Chinese authorities would interfere in prices and capacity on Pacific routes

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Chinese authorities would interfere in prices and capacity on Pacific routes

According to information from Zest Shipping Media, the Chinese authorities are willing to interfere with both pricing and capacity management on trans-Pacific routes, as rates soared to record levels again this week.

Yesterday the Ministry of Communications of China held a conference where they discussed refusing to allow shipping lines to increase spot rates on routes from China to the US  and that all suspended sails should return to normality in week 42 of this year, that is, the third week of October.

According to some media in the maritime sector, this measure has not been confirmed by the government. Zest also noted that Cosco had already dropped its GRI (General Rate increase) planned for September 15, and other operators are expected to follow suit.

Containerized cargo analyst Lars Jensen stated that if this is implemented, it would have a major impact on the shipping lines market, damaging the ability of these carriers to manage their capacity in the face of extreme demand volatility.

He also indicated that prohibiting blank sailings is not an essential problem at this time due to the current tight market situation, however, another recession will very likely come and if shipping lines cannot adjust their capacity, this would represent a serious inconvenient.

Apparently this measure was caused by the rate hike this week as the market is adjusting again after the quarantine and this affects all operations.

According to the SCFI (Shanghai Containerized Freight Index), for the seventh consecutive week the trans-Pacific routes from China to the west coast of the US exceeded $ 3,000 per Feu (40-foot container) reaching a new high of $ 3,813.

For now, all industry analysts and carriers are waiting for an official statement from the Chinese authorities, especially considering that the Golden Week of the Asian giant is approaching.

In this week, which is celebrated from the first day of October, all factories in China take a break causing congestion in transport capacity (air and sea) before the start of the celebration and low demand for transport just after this week , causing again blank sailings by shipping lines to adjust their capacity to demand.

If the Chinese authorities decide to put the measures in place, carriers could suffer greatly from the post-Golden Week effect as they will not be able to adjust their capacities.

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