MSC shocks with $600 Asia-Europe GRI


Mediterranean Shipping Company (MSC) has announced a general rate increase (GRI), effective 15 December, of US$600 per teu on all westbound cargo on the overcapacity-plagued Asia to Europe tradelane.

The hike follows ocean carriers’ recent “83% success rate" with 1 November GRIs on this key trade, according to one senior analyst.

“Almost the full [1 November] GRI to North Europe made it through with an 83% success rate,” said SeaIntel Maritime Intelligence analyst Lars Jensen.

That reflected in the fact that box rates last week from Asia to Europe on the Shanghai Containerised Freight Index gained $176 per teu over seven days to $1,491.

MSC says the GRI will apply to all cargo leaving China, Hong Kong, Taiwan, Japan, Korea, Vietnam, Singapore, Malaysia, Thailand, Indonesia and Bangladesh to destinations in North Africa, the Black Sea, North Europe, and Scandinavia and the Baltic.

The Geneva-headquartered liner and its peers are facing dismal European demand, particularly in the Mediterranean. According to data from Container Trades Statistics, September saw a 7.7% decline in container liftings on the Asia to the western Mediterranean and North African route, representing a 16.2% fall on the trade lane for the third quarter of this year, to 599,340teu, compared with corresponding 2011 volumes of 715,198teu.

Despite general freight rate gains in the Asia-Europe trades, the SCFI also showed that box rates from China to the Mediterranean fell 17.1% last week, down $218 to $1,055 per teu.

Focused on the Mediterranean, the poor outlook for European consumer demand is unlikely to improve any time soon. Indeed, the beleaguered Greek parliament passed a €13.5  billion (US$17.3bn) austerity bill this week, and unemployment in the country is currently running at a shocking 25%.

More widely, the EC is expecting weak Eurozone demand for in 2013, plus headline Eurozone unemployment rising from 11.6% to 12% next year.

MSC faces a tough challenge: making its GRI stick on a container lane grappling with poor and falling import consumer demand this year and next.