The Shanghai Containerized Freight Index showed rates in European lanes declined at an accelerated pace this week, ahead of mid-May general rate increases. Hapag-Lloyd, Cosco and UASC have proposed increases of between $500 and $600 per 20-foot container.
“It is not unusual to see rates decline rapidly before the implementation of a GRI, however, general market feedback for the upcoming May 15 increase on Asia-North Europe is that it will not be successful. This is mainly attributed to the fact that carriers have continued to extend rates until the end of the month and into June. If this plays out as expected, then rates will remain well below break-even for the foreseeable future,” said Richard Ward, research analyst for container derivatives of ICAP PLC.
Rates to northern European ports fell for the eighth straight week, down 8.2 percent or $65 to $731 per TEU in the week ending May 10, according to the latest SCFI data, issued by the Shanghai Shipping Exchange. Last week, rates fell by less than 3 percent. The index has declined 48.6 percent or $692 during the eight-week slump, putting it at close to half of what it was prior. The current SCFI index to northern Europe is 60 percent lower than it was at the same point in 2012, and 42.4 percent or $539 lower than it was on Jan. 1.
The spot rate from Shanghai to Mediterranean ports also fell for an eighth consecutive week, down 4.3 percent or $36 to $805, roughly double the drop seen last week. This rate declined more than 41 percent or $561 in the eight-week period. The index is currently 58.4 percent lower year-over-year and 30.5 percent or $353 below where it was at the beginning of 2013.
“The Mediterranean is looking slightly more positive, even if that is only because many of the carriers have announced a GRI of around US$500 from June 1,” Ward said. UASC and Maersk have announced GRIs of $675 to $750 per TEU for June 1. “What is also helping on this route is there are reports of increased cargo heading to North and West Africa via the Med, and therefore it is no surprise that carriers are utilizing this fact in an attempt to bump up the rates.”