Spot rates on Asia-Europe trade routes fell to historic lows

The spot rates on Asia-Europe trade routes fell to historic lows, dropping with 32% during the last week, reported Shanghai Container Index (SCFI). The index rates on Asia-Europe routes fell by 214 USD, reaching 444 USD per TEU, which is the lowest level in the history of the maritime transport. For comparison during the crisis in 2008-2009, the average cost of freight from Shanghai to Hamburg, fell to 900 USD per TEU, which is adjusted for inflation is almost 2 times higher than today’s levels. The big decrease in the rates in due to the overcapacity of the market. The routes between Asia and Mediterranean Sea index value also decreased, losing 195 USD and reaching 581 USD per TEU. The imbalance of supply and demand continues to grow, as carriers derive more container ships with a capacity of over 18 thousand TEU. Meanwhile, projected traffic growth will not be able to provide additional tonnage increase, even taking into account the benefits that low EUR, which supports the European importers. Also should have in mind that on routes Asia-North America still operate only container ships with a capacity of no more than 8 thousand TEU, since the ports of North America has not yet been modernized for the larger vessels.

So, according to forecasts the total capacity of Asia-Northern Europe trade during the year will grow by 9.1%. At the same time, according to Container Trade Statistics, the total volume of container traffic on routes from Asia to North Europe and the Mediterranean declined with 1% in Q1 2015 for the first time over the past two years. According to the forecasts the imports in Northern Europe in the first half of this year will remain at the level of the previous year, and export growth will not exceed 1.8%.