Shanghai Containerized Freight Index spot rates for U.S.-bound trade lanes declined again in the week of April 19, although they remain more stable than the Asia-Europe rates.
The spot rate to the U.S. East Coast dropped 2.5 percent or $85 per FEU since last week to $3,295, according to the latest SCFI data, issued by the Shanghai Shipping Exchange. Rates in this lane have been slowly decreasing for the past 12 weeks, with the exception of two weeks of increases that totaled $207 because of the April 1 general rate increase. The current rate is down 7.3 percent from the same week in 2012 and down 2 percent since the beginning of 2013.
The spot rate to the U.S. West Coast fell 2.5 percent or $55 to $2,171 per FEU this week. Showing a similar trend to that of the East Coast, rates in this lane have been declining for the past 12 weeks, aside from two weeks that produced an overall increase of $198 after the April 1 GRI. The current rate is down 10 percent year-over-year and 2.3 percent below the level seen at the beginning of 2013.
“The continued decline will not help current efforts for annual rate negotiations. Moreover, with utilization levels at around 80 percent on the trade lane, the upcoming GRI for May could struggle, which again will place further downward pressure on rates. Reports also suggest that large BCOs are reluctant to entertain contracted rates at above cost for the carriers and are unwilling to commit to levels that are higher than where they fixed last year. Smaller BCOs will be waiting to see how these talks play out before potentially committing to a yearly rate’” said Richard Ward, research analyst for container derivatives of ICAP PLC.
Proposed GRIs in the trans-Pacific West Coast-bound trade lane are set for May 1. Cosco, U.S. Lines and MOL have proposed increases of $800 per FEU.