Will the Ministry of Transport intervene in the suspension of shipping companies to cause skyrocketing freight rates to decline
According to Zest Shipping Media, the Chinese authorities will intervene in the management of freight rates and capacity on trans-Pacific routes. The Ministry of Transport is currently discussing prohibiting shipping companies from increasing spot freight rates from China to the United States, and requires shipping companies to resume their suspension from the 42nd week. Although the news has not been confirmed by the government, Zest Shipping Media pointed out that COSCO Shipping Group has abandoned its planned GRI on September 15 and other shipping companies are expected to follow suit.
Prior to this, the Water Transport Bureau of the Ministry of Transport has issued a request to six container liner companies such as COSCO Shipping Container Lines Co., Ltd., Maersk Co., Ltd., Mediterranean Shipping Co., CMA CGM, Hapag-Lloyd Co., Ltd. and Evergreen Shipping Co., Ltd. Assist in providing letters on international container liner routes. The letter stated that in view of the recent fluctuations in the freight rates of China-U.S. routes, companies are requested to provide relevant information on China-U.S. and China-Europe routes, as well as the analysis of the reasons for the recent fluctuations in freight rates of China-U.S. and China-Europe routes and the next work arrangements.
Lars Jensen of Sea Intelligence pointed out that the intervention of the Chinese authorities will have an unprecedented impact on the market. Faced with extreme demand fluctuations, it may impair the ability of shipping companies to manage capacity. In the case of tight market conditions, there is basically no problem in banning blank sailing. However, if operators are prohibited from managing capacity, the shipping industry is likely to usher in a new downturn.
Although growth has slowed, for the seventh consecutive week, trans-Pacific trade to the west coast of the United States still exceeded US$3,000 per TEU, setting a new high of US$3,813.
The high demand on the trans-Pacific route also had a knock-on effect on the European route. Because the profits on American routes are more attractive, more and more empty containers are put into trans-Pacific routes, thus affecting European demand.
Freight forwarders claim that the suspension of flights, delays caused by typhoons and the Golden Week congestion in the next few weeks, the regulation of shipping companies' capacity and other variables and dynamics are causing chaos in the global supply chain.
Another source said that he had seen an MSC ship full of empty containers at the Singapore Sea to save port storage costs. Other shipping companies have followed suit. There is a shortage of empty containers throughout Asia.