Spot container freight rates measured by the Shanghai Containerized Freight Index fell on the Asia-Europe lane this week, while the Asia-U.S. trade saw gains for the second week in a row.
Asia-Europe rates declined by about $80 per TEU for the week ending April 18. The index rate from Shanghai to northern European ports decreased 6.8 percent or $79 from the week before to $1,077 per TEU, after falling roughly the same amount the week before. The rate has now lost $165 of the $399 increase achieved in the last week of March and first week of April. The rate is still up $234 per TEU from four weeks ago, and is up 23.1 percent year-over-year, although it has slumped 39.0 percent or $688 since the beginning of 2014.
By August, total weekly capacity in the Asia-North Europe trade is expected to grow 6.4 percent, which could trigger a carrier showdown, as rate volatility is expected to continue, according to Alphaliner.
The spot rate from Shanghai to Mediterranean ports fell 6.4 percent or $81 from the week before to $1,182 per TEU, the third consecutive week of decline, according to the latest SCFI data issued by the Shanghai Shipping Exchange. Nearly $220 of the $508 gain achieved in the week leading up to the April 1 GRIs has now been erased. The rate to the Mediterranean is up 30.5 percent year-over-year, but down 34.0 percent or $609 from Jan. 1.
“Carriers clearly realize that shippers, being a less concentrated group versus the Top 20 carriers, do not have a unified voice or platform to launch counter ‘general rate decreases’ that are more in line with market fundamentals,” 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. “This allows carriers to continually impose increases in every month that rates fall through the floor, and they have been doing this consistently since early 2012. Despite the partial success of GRIs as a firefighting tool for carriers in recent years, it has done little to change the color of the ink of earnings from red to black.”
Maersk Line, CMA CGM, MOL and Hapag-Lloyd plan to implement rate increases in the Asia-Europe trade lane in the beginning of May.
Rainsford said there are two likely outcomes for near-term rates: They will fall softly throughout the rest of April and the May 1 GRI will be ineffective, or April rates will decline steeply and the May 1 GRI will be partially successful.
“Either outcome is far from lucrative for the carriers,” he said.
Asia-U.S. Rates Climb
Asia-U.S. rates increased about $50 per FEU for the week ending April 18, following the mid-April GRI recommended by the Transpacific Stabilization Agreement.
The rate from Shanghai to the U.S. West Coast was $1,923 per FEU, climbing 2.7 percent or $51 from last week, the second consecutive week of gains. Today’s rate is 6.0 percent or $108 above the Jan. 1 level, but remains down 11.4 percent year-over-year.
The Drewry benchmark rate from Hong Kong to Los Angeles rose this week after three weeks in a row with no positive movement, reaching $1,964 per FEU.
The rate from Shanghai to the U.S. East Coast was $3,328 per FEU, improving 1.4 percent or $47 per FEU from last week, which also registered an increase. The current rate is up 6.1 percent or $191 from Jan. 1, and 1.0 percent year-over-year. This was the first year-over-year gain in the past four weeks.