Asia-Mediterranean spot freight rates measured by the Shanghai Containerized Freight Index gave back $20 in the week ending June 14, after gaining $462 from a June 1 general rate increase. UASC, CSCL and Maersk planned to increase rates by $500 to $750 per 20-foot container, while Cosco and MSC sought to put into effect peak-season surcharges of $300 and $700, respectively.
Such a slight drop “indicates a strong implementation of the recent GRI. Expectations had been that the route may decline more rapidly after the GRI was implemented due to the way in which previous GRIs have developed over the past few attempts. Despite this, rates are still 34 percent lower than during the same period last year,” said Richard Ward, research analyst for container derivatives at ICAP.
The spot rate from Shanghai to Mediterranean ports slipped 1.6 percent to $1,202 from the week before, according to the latest SCFI data issued by the Shanghai Shipping Exchange. It currently stands down 30 percent year-over-year and 3.8 percent or $44 above where it was at the beginning of 2013.
Rates to northern European ports fell further, extending their decline into a 13th week. The last time rates fell for a period this long was for 14 weeks between September and December of 2011. During this time, rates fell a total of 42 percent or $349. So far in the current slump, rates have already fallen 62.5 percent or $890. The current SCFI index to northern Europe is 66.4 percent below where it was at the same point in 2012, and 58 percent or $737 lower than it was on Jan. 1.
“SCFI rates in northern Europe continue to tick down, and it seems a foregone conclusion that we will see sub $500/TEU prior to the end of the month,” said David Barnes, freight derivatives broker at Clarksons Securities
Ward seems unsure about further declines, saying “it appears now that the bottom of the market may have been reached. Reports suggest that carriers are no longer discounting rates as heavily as previous weeks suggest, therefore the expectations are that rates could remain fairly stable until the July 1st GRI. There is, however, the possibility that we might still see some small declines due to overpriced carriers moving back into line with the market.”
Several carriers have announced large Asia-Europe GRIs for July 1. Hapag-Lloyd announced an increase of $1,000 per TEU from Asia to European ports as well as peak season surcharges of $500 and $650 per TEU to northern European and Mediterranean ports, respectively. CMA CGM set a $775 GRI and a $150 peak season surcharge to implement an overall $925-per-TEU increase on the Asia-North Europe lane. Maersk, OOCL, Hyundai Merchant Marine and MSC plan increases of $950, $975, $1,000 and $1,000 per TEU from Asia to northern European ports. Cosco, Maersk, MSC, and OOCL will also be increasing rates on TEUs from Asia to Mediterranean ports by between $400 and $650.