Spot rates in the Asia-Europe trade rebounded this week after three consecutive weeks of decline as carrier efforts to reduce excess capacity began to take hold.
The World Container Index of spot prices in the trade from Shanghai to Rotterdam, compiled by Drewry and the Cleartrade Exchange in Singapore, climbed $163 on Aug. 2, or 4.9 percent, to $3,496 per laden 40-foot-equivalent units from $3,333 per FEU on July 26.
Asia-Europe carriers, including the four members of the CKYH alliance and Maersk Line, started skipping some port calls in China last month in an effort to reduce capacity.
“The shipping lines are managing their capacity well this year, which is why we are seeing higher freight rates and better financial results,” said Philip Damas, director of Drewry Supply Chain Advisors. “What we are seeing is a higher utilization of ships, even though there continues to be overcapacity because the shipping lines are either canceling various sailings, laying up ships, or redelivering charter tonnage.”
Nevertheless, Drewry expects some softening in pricing through the second half of the year as continuing market weakness weighs on rates. “There is still a lot of latent overcapacity,” Damas said.
This week’s WCI is 184 percent higher than the WCI of $1,230 per FEU on Jan. 5, which reflects carriers’ discipline in maintaining the four general rate increases they implemented in the Asia-Europe trade this year. It is also 130.2 percent higher than the index of $1,519 per FEU in the same week last year.