However, a very different story is happening on the Far East-North Europe trade, where carriers are locked in a destructive price war and where capacity withdrawals are limited to smaller-scale loops. Although losses are expected to be equally as large as those on the Transpacific, carriers are very reluctant to pull out surplus capacity. On the Far East-North Europe trades this has driven spot freight rates down by 54% since the beginning of the year, compared to a 24% fall on the Far East-US West Coast trade.
Spot rates on the two main trades have ended up well below market expectations. Based on SSEFC forward rates for October futures traded over the last four months, spot rates at the end of October were 34% lower on the Shanghai-North Europe route and 17% lower on the Shanghai-US West Coast route compared to average forward rates.