Container shipping firms are hoping for a better year as freight rates rebound in the lead-up to the Lunar New Year holiday and the nagging problem of overcapacity eases during the year. Surplus supply, which has hit the liners heavily since 2008, should narrow to 1.5 per cent from 2.5 per cent last year, a forecast by 11 institutes and research houses said. Shipping lines were quite successful in raising their rates as planned last month and at the beginning of this month as an earlier Lunar New Year, which occurs at the end of January this year, helped drive rush orders. Spot rates on the China-Europe route rose 17 per cent week on week, or 39 per cent year on year, in the week to January 3, according to the latest JPMorgan report, citing the Shanghai Export Container Freight Index. The spot rate from China to the Mediterranean Sea rose 14 per cent week on week, or 55 per cent from a year earlier. China-US spot rates rose just 1 per cent week on week last week, as larger vessels are deployed on the route. Spot rates for China to the US west coast plunged 18 per cent year on year, however, while rates to the east coast tumbled 7 per cent last week. “The freight rates seem to have increased very rapidly on the European route, but they are now at a level that marginally covers our costs,” said Huang Xiaowen, managing director of China Shipping Container Lines. The freight rates seem to have increased very rapidly on the European route, but they are now at a level that marginally covers our costs Huang Xiaowen, China Shipping Container Lines The firm has been able to put in place about 80 per cent of the planned rate increase over the past two months, Huang said. The freight market will be quiet after the Lunar New Year as migrant workers leave factories for visits home. “Taking into account the improved demand and supply situation this year, I believe freight rates will gradually go up in March,” Huang said. Global trade will expand 5 per cent this year, compared with 3.7 per cent last year, while the supply for cargo space will grow 6.5 per cent, according to the average forecast of analysts at 11 firms, including industry consultancies Clarkson, Alphaliner and Drewry and brokerages Barclays, Credit Suisse and Bank of America Merrill Lynch. The survey results were provided to the Post by a major Asian shipping line that requested not to be named. “The sustainability of rate hikes would depend on the liners’ ability to control the supply in an effective way,” said Geoffrey Cheng, head of transport at Bocom International. Cheng expected rates on European trade lanes to increase by a few percentage points this year. However, the rates on transpacific routes would stay flat or even drop, he said, owing to the cascading of vessels on this route, referring to the substitution of large vessels for small vessels. The newly built 14,000 twenty-foot equivalent unit vessels and 18,000 teu vessels will be deployed in these trade lanes. Cascading of vessels on the European routes last year pushed the rates down to US$ 600 per teu at one point, which ate into the bottom line of the lines. The loss at China Shipping widened to 1.7 billion yuan (HK$2.16 billion) in the first three quarters of last year from 504 million yuan in the same period in 2012.