Asia-Europe spot freight rates measured by the Shanghai Containerized Freight Index fell further in the week ending June 21. However, Asia-Mediterranean rates only fell by $36, hanging on to 88 percent or $406 of the $462 originally achieved from the June 1 general rate increase.
“Despite the drop, the Mediterranean route can be seen as fairly positive for carriers, given the speed of declines seen post previous GRI’s. Strong cargo levels and utilization rates are reportedly supporting developments on the Med ensuring that June’s increase is mostly maintained. If the current trend continues liners could well achieve a further jump in rates with their next planned rate hike of roughly USD 500 per TEU due to come in from July,” said Richard Ward, research analyst for container derivatives at ICAP.
The spot rate from Shanghai to Mediterranean ports slipped 3 percent last week to $1,166 per 20-foot equivalent unit from the week before, according to the latest SCFI data issued by the Shanghai Shipping Exchange. It currently stands 31 percent lower year-over-year, but is 0.7 percent or $8 above where it was at the beginning of 2013.
Rates to northern European ports continued to drop, extending their decline into a 14th week. The rate now stands at $514 per TEU, down 3.6 percent or $19 from last week. Rates have fallen 64 percent or $909 during the past 14 weeks. The current SCFI index to northern Europe is 66.8 percent below where it was at the same point in 2012, and roughly 60 percent or $756 lower than it was on Jan. 1.
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 Mediterranean Shipping Co. plan increases of $950, $975, $1,000 and $1,000 per TEU respectively 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.
“At present it looks unlikely that the Asia-North Europe index will fall below USD 500 with next week’s index likely to reflect the pending July 1st GRI,” Ward said. “Carriers are reportedly quoting July spot rates in the region of USD 2,500 per FEU. Shippers are indicating at this stage around USD 150 has been knocked off the original GRI, once again showing the inability of carriers to hold their ground. Time will tell as to whether further discounts will be offered as we approach July, but it would be of no surprise for liners to achieve only a fraction of their originally planned rate increase.”