Have shipping rates peaked already?

Asia-Europe prices will likely remain steady for the summer as carriers meet increasing resistance to rate hikes.

Customers are bristling against the successive increase in Asia-Europe trade rates, and some carriers are even starting to lower their prices to boost trade volumes. Downward price pressures will only escalate should big players like Maersk start to add capacity.

Here's more from CIMB:

As we indicated last week, customers are starting to resist the succession of rate hikes and slot utilisation has not been able to breach the 90% level. Trade volumes remain lacklustre, with AE headhaul volumes shrinking 1.2% yoy in 1Q12. Drewry reported that “some carriers are already offering pricing reductions on cargo bookings for later in the month [May], indicating that the market may now have peaked.”

However, carriers are not giving up on further rate increases. Hapag-Lloyd has announced a US$400/teu increase on the AE trade that is intended to take effect on 4 June. It remains to be seen if this effort will succeed as carriers as a group are beginning to add back capacity rather than increase idling. Alphaliner noted that from April/May, several new or reinstated loops are expected to increase AE and TP capacity by 6.5-6.7%. The additional AE capacity will be added by the CKYH Alliance and by the Evergreen/CSCL/Zim trio. But Maersk has so far restrained itself from reinstating its seventh AE loop while the G6 Alliance has already made a definitive announcement that it will not add a seventh loop as the current market environment did not justify additional services. As long as the big boys do not add additional capacity, AE rates may be able to hold through the summer even if they do not rise further.