India-Gulf container rates plunge as capacity returns and cargo backlogs ease
Container shipping rates from India to the Persian Gulf have significantly softened from the peaks ...
Peak season is now fully under way, after a week in which spot rates on the transpacific and Asia-Europe trades all posted hefty increases.
With pressure rising over the past couple of weeks as demand strengthened against tightish capacity, carriers were handed an opportunity to push through a series of FAK (freight all kinds) levels for the spot market, as well as new peak season surcharges for contracted shippers.
Implemented on 1 June, these increases had a material effect on spot rate indices this week, with the Shanghai-Rotterdam leg on Drewry’s World Container Index (WCI) seeing a 25% week-on-week gain, to finish at $3,579 per 40ft, while the Shanghai-Genoa route was up 20% on the previous week, to $5,089 per 40ft.
As previously reported by The Loadstar, part of June’s demand surge is due to contracted shippers pulling forward shipments to avoid the 1 July publication of carrier’s third-quarter bunker adjustment factors (BAFs), which are expected to show severe increases due to escalating fuel costs promoted by the closure of the Hormuz Strait.
One major European forwarder told The Loadstar another factor was the elongated transit times that are now the norm on the Asia-Europe trades.
“We have seen a noticeable uplift in demand following discussions with several customers whose volumes have increased earlier than expected; this is effectively bringing peak season demand forward, driven largely by poor schedule reliability, with customers preferring to receive stock early rather than risk late arrival,” he explained.
However, he added that while shippers and forwarders may be shocked by this week’s pricing spike, further rises this month may be more modest.
“Our expectation for the second half of June is an increase of approximately $500 per teu, compared with the first half – at this stage, I do not anticipate that most carriers will push beyond this level in a single adjustment.
“While we have not seen allocation reductions, there have been some rollovers, and June space is now effectively full. We are still able to secure space for the occasional container, but availability is otherwise extremely limited,” he said.
That would broadly chime with the further hikes so far announced by carriers, with Hapag-Lloyd and Maersk, for example, introducing further Asia-Europe PSSs on 8 and 10 June, ranging from $300 to $500 per teu.
Meanwhile, today’s Shanghai Containerised Freight Index (SCFI), which records rates quoted for the forthcoming week, and as such can indicate the direction of the following week’s WCI (as it did last week), recorded a 4% gain on the Shanghai-North Europe leg and just 1.5% on Shanghai-Mediterranean.
There were even stronger gains on the transpacific, where the Shanghai-Los Angeles leg rose 31% week on week, to finish at $4,565 per 40ft, while the Shanghai-New York route was up 20%, to $5,505 per 40ft.
Since Chinese New Year, prices on the trade had been maintained by strict carrier capacity management, but now there appears to be new demand drivers, according to Drewry.
“Demand is being supported by shippers bringing forward bookings ahead of potential US tariff changes expected in July and additional cargo demand linked to the FIFA World Cup,” the analyst said.
“Retailers are also replenishing inventories earlier than normal in preparation for major sales events, including Amazon Prime Day and TikTok’s mid-year promotions in June and July.
“Carriers successfully implemented PSSs on transpacific eastbound trade routes this month. With peak season now under way and seasonal demand strengthening, Drewry expects further upwards pressure on rates in the coming weeks,” it added.
However, by far the most eye-watering PSS announced so far has been from CMA CGM, which is pushing for a $2,600 per 40ft hike from 1 July on the East Mediterranean-North America East Coast transatlantic trade.
It has also announced a rate restoration initiative for 2 July, of $600 per 40ft, on North Europe-North America shipments.
This week’s Rotterdam-New York rate on the WCI was $2,560 per 40ft, up 5% on the week before.
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