DRIVES DOWN OCEAN FREIGHT RATES

Container shipping vessel utilisation is now back to pre-pandemic levels on Transpacific and Asia-Europe trades, with a close link between supply, demand, and pricing, whereas on the Transatlantic trade ‘there is seemingly no clear correlation between utilisation and spot rate levels’, Sea-Intelligence observes

Container shipping vessel utilisation has returned to pre-pandemic levels on Transpacific and Asia-Europe trades, with a close link between supply, demand, and pricing, whereas on the Transatlantic trade there appears to be no clear correlation between utilisation and spot rate levels, according to analysis by consultancy Sea-Intelligence.

Alan Murphy, CEO of Sea-Intelligence, observed that during the pandemic period, a combination of high demand coupled with an unprecedented loss of capacity from vessel congestion, led to vessel utilisation rates spiking to record levels, which in turn led to a spike in spot rates, with both reaching a peak in February 2022.

Since then, however, vessel utilisation has dropped sharply; in the case of Transpacific, it is now back to the pre-pandemic levels, whereas in the case of Asia-Europe, it dropped below the pre-pandemic levels at first, but is now back to prepandemic levels. Interestingly, the dynamic between utilisation and spot rates varies depending on whether utilisation is increasing or decreasing. When utilisation was increasing on the Transpacific, spot rates remained relatively unchanged at a low level, until a trigger point of around 90% nominal vessel utilisation triggered a sharp increase in spot rates. When utilisation levels started to decrease since the peak in February 2022, we see a much more linear relationship between utilisation and spot rates, as illustrated in Figure 1 for the Transpacific trade. We see the same general pattern for Asia-Europe, although with more noise. Overall, the rate developments in the Transpacific and Asia-Europe trades match expectations very well, if the assumption is a market operating with a close link between supply, demand, and pricing. However, in the Transatlantic trade there is seemingly no clear correlation between utilisation and spot rate levels. Unlike the Transpacific and Asia-Europe trades, declining utilisation levels have thus far failed to have an impact on pricing in the trade, indicating that some other mechanism must also be at play, in determining rate levels on this specific trade.

CLdN, the logistics specialist for sea, rail and road, announced today that it will start new services from the European mainland to Teesport in the North East of England and expand its existing service to London (Purfleet).

The Teesside service will initially consist of four round trip sailings per week, three from Zeebrugge and one from Rotterdam and will start on 18 March 2023. This expansion is driven by customer demand to have direct and reliable access for freight units to the North East of England, thereby bringing cargo closer to its final destination and avoiding road mileage and unnecessary CO2 emissions. A long-term agreement with PD Ports, the owners of Teesport, enables CLdN to offer its customers a robust and stable service. Located close to the mouth of the river Tees, Teesport is the UK’s fifth largest port with a complementary onsite intermodal rail terminal enabling direct access to the UK’s national rail network, including two train departures to Scotland per day.

The expansion of CLdN’s Purfleet (London) service will consist of an additional three round trip sailings per week from Zeebrugge. The additional sailings will provide 30% more capacity and increase the frequency to three departures in both directions on peak days. Since 1991 the Purfleet service has been a core route in CLdN’s network and today’s capacity expansion is a further signal of CLdN’s commitment to continuously improve the service for its customers.

Following the expansion, customers will be able to place their cargo in one terminal hub in Zeebrugge and choose to ship to any one of CLdN’s terminals on the East coast of England: Purfleet, Killingholme (Humberside) and Teesport. The new Tees service will be priced in such a way as to assist customers in developing new cargo flows.

CLdN has invested heavily in recent years to grow its fleet with larger and more efficient RoRo vessels. CLdN’s extensive and modern fleet is ideally positioned to respond to the increased demand for unaccompanied freight across the North Sea and to do so with lower CO2 emissions than any of its competitors.

We are very pleased to start a new service to the North East of England and also significantly expand our Purfleet service. Thanks to CLdN’s continuous investment in terminal infrastructure and an efficient RoRo fleet, we have the capability to respond rapidly to customer demand. We are excited about today’s announcement and we see this expansion as the next step in the on-going structural growth of the CLdN network.

Florent Maes, CEO, CLdN