Spot container rates from Asia to Europe measured by the Shanghai Containerized Freight Index slid further in the week ending Aug. 16. This was the steepest week-to-week decline in 13 weeks in the northern Europe trade and in 18 weeks in the Mediterranean.
“Clearly, there is a disconnect between claims of good utilization levels and the ability to maintain the GRI inflated prices,” said David Barnes, freight derivatives broker at Clarksons Securities.
The spot rate from Shanghai to northern European ports fell 7.1 percent or $102 this week from the week before to $1,334 per 20-foot-equivalent unit. The current SCFI index to northern Europe is 11.4 percent below where it was at the same point in 2012, but 5.0 percent higher than at the beginning of 2013.
The spot rate from Shanghai to Mediterranean ports slid 7.0 percent or $98 in the week ending Aug. 16 from the week before to $1,312 per TEU, according to the latest SCFI data issued by the Shanghai Shipping Exchange. The current SCFI index to the Mediterranean is off 11.8 percent year-over-year but up 13.3 percent from Jan. 1.
“The most notable news this week was that Maersk Line reported a profit of $439 million for the second quarter as a 13 percent reduction in unit costs offset a 13 percent decline in average freight rates. Worryingly for its competitors, who have reported mixed results for the quarter, this increased profitability could result in the temptation to suppress freight rates and therefore increase market share, whilst remaining significantly more profitable than other,” said Richard Ward, research analyst for container derivatives at ICAP. “The more likely scenario, as we have seen this year, is that any improvement in the supply-demand balance will quickly be used to significantly increase rates. Of course, this is unlikely to hold in the long term, meaning rates snap back, although again Maersk Line will be somewhat protected from such downward movements.”
Further increases in this lane have been proposed for Sept. 1. NYK, MSC, UASC, OOCL, Maersk, and CMA CGM have set increases of between $300 and $650 per TEU for cargo on the Asia-Europe lanes. Hapag-Lloyd also announced a GRI of $500 per TEU in this lane for Sept. 2.