant challenges, requiring 14 ships for full weekly coverage but is currently operating with just eight vessels, including four newly delivered 15,372 TEU ships. In contrast, the Premier Alliance and Gemini Cooperation appear better positioned to maintain weekly sailings without major disruptions.

Source: The Loadstar