Slow steaming, wayporting loses steam as rates come under new pressure

GERMANY'S DVB Bank says increasing deployment of new mega ships is adding so much capacity that rates are coming under great pressure and means of concealing this by enlarging loops, wayporting and slow steaming are wearing thin.

"Given the limitations of capacity discipline measures in the face of incoming supply, freight rates on the Far East-Europe route are expected to be under huge pressure again, thereby dampening profitability," said the report from the Frankfurt bank's research and planning unit.

Rates have been robust since the increases levied at the beginning of this year, but growing capacity risks wiping out these gains, it said.

The bank report said carriers, having deployed an extra 348,000 TEU on the Asia-Europe route, an increase of 8.9 per cent, are running out of options after six months.

The report said weekly capacity rose 3.6 per cent as carriers used slow-steaming and wayporting to stretch capacity, as well as cushioning the effect of more tonnage afloat by adding to three ships per loop on top of the usual eight that was common four years ago.

The DVB Bank report said there was no further benefit from such measures and even wayporting, adding to transit times through transshipments, had run its course in absorbing the extra tonnage flooding the market.

"Taking into account the poor economic outlook, trade volumes are expected to remain subdued," said the report."