Asia-Europe freight rates can expect modest increases in 2013: study

PROSPECTS for the Asia-Europe container trades look more promising this year, although other routes look less encouraging, according to Containerisation International's data hub Freight Forecaster.

A series December price increases signalled an effort by carriers to arrest the decline in spot rates in the second half, said London-based CI. Trade is expected to expand four to six per cent in 2013, and carriers are restricting capacity, leading CI to think, that combined, these measures should bring about a modest increase in rates.

"With a four per cent slide in cargo volumes expected in the fourth quarter of 2012, average ship utilisation levels during the period were expected to have fallen to 81 per cent." said the report.

Despite greater volatility on the Asia-Med route, the Freight still sees a "modest improvement in rates" in the first half, largely because Forecaster there are seven per cent fewer slots available.

But for carriers on east coast South America to northern Europe the picture is not as good, with CI predicting rates will be under pressure for most of the year because demand is weak.

"Despite the trade growing faster than expected, overcapacity prevailed in the market and average vessel utilisation levels remained too weak for freight prices to rise. This situation will continue in 2013, with load factors not expected to exceed 80 per cent over the next 12 months."

Although cargo volumes are expected to rise one per cent in the first quarter, and then to rally as much as five per cent in the third quarter, slot capacity is also expected to grow as bigger ships one on line.