China instructs container lines to stop pushing up rates
Source
American Shipper
Post Date
09/16/2020
Chinese authorities on Friday met with major container lines regarding record-high trans-Pacific spot freight rates, spurring reports that regulators instructed carriers to not push for any more general rate increases and to remove blank sailings after Golden Week.
In a LinkedIn post, Dennis Zhou, a consultant, said the Chinese Ministry of Communications requested that carriers refrain from increasing rates again and restore all sailings after Week 42, which the week after the seasonal shipping lull of Golden Week.
A carrier utive confirmed that the Chinese ministries of transport and communications, under guidance from the national Development and Reform Commission, told carriers not to implement rate increases. In the Shanghai meeting on Friday afternoon, Chinese authorities discussed the impact of the COVID-19 pandemic, extra-loaders, and blank sailings in the July-October period, and the US Federal Maritime Commission¡¯s (FMCs) rule that carriers must notify the regulatory agency 15 days in advance of any blank sailing.
The FMC wasn¡¯t immediately available to comment on reports that their Chinese regulatory counterparts were instructing carrier behavior on trades connecting to the United States.
If carriers do in fact heed Chinese regulators¡¯ direction, ¡°it would be an unprecedented impact on the market, and more worryingly, potentially derail the carriers¡¯ ability to manage capacity in the face of extreme demand volatility,¡± said Lars Jensen, CEO and partner at SeaIntelligence Consulting. ¡°Placing a ban on blank sailings is essentially a non-issue right now in a tight market, but it is highly likely we will see another downturn ahead of us, and if carriers are barred from managing capacity, this becomes problematic.¡±
The last time Chinese regulators stepped so decisively into the container shipping market was when the Ministry of Transport in June 2014 rejected the proposed P3 Alliance of Maersk Line, CMA CGM, and Mediterranean Shipping Co. The FMC had given the go-ahead to the proposed alliance involving the three largest container lines prior to its rejection by China on the grounds the vessel-sharing agreement would concentrate an excessive share of the market into one entity¡¯s co
