The Shanghai Containerized Freight Index saw further rate erosion in European lanes, pulling the overall SCFI index below the $1,000 per 20-foot container mark for the first time since February 2012, to $990.78. Proposed May 15 general rate increases of between $500 and $600 per TEU by Hapag-Lloyd, Cosco and UASC gained no traction in the week of May 17.
Despite the current slump, a rush of increases and surcharges have been announced for June and July. UASC, CSCL and Maersk announced GRIs of $500 to $750 per TEU for June 1. Cosco and MSC have proposed peak-season surcharges of $300 and $700 respectively for the same day. However, Hapag Lloyd and Maersk made news by already announcing large GRIs for July 1 in Asia-Europe lanes. Hapag Lloyd announced an increase of $1,000 per TEU from Asia to European ports, while Maersk plans an increase of $750 per TEU from Asia to northern European ports only. In addition, Hapag Lloyd has announced peak-season surcharges to take effect in June through August for the Asia-Mediterranean line by $650 per TEU and in August through September in the Asia-North Europe line by $500 per TEU.
“Although container forward rates ticked higher on June and Q3 following Hapag Lloyd's announcement, there has been little movement since. Maersk Line adding their weight has only added to the feeling that the June GRI will be unsuccessful,” said Benjamin Gibson, freight derivatives broker at Clarksons Securities.
Rates to northern European ports fell for the ninth straight week, down 8.6 percent or $63 to $668 per TEU in the week ending May 17, according to the latest SCFI data, issued by the Shanghai Shipping Exchange. The index has been more than cut in half compared to where it was nine weeks ago, when it stood at $1,423. Rates are down by $755 in total during this time. The current SCFI index to northern Europe is 61.7 percent lower than it was at the same point in 2012, and 47.4 percent or $602 lower than it was on Jan. 1.
The spot rate from Shanghai to Mediterranean ports also fell for a ninth consecutive week, down 3.2 percent or $26 from last week to $779. This rate has fallen 43 percent or $587 in the nine-week period. The index is currently 58.4 percent lower year-over-year and 32.7 percent or $379 below where it was at the beginning of 2013.
“Despite the financial necessity to increase rates many in the market believe that they will not be successful unless further capacity reductions take place. In light of Hapag proclaiming a peak season surcharge, shippers at present are not expecting any significant pick-up in demand to justify such a move. Of course a rate restoration or general rate increase, can to some extent to be justified with rates at unsustainable levels,” said Richard Ward, research analyst for container derivatives of ICAP PLC.