Average spot rates in the Asia-Europe trade lane eased this week following the general rate increase that carriers put into effect on July 5 ranging between $400 and $500 per 20-foot equivalent unit.
The World Container Index of spot prices in the trade from Shanghai to Rotterdam, which is compiled by Drewry and the Cleartrade Exchange in Singapore, fell $32 on July 12, or 0.9 percent, to $3,489 per laden 40-foot container from $3,521 per FEU on July 5, when the WCI jumped 13.1 percent from the previous week.
The easing of rates this week after a big general rate increase reflects the pattern of small declines that has been going on all year after the four big rate increases that carriers have implemented in the trade.
When carriers have tried to put big increases into effect, they have only been partially successful because of vessel overcapacity and the weakening of demand caused by the advent of recession in Europe. “The increase accepted by the market (last week) was $409 per FEU — only about half of what the carriers wanted,” said Philip Damas, director of Drewry Supply Chain Advisors. He said Drewry expects rates will erode again over the next few weeks.
Carriers have nevertheless been able to hang on to most of their four GRIs, which means they are now operating in the black in the Asia-Europe trade.
Despite the pattern of rate decreases after each GRI, this week’s WCI is still 183.6 percent higher than the WCI of $1,230 per FEU on Jan. 4, which reflects the carriers’ discipline in maintaining those rate increases until the last several weeks. It is also 127.8 percent higher than the index of $1,531 per FEU on July 14 of last year.