Spot container freight rates from Shanghai to the U.S. and Europe edged lower this week, but both markets are still holding on to substantial gains achieved late in 2013.
Spot rates as tracked by the Shanghai Containerized Freight Index, or SCFI, were $2,108 per 40-foot container to the U.S. West Coast, down slightly from $2,110 last week and up 16 percent since Jan. 1. The rate is up 24 percent from its 2013 low of $1,700 seen in early December. Rates from Shanghai to the U.S. East Coast were $3,426 per FEU, essentially unchanged from the week before but still up 16 percent from the 2013 low of $2,952 per FEU seen on Dec. 6.
Rates from Shanghai to North Europe have been drifting downward since Jan. 1 and continued to slip last week, dropping 1 percent to $1,580 per 20-foot-equivalent container (TEU). Rates on this trade are down 10.5 percent since Jan. 1 but are still up 139 percent from mid-October, when rates were $661 per TEU. Rates from Shanghai to the Mediterranean were $1,609 per TEU. Similarly those rates have lost roughly 10 percent since Jan. 1 but are still substantially up from last fall. Med rates hit a 2013 low of $705 per TEU on Oct. 18, and today’s rates are up 128 percent from that low.
The SCFI rates were published one day early this week because of the Chinese New Year, which will mark the beginning of a lull lasting a few weeks. “With Chinese Lunar New Year under way, all has gone very quiet,” said Michael Rainsford, commodities trader for Morgan Stanley and president of the Container Freight Derivatives Association. He said the lull could help carriers reverse the weakness in spot rates since the beginning of the New Year. “Timing is perhaps a savior for the carriers given the downward trend, as closure of ports, customs and factories during this period will no doubt serve to dampen the impact of continued weak fundamentals on the main headhaul trade lanes.”
Rainsford said the slipping market in Asia-Europe will prompt carriers to issue a new round of general rate increases. Hapag-Lloyd this week announced a $525 per TEU GRI effective March 1. “No doubt the stars will align and other carriers will also independently announce rate increases in the region of $500 per TEU for 1st March,” he said.
In the trans-Pacific there were scattered reports from NVOCCs out of Asia this week of backups at the ports and cargo being rolled to subsequent sailings, tied to the end of the pre-Chinese New Year rush, but a survey of a few large retailers this week did not substantiate those reports. One shipper reported some rollings but nothing out of the ordinary. Carriers in the Transpacific Stabilization Agreement announced a $300 per 40-foot container increase as of Jan. 15, noting in a press release that “Strong forward bookings suggest that the increase will hold through the important Lunar New Year period.” The TSA carriers plan another $300 per FEU increase effective March 15, and a further May 1 increase separate from rate adjustments planned for 2014-15 contracts, the amount of which has not yet been announced.