Asia-Europe spot rates fell 2.1 percent this week in a continuing downward spiral that has seen freight rates decline by almost 65 percent since the end of January.
The World Container Index assessed by Drewry Shipping Consultants showed that the average spot freight rate for shipping a loaded 40-foot equivalent container unit from Shanghai to Rotterdam this week was $888, compared to $2,524 per FEU on Jan. 31.
Drewry, which publishes container freight rate indices on 11 East-West routes in collaboration with Cleartrade, through the World Container Index joint venture, began to provide the Asia-Europe index to The Journal of Commerce this week.
The WCI is designed to be used as a pricing mechanism for the settlement of derivative trades and hedging. The WCI can also be used as a reference point for index-linked contracts.
This week’s Shanghai-Rotterdam index was $19 per FEU lower than last week’s $907 per FEU.
The yearlong decline in the index is due to the delivery of scores of big new container ships on the Asia-Europe trade lane and weak European demand.
Although carriers have started to suspend some Asia-Europe services for the slack winter season, they have laid up 526,000 20-foot-equivalent units of capacity, or 3.4 percent of the total container fleet capacity, according to BIMCO’s December Market Review. That’s just a little more than a third of the 1.5 million TEUs that was idle at the end of 2009 when carriers took stronger measures to stem the slide in rates.