WCI: Backhaul Rates Unchanged for Week

WCI: Backhaul Rates Unchanged for Week

Backhaul east-west container rates were flat this week in the Europe-to-Asia and trans-Pacific westbound lanes, according to the latest release of the World Container Index.

Europe-to-Asia eastbound rates from Rotterdam to Shanghai remained at $1,073 per 40-foot container this week. They have seen little change since the beginning of February with the exception of last week when they rose 2.4 percent. They remain up 14.6 percent since the beginning of the year, when the index stood at $936, and are 104 percent higher year-over-year.

Because of relatively smaller demand to export east in this trade lane, the price of shipping containers from Europe to Asia has remained lower than the price to ship westbound. Scott Hamilton from Bloomberg noted in a recent article that “Europe-to-Asia freight rates will defy a decline in the other direction this year as exports heading east grow faster than imports, helping to fill a glut of empty boxes. The number of containers moved to Asia will rise as much as 5 percent in 2013, while volumes to Europe will expand just 1 percent, according to Macquarie Capital (Europe) Ltd., which will help Maersk raise its eastbound fee on the route by 27 percent.”

He also notes that about 40 percent of containers shipped to mainland China from the Port of Rotterdam in 2010 were empty. Lars Mikael Jensen, head of Maersk Line’s Asia/Europe network, as quoted by Hamilton said, “If we can have in relative terms fewer empty containers that we need to get back to Asia because we can fill cargo in them that gives us freight revenue, then that is obviously reducing costs for us and ultimately for customers.”

Hamilton explains: “That gap may narrow as European demand is curtailed by recession and Asia consumes more higher-value goods, such as car parts and scientific tools. Cargo heading that direction may become more profitable at a time when the industry is struggling to deal with overcapacity.”

Trans-Pacific westbound rates from Los Angeles to Shanghai also held at last week's rate, standing at $946 per FEU. Before last week’s jump, it had remained at $910 for three weeks. The rate remains up 8.2 percent since the beginning of the year, when the index was $87 and 9.1 percent higher than it was at the same point a year earlier.