The Asia/Europe trades are in the midst of a massive downturn in both demand and rates, according to analysts involved in both the North Europe and Mediterranean trades.

Rates for Asia/North Europe are being quoted as low as US$150/TEU, which effectively means lines are not only entering an area of making a loss, but are now at a level whereby they provide a negative contribution to a shipping line’s involvement in the trade.

Some analysts are voicing concerns that handling a loaded container is costing the line more handling an empty container, and thus the future for some lines on the trade could have a short-term future.

“Personally, we are not sure anymore how many carriers will be able to afford to carry on anymore in this trade,” one freight forwarder said recently.

There are already strong indications that the much-talked about merger of COSCO and China Shipping Container Lines (CSCL) is set to go ahead, and there are growing rumours, particularly in Asia, that NOL could be ready to dispose of its liner arm APL, with OOCL apparently sitting on the sidelines waiting to pounce as a likely buyer.

Sources also believe the real weakness in Asia/Europe involvement could centre on the so-called “smaller players” with limited involvement in the trade.

Names such as Hamburg-Sud, Wan Hai and PIL (Pacific International Lines) have been frequently mentioned as possible companies which may be thinking “enough is enough” on Asia/Europe, with plans to concentrate on established strengths elsewhere. Each one of those lines has limited involvement in the Asia/Europe trade and work the trade in slot purchase agreements with little or no vessel deployment in individual services.

The soaring cost of purchasing slots on someone else’s service may appear to these lines to be too much to handle, and they could be tempted to make an exit – or, at least, a temporary one.

Twelve months from now, the general feeling is that the Asia/Europe trade we see today – and the lines involved – could provide a totally different scene, and the recently-formed alliance and agreements were undertaken with a lot of forethought.

By Paul Richardson

Sea Freight Correspondent | London