Spot container freight rates from Shanghai to northern European and Mediterranean ports fell about $120 per TEU in the week of Feb. 28, continuing a downward trend that started in the second week of January and marking the lowest level since early December 2013.
Rates on the SCFI Asia-Europe route have fallen close to 30 percent in just three weeks, said Michael Rainsford, a commodity broker for Morgan Stanley, who said his views are his own and do not necessarily represent the views of the firm.
“We have never seen such rapid decay as this,” Rainsford said. He noted that the continuing decline reflects carriers’ “limited control of the market.”
Rates from Shanghai to North Europe dropped by double digits for the third consecutive week, falling 10.0 percent or $123 per TEU to $1,110. The rate on this trade is down 37.1 percent or $655 since Jan. 1, but is still 67.9 percent or $440 per TEU above the level seen in mid-October, when the index rate was $661 per TEU. The current rate inched up 0.5 percent year-over-year.
The rate from Shanghai to the Mediterranean is $1,147 per TEU, declining 9.3 percent or $117 per TEU this week. The rate has fallen 36.0 percent or $644 since Jan. 1, but remains 62.7 percent or $442 per TEU above the level seen on Oct. 18. The current rate is up 11.0 percent year-over-year.
“A number of carriers have postponed early March Asia-Europe general rate increases and some are suggesting that the mid-March GRIs will get rolled to April 1,” Rainsford said. “This seems likely as Maersk, CMA CGM and MOL have announced April 1 GRIs to the tune of around $500 per TEU.”
With the market currently falling at 10 percent per week, and no GRIs planned until April, the rate index could be as low as $850 per TEU by then, Rainsford explained. “We are actually seeing in the physical market a number of carriers that are offering spot rates not far from these levels today, which is a very concerning sign of what is to come,” he said.
Spot container freight rates from Shanghai to U.S. East and West Coast ports experienced a sixth week without growth in the week of Feb. 28. The spot rate as indexed by the Shanghai Containerized Freight Index to the U.S. West Coast was $1,852 per 40-foot container, down 4.8 percent or $93 per FEU from last week. Thanks to increases in the first three weeks of 2014, the current rate is still up 2.0 percent or $37 from Jan. 1, although it is down 19.0 percent year-over-year.
The rate from Shanghai to the U.S. East Coast was $3,256 per FEU, down 1.2 percent or $38 per FEU from last week. Today’s rate is up 3.8 percent or $119 from Jan. 1, but down 5.5 percent from the same week in 2013.
Member carriers in the Transpacific Stabilization Agreement have planned a $300 per FEU increase to take effect in mid-March, and a further May 1 increase by an amount that has not yet been announced.