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Asia-Europe rates plunging 'precipitously': De Trenck

Hong Kong: Rates on the Asia-Europe box lane have slumped due to slowing demand and larger than anticipated capacity additions, Citigroup warned in a recent note. Noting a 'big slowdown under way', Citigroup's Asia Pacific head of transportation, Charles De Trenck (pictured) wrote that rates had plunged 'precipitously' in the past two months from a peak of $1,952 to now as low as $1,000 to $1,100 on a spot basis.
'Asia to Europe demand volumes have slowed to 12-13% for 4Q07. We thought 15% levels would be where things already start to look a little weak from 1H07: 21%, but trade has slowed more than expected and combined with capacity additions, rates have taken a hit,' Citigroup reported.
'A lot of capacity has been added in recent months, with most recent additions still being estimated. But quick estimates point to about 5-8% additions on top of the 20% levels initially expected. Capacity has flowed in from cancelled US services.'
Cosco became the latest carrier this week to reduce transpacific services in what is looking like a very slack winter to the US. [21/12/07]


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