News / As rates decline, box carriers announce price hikes – but will they hold?

12/05/2017

Spot container freight rates on the world’s largest shipping routes continued their downward slide this week.

However, the major container lines reported first-quarter financial results showing trading conditions that are a huge improvement on the dire Q1 of 2016.

This week’s Shanghai Containerised Freight Index recorded declines on all the routes out of China it covers, except for a 16.5% increase on Shanghai-Santos, where shippers are now paying $3,2834 per teu, and Shanghai-Singapore, which saw rates increase 2.8% to $183 per teu.

On the North Europe trade, rates declined 3.5% to $961 per teu, while the headhaul Mediterranean trade declined 3.9% to $949 per teu.

Meanwhile, yesterday’s Drewry’s World Container Index reported eastbound rates for cargo out of northern Europe to Asia declining quite dramatically as space restrictions eased and large numbers of rollovers abated.

Drewry said: “The spot rates from Europe to Asia continue to decline, with rates from Rotterdam to Shanghai losing 18%, or $218, from last week. “Meanwhile, the situation regarding space has normalised, and we expect rates to deflate further next week.

“Likewise, the headhaul rates on Shanghai to Rotterdam and Shanghai to Los Angeles slid by 3% each. Rates are expected to fall again next week as GRIs are getting discounted,” it added.

A number of carriers have announced FAK rate levels for Monday, but the trade appears to be lagging below these aspirations. Maersk has announced a Shanghai-Rotterdam FAK rate of $1,125 per teu and CMA CGM $1,200 per teu.

Rate declines were more marked on routes to the US. The transpacific trade into Los Angeles saw rates fall 7.9%, to 1,432 per 40ft, while the all-water route to the east coast was down 5.3%, to $2,432 per 40ft.

In response, Hapag-Lloyd has announced a general rate increase (GRI) of $700 per 40ft for Monday to all destinations in Canada and the US from Asia.

Despite the apparent softening of carriers’ pricing resolve, lines are enjoying a far better period than this time last year, Drewry noted.

“The average composite index of the World Container Index assessed by Drewry for the year to date is $1,591 per 40ft, $118 lower than the five-year average of $1,710 and 40% higher than a year ago,” it reported.

This recovery has been seen in a slew of results from carriers. Yesterday, Maersk reported vastly improved numbers, as did Hapag-Lloyd today.

Israel’s Zim Line, which is outside the alliance structure, this week reported a first-quarter net loss of $6.4m, compared with a net loss of $56.3m in Q1 16, while Yang Ming said yesterday its Q1 net loss of $29m represented a year-on-year improvement of 75.3%.