MSC follows its peers and hikes Asia-N Europe FAK rates

With effective from 15 August MSC has announced its FAK rates on the Asia-North Europe tradelane would be $947 for a 20ft box and $1,694 for a 40ft.

This follows Maersk’s FAK increase to $1,025 per 20ft and $1,900 per 40ft, which came into effect on 31 July.

MSC’s new rates are subject to a fuel surcharge of $138/$276 per 20/40ft and an emission control surcharge of $15 per teu, meaning that all-in they are similar to prices charged by its 2M partner.

However, other carriers are attempting to push rates on the route even higher; for example, CMA CGM is charging FAK rates of $1,150 per 20ft and $2,100 per 40ft from 15 August.

Container spot rates from Asia to North Europe initially spiked last week, a consequence of carriers’ widely implemented 1 August GRIs, Drewry’s WCI component surged 25%, to $1,620 per 40ft.

However, rates have fallen back due to soft demand. In fact, Monday’s Ningbo Containerized Freight Index (NCFI) recorded a 7.8% decline in its Asia-North Europe spot rate.

“Market volume was not enough to support freight rates after the increase,” said the NCFI commentary.

The manager of a UK-based NVOCC told The Loadstar this morning the main carriers were signalling that there could be some flexibility on the minimum FAK rates.

“ I don’t think they are in a position to hold the line on the GRIs, given the fact that there is no peak season, and they will just be happy to hang on to a percentage of those huge increases,” he said.

Indeed, MSC decided to blank its standalone Swan service last week, cancelling the sailing from Asia at short notice due to “slowing demand”.

Meanwhile, Maersk CEO Vincent Clerc made it clear during the company’s second-quarter earnings call last Friday that market share was not a priority for its container division.

Maersk’s liftings in Q2 across its liner services fell 6.1% compared with the same period of the previous year, however, CMA CGM which is challenging to usurp the Danish carrier from its second place ranking, managed to produce above-industry-par flat growth during the quarter.

Mr Clerc said growth driven by unprofitable rates made “no sense”, adding: “We would have to really take into consideration whether market share is so important or margin is more important, which maybe you can hear how I phrased this that I tend to weigh margin higher than market share.”

Meanwhile, in what could end up as a messy 2M divorce, MSC has just announced that it has joined the SEA-LNG coalition, which lobbies for the fossil-based gas as a transition fuel to net zero – a strategy Maersk has refused to adopt.

This story was corrected and the headline amended after the original copy was published yesterday, 7 August