News / Asia-Europe rates still on the up, but transpac blanking strategy struggles

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Container spot freight rates on the Asia-Europe trades continued their upward march this week, with prices returning to levels last seen in late summer.

Drewry’s World Container Index (WCI) this week recorded a 5% week-on-week gain on its Shanghai-Rotterdam leg, to end at $2,361 per 40ft, a level it last hit on 4 September.

Meanwhile, the WCI’s Shanghai-Genoa leg was up 13% on the previous week, to break the $3,000 barrier and end at $3,004 per 40ft, which it last achieved on 14 August.

Forwarders on the trade told The Loadstar they expected further incremental gains next week, promoted by a new series of carrier FAK [freight all kinds] levels due to implemented on 15 December – both Hapag-Lloyd, MSC and CMA CGM have announced an FAK rate of $3,500 per 40ft on Asia-North Europe shipments.

On the Asia-Mediterranean trade, MSC is seeking an FAK rate of 4,750 per 40ft, while Hapag-Lloyd is attempting to push through a $4,200 per 40ft FAK rate, both also set to be implemented on 15 December.

However, Drewry noted that the recent strengthening of Asia-Europe spot rates had also been due to a recent upsurge in demand, creating a pre-Chinese New Year “mini-peak”, which it said was becoming a structural feature of the trade.

“Unlike the transpacific tradelane, spot rates on Asia-Europe have successfully maintained stable or rising rate levels for four consecutive weeks. This strength is driven by a shift in seasonal patterns.

“Over the last three years, Drewry has observed double-digit month-on-month demand growth in December, establishing strong year-end volumes as the ‘new normal’.

“With the lunar new year falling in February, carriers are already seeing early bookings, leading Drewry to forecast further slight rate increases next week,” it explained.

As if to underscore this, Maersk has announced a peak season surcharge (PSS) of $1,000 per 40ft on Asia-Mediterranean shipments from 23 December.

And more evidence of further Asia-Europe price rises was seen in today’s Shanghai Containerised Freight Index, which often acts as a ‘forward curve’ for the following week’s WCI, as it records quoted rates, which noted a 10% week-on-week gain to North Europe and a 19% increase to the Mediterranean.

It was the opposite picture on the transpacific, where declines mitigated the Asia-Europe rises to leave the composite level flat.

The WCI’s Shanghai-Los Angeles leg dropped 7% week on week, to end at $2,103 per 40ft, while Shanghai-New York declined 5% from the previous week, to finish at $2,756 per 40ft.

Largely, spot rates resumed their downward trajectory as carrier efforts to reduce capacity proved ineffectual.

“According to Drewry’s Container Capacity Insight, blanked sailings on the transpacific tradelane increased this week and are projected to rise further, with 12 cancellations already announced for next week,” the analyst said.

“Although carriers are increasing these cancellations to prop up falling spot rates, the strategy is struggling due to a lack of volume.

“Since most Christmas inventory was already shipped in November, there is currently insufficient cargo to support freight rates. Consequently, Drewry expects rates to soften slightly in the coming week,” it added.

With a  series of general rate increases (GRIs) ranging from $1,000 to $3,000 per 40ft, depending on carrier, there is an outside chance that the decline could be reversed next week, although forwarders said demand levels were likely to be too weak to support the GRIs.

“We’re seeing a clear pullback in December booking activity,” US forwarder Freight Right said. “Many importer front-loaded earlier in the year due to tariff uncertainty, and aren’t replenishing heavily right now.

“Combined with a broader cooling in consumer-driven shipments, the final weeks of the year are shaping up quieter than normal.

“When demand softens this sharply, GRIs tend to have limited staying power,” it added.