Sea liners try to stabilize prices on European routes to provide a favorable environment for annual long-term contract negotiations!

The European line continued to decline in the off-season in October, but the slope of decline slowed down. In order to provide a favorable environment for the annual long-term contract negotiations in December, shipping companies began to stabilize prices. Some shipping companies released November prices yesterday as a prelude to stop the downward trend. Whether the price will be raised again in December will be successful needs to be tested by the market. On October 9, the official of the 2025 new alliance Gemini officially confirmed that it will continue to choose to detour the Cape of Good Hope from February 2025. This means that the new structure of the alliance container liner operation caused by the Red Sea crisis in December last year will be more long-term.

With the end of the US East Coast port strike, the supply chain crisis has been temporarily alleviated, and the shipping industry has entered the off-season. After China's Golden Week, the shipping alliance adjusted the market capacity. The main east-west round-trip routes have announced the cancellation of 100 flights between September 30 and November 3, with a cancellation rate of 14%. In order to keep the freight rate above the break-even point as much as possible, shipping companies have implemented a large number of blank flights to prepare for cargo transportation before the Lunar New Year. At the same time, the air freight market has also ushered in the demand of the year-end shopping season, and the logistics demand for e-commerce and consumer electronics has increased significantly.

Regarding capacity, current container ship orders have reached an all-time high in terms of TEU capacity. However, analysts at Alphaliner pointed out that many orders in the current construction boom are to replace old ships, especially Maersk, which is relatively lagging in updating its aging fleet. According to Alphaliner data, the top ten container liner shipping companies currently have a total of 431 container ships under construction with a capacity of more than 5.9 million TEUs. This situation, coupled with record LNG ship orders, has squeezed orders for tankers and dry bulk carriers among well-known Asian shipyards. In June this year, the global container fleet reached a record high of 30 million TEUs for the first time. Although the global container fleet will grow significantly in the next few years, Alphaliner data shows that nearly half of the orders of the top ten shipping companies are actually for replacing existing tonnage. At present, these companies are still operating 683 ships that are 20 years old or older, with a capacity of more than 2.6 million TEUs. At present, these companies are still operating 683 ships that are 20 years old or older, with a capacity of more than 2.6 million TEUs. Assuming a normal commercial life of 25 years for ocean cargo vessels, these figures suggest that the top ten operators may need to use 44% of their orderbook to replace older vessels rather than expand. However, the timing and pace of replacement still needs to be assessed based on actual developments.