Spot freight rates from Asia to European ports measured by the Shanghai Containerized Freight Index lost another chunk of the recent general rate increase in the week ending July 12. This was the second straight week of declines following a substantial increase for each lane on June 28. Carriers such as CMA CGM, Hyundai Merchant Marine, Hapag Lloyd, Maersk, Cosco, MSC, and OOCL had achieved much of their GRI goals in that week.
The spot rate from Shanghai to northern European ports fell 4.2 percent or $56 this week to $1,290 per 20-foot container. Last week the rate fell $63, eroding more of the gains from the July 1 GRI. As of this week, the increase achieved has fallen to $776 per TEU. The current SCFI index to northern Europe is 26.2 percent below where it was at the same point in 2012, but remains 1.6 percent or $20 above where it was on Jan. 1
The spot rate from Shanghai to Mediterranean ports also slipped further this week, down 4.7 percent or $64 since last week to $1,298 per TEU, according to the latest SCFI data issued by the Shanghai Shipping Exchange. Ocean carriers have now achieved just $132 of a targeted increase generally between $400 and $650 per TEU.
“Much as was expected, both Asia/Europe and Asia/Med came off this week and in fact the differential between the two routes has now closed to just $8 per TEU; an incredible reversal given that June saw this at close to $700 per TEU. Aug 1 now heralds the next spin of the merry-go-round as carriers seek to further inflate weakening prices on the main headhaul trades,” said David Barnes, freight derivatives broker at Clarksons Securities.
Hanjin and MOL were the first to announce subsequent $500 per TEU increases for August 1 in the Asia-Europe lane, and carriers such as OOCL, MSC, HMM, Hapag Lloyd, and UASC have followed suit. Maersk announced an increase for the same day, but of only $300 per TEU.
“This may act as a cap in terms of what will be implemented, although it is difficult to say exactly as the reduced GRI may be reflecting their higher spot rates in comparison to their competition. This may therefore mean that they are not necessarily undercutting their rivals before the increase has even come into force. With reports from both forwarders and carriers that utilisation rates have increased on routes to Europe and even some reports of cargo being rolled then there is a real possibility that we will see another jump in rates come August,” said Richard Ward, research analyst for container derivatives at ICAP.