China’s Ministry of Transport has sent letters to six major containerlines, asking them for explanations behind the recent freight rate surges, which has seen ships charging record figures on the transpacific.
The six companies questioned are Cosco, Maersk, MSC, CMA CGM, Hapag Lloyd and Evergreen.
According to Alphaliner, spot freight rates on the North China to US West Coast trade have surged to their highest level ever, despite the restoration of blank sailings by carriers and even the introduction of new capacity.
Rates are now 120% up on their value a year ago. Prices on the route reached $3,144 last Friday, consolidating the all-time high of $3,167 recorded the previous week. Both mark the first time rates have exceeded $3,000.
We need to see what happens in the new norm before suspecting foul play
The inquiry by the Ministry of Transport comes after a number of shippers questioned the legitimacy of liners profiting at a time when the world economy is in such a precarious position.
“The letters sent by Ministry of Transport are mainly for inquiry purposes, even so, the ministry has sent a clear signal to the companies, making them operate more openly in order not to step out of line,” said Zhang Lingfang, a professor at Dalian Maritime University.
Zhang Yongfeng, director at Shanghai International Shipping Institute (SISI), said the rate surge was due to huge restocking efforts going on this quarter in both the US and Europe.
“We think carriers overestimated the decrease in demand from North America leading to the increase in freight rates. We do not think this was malicious,” said Martin Dixon, head of research products at consultants Drewry.
Fighting the drop in cargo figures earlier this year, liners blanked record volumes of sailings, which in turn stoked up freight rates.
It’s not just Chinese officials who are keeping an eye on the surging transpacific rates. Splash Extra reported last month how American authorities are monitoring the situation with a possible eye on collusion.
The Department of Justice in Washington only just closed a two-year liner collusion investigation 18 months ago.
Andy Lane from Singapore’s CTI Consultancy poured cold water on the collusion claims today. Speaking with Splash, Lane said: “We have come through unprecedented times, during which demand has been extremely volatile, and even harder to predict. As a consequence, there have been periods where insufficient capacity has been deployed, as carriers try to match capacity to expected demand, and this has resulted in freight rate increases. I think that we need to see what happens in the new norm before suspecting foul play.”