The Shanghai Containerized Freight Index spot rate for Shanghai to northern European ports fell to $875 in the week of April 19, the lowest since February 2012. This followed an unsuccessful April 15 general rate increase of $500 per 20-foot container set by carriers such as Hapag-Lloyd, Maersk Line, MSC and Cosco.
Rates to northern European ports fell 6.9 percent or $65 per TEU from the week before, according to the latest SCFI data, issued by the Shanghai Shipping Exchange. The rate dropped steeply for the past five weeks, down 38.5 percent or $548 since March 15 when roughly 60 percent of a proposed $700-per-TEU increase was achieved. The current SCFI index to northern Europe is 49 percent lower than it was at the same point in 2012, and 31 percent lower than it was on Jan. 1.
Also down this week was the spot rate from Shanghai to Mediterranean ports, which fell 5 percent or $49 this week to $906. This rate declined 33.7 percent or $460 in the five-week slump. The index is currently 48 percent lower year-over-year and 21.8 percent below where it was at the beginning of 2013.
“The speed of the recent declines on the European trades has slowed when compared to the three-digit declines seen over the past few weeks. With rates now currently well below break-even levels, carriers will at least try and put up a fight at the negotiating table, which might explain why we have seen smaller declines this week. Worryingly for the upcoming GRI in May, some reports suggest carriers are beginning to offer rates valid until the end of May, which do not include a GRI. Of course, this has the potential to undermine any potential rate increase, although the question is can any carrier now afford not to increase their rates,” said Richard Ward, research analyst for container derivatives of ICAP PLC.
Proposed GRIs in this trade lane are set for mid-May. Hapag-Lloyd, Cosco and UASC have proposed increases of between $500 and $600 per TEU.