The rise of container freight rates to a five-year high has resulted in liner operators moving ships back into the trade from Asia to the US.

Rates from China to the US West Coast rose $187 to $2,776 per 40-foot equivalent unit (feu) in the week to 6 July.

That is nearly double the lows of early March and more than 61% higher than this time last year, according to the Freightos Baltic Index.

Rates from China to the US East Coast rose to $3,435 per feu — up from $2,500 in early May, and about 23% higher than the same time last year.

The pick-up in rates is leading carriers to “unblank” some of the sailings that were cancelled earlier in the year.

Healthy levels

Hundreds of sailings were called off in April and May when Covid-19 caused a slump in demand.

But the list of blanked sailings this month is the lowest since the beginning of the Covid-19 outbreak, according to Drewry.

It counted just 36 sailings being withdrawn from the transpacific, transatlantic and Asia-North Europe/Mediterranean trades in July.

Alliances are still expected to blank sailings in the coming weeks to maintain freight rates at a healthy level.

But analysts believe that lines overdid the cuts and underestimated the spike in post-corona­virus demand.

The result is that operators led by 2M partners Maersk and Mediterranean Shipping Co are adding capacity to the trade this week, launching a new service between China and the US West Coast.

It will use chartered vessels of 8,100 teu to 9,300 teu, believed to include the 8,208-teu Seamax Fairfield (built 2006).

Other services are being reintroduced by liner operators, including Israel's Zim and THE Alliance members.

First-quarter operating profit of $1.4bn

Alphaliner estimated such moves could return weekly capacity on the trades to the levels they were at roughly a year ago.

It added that capacity could increase more if 2M and THE ­Alliance next month resume two Asia to US East Coast services that were suspended from April to July.

Asian operators Evergreen and Yang Ming Marine Transport are also introducing 12,000-teu newbuildings between Asia and the US to replace 8,500-teu ships.

Container freight rates on East-West trades spiked in the past month.

Drewry’s composite World Container Index hit a five-year high last week at $2,031.57 per feu. That is up 48.1% on the same period in 2019.

The firmer rates have enabled the liner industry to secure an operating profit of around $1.4bn in the first three months of 2020, similar to the same quarter of last year, according to Drewry.

It meant several companies have upgraded their quarterly and full-year guidance.

Danish containership giant AP Moller-Maersk said on 17 June that second-quarter Ebitda is expected to be slightly above first-quarter levels as the sector cut fleet capa­city by more than demand fell.

Clarksons Platou Securities expects Maersk to report full-year Ebitda of around $6bn, which would beat last year’s $5.7bn, despite Covid-19.

Container shipping is one of the few sectors that is having “a good pandemic”, said Drewry, which questioned whether liner operators are “profiteering from the crisis”.

Misjudgements

But it expects this may be ­temporary, as lines begin to return capacity to the worst-affected trades, such as the eastbound transpacific.

“That makes previous capacity over-reductions look more like understandable misjudgements rather than anything more malicious,” it said.

Drewry expects freight rates to soften in the second half of the year: “Carriers will cautiously ­reintroduce capacity to meet any demand recovery, but not at the expense of a large collapse in rates to uneconomic levels.”

Carriers announced very few cancellations for July and August, according to Freightos, which said reports of planned rate increases suggest carriers are expecting ­volumes to keep improving.