News / With spot rates falling, carriers blank more sailings and plan surcharges

Container spot rates continued their decline this week across most Chinese export routes, prompting ocean carriers to blank more sailings.

The Ningbo Containerized Freight Index (NCFI) today recorded falls on all but five of the 21 routes covered by its composite index, shedding a further 1.7%, to 3,613.9 points.

It said demand on the North European and Mediterranean markets was “sluggish”, resulting in “rates coming under pressure”.

Indeed, all three published indices reflected 4% to 5% decreases in their North European components, with Drewry’s WCI falling to $12,221 per 40ft, Xeneta’s XSI down to $12,940 and the Freightos Baltic Index (FBX) declining to $12,783.

The Covid-19 lockdown this week at the tech and finance hub of Shenzhen has resulted in delays to production and cancelled orders. And although the main export port for the region, Yantian, is said by carriers to be working “normally”, shuttered warehouses, restricted trucking services and delays in yard handling and at gates are all taking their toll on cargo availability and slowing vessel working times.

According to anecdotal reports to The Loadstar, forward bookings for North Europe are also down quite considerably, which could be due to the uncertainty over whether the tech manufacturing sector lockdown will end on Sunday.

Nevertheless, carriers are preparing to blank more sailings in anticipation of a period of low demand. 2M carriers Maersk and MSC announced today three further void sailings for April, attributed by MSC to “the ongoing challenging market situation”.

Lars Jensen, of Vespucci Maritime, said shippers should be “cautious in how they interpret the data” on rate declines. On the one hand, he said, the fall in rates “might be a harbinger of more declines to come especially if demand suddenly drops rapidly”. But he added: “The reality right now is that seasonal rate declines at this time of year can easily explain the drops we have seen so far.”

Meanwhile, on the transpacific, the NCFI commentary described the supply and demand fundamentals of the Asia to North American tradelanes as “generally good”.

However, this did not prevent spot rates on the trade falling this week, with, for example, the WCI component for the US west coast down 7%, to $10,154 per 40ft, and to east coast ports falling by 5%, to $12,276.

On the transatlantic, spot rates were stable, with the WCI at $6,491, the XSI at $7,031 and the FBX at $6,626, all per 40ft.

North European exporters are hoping that rates on the route will begin to fall back nearer to the market rate of just a year ago, of around $2,000 per 40ft, now that carriers are deploying extra loaders, using ships redeployed from culled Russian services.

Notwithstanding the softening of rates, shippers are bracing for significant bunker surcharge hikes from carriers, along with skyrocketing haulage costs. Reports to The Loadstar this week suggest that the majority of ocean carriers in North Europe will add a 25% fuel surcharge to the cost of their line hauls from 1 April.