Transatlantic Rates May Sink Under The Weight Of Extra Tonnage !

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Credit: Ian Taylor/ Unsplash
  • Ocean carriers are upgrading tonnage capacity.
  • They are shifting capacity to North Europe-US east coast services.
  • Spot rates remain high there.

Ellerman City Liners will launch a transatlantic service next month, deploying ships used on its China-UK express service, while Ocean Alliance members are beefing-up their presence on the route by phasing-in 14,000-teu vessels to replace smaller tonnage.

Soaring Spot Rates

As container spot rates for Asian exports collapsed over the past few months, FAK rates on the headhaul route from North Europe to the US east coast held onto their gains and are still at about $6,500 per 40 ft. Over the years the transatlantic trade lane has proved much less volatile for carriers than the larger transpacific and Asia-Europe routes. 

However, high demand and skyrocketing rates on offer for Chinese exports in the past two years tempted carriers to redeploy transatlantic tonnage onto other more lucrative trades, causing a capacity crunch and a rates spike on the route. The lack of tonnage, port congestion in North Europe and the US east coast, caused by carriers deploying additional tonnage from Asia away from the chronic congestion on the west coast.

However, the market has swung full circle, and carriers are now jockeying for a share of the highly profitable North Atlantic trade by adding capacity at the expense of other services.

The Way Ahead

Ellerman will deploy its 5,060 teu SC Mara on a new transatlantic service after the panamax vessel has discharged its Asian imports at North European ports in mid-December. Its pro-forma schedule will be Antwerp, Rotterdam, Tilbury, New York, Wilmington and Jacksonville. According to Alphaliner, the second vessel to join Ellerman’s service will be the 3,534 teu Mona Lisa, currently deployed on its China-UK loop.

Meanwhile, Alphaliner reports, Ocean Alliance partners will soon start deploying 14,000 teu ships on the transatlantic, replacing 8,500 teu to 10,000 teu vessels. The extra capacity, as well as the introduction of new services, will almost certainly have a negative effect on pricing.

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Source: Theloadstar

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