China could consider banning blank sailings to lower trans-Pacific freight rates

According to a report by The Loadstar, China's communications ministry discussed refusing to allow shipping companies to increase spot rates from China to the US and reinstating canceled trips as of October 12.

Last Friday, the Ministry of Transportation and the interested authorities held a conference with all the shipping companies that cover the trans-Pacific lines to discuss issues such as the standardization of the maritime freight registry, the additional requirements on trans-Pacific routes, as the registration of capacity, routes and hours, and compliance with the supplement of previous registrations, among other issues.

Peter Sand, BIMCO's head analyst, stated: "This week, we have seen signs that fares have continued to increase on routes from Shanghai to both coasts of the US. Fares to the East Coast have increased more than fares to the West Coast."

According to Lars Jensen of Seaintelligence Consulting, "this would have an unprecedented impact on the market and could derail the shipping companies' ability to manage capacity in the face of extreme demand volatility." "Banning blank rides is not a problem right now, in a tight market, but we are very likely to see another recession and this will become problematic if carriers can't manage the capacity," he added.

Rate hike
For the past seven weeks, US West Coast rates have increased. "We are also seeing a strong impact on the CCFI (China Containerized Freight Index) contract rate index for the USWC, where contract rate levels have increased by 12% in the last four weeks and by 44% since the beginning of the pandemic," Jensen said.

"Spot rates on the Shanghai Container Freight Index (SCFI) jumped to their highest level since September 2012, reaching $ 1,263.26 on August 28 and increasing by 54.4% since April 24, when the SCFI was at its lowest point this year," Sand added.

"The routes from Shanghai to the US Coast are behind the largest increase in freight rates. Since the end of April, rates to the west coast of the USA increased by 143.4% to $ 3,639 per TEU, the highest level since at least 2010.

"Spot rates on the US East Coast have increased by 60.6% from April 24 to $ 4,207 per TEU. Freight rates to Europe have also increased, albeit at a slower pace, as they have increased by 36.7% since April to $ 1,029 per TEU," Peter said.


Source: according to information from MasContainer 

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