Asia to Europe contract rates soar, but there's pressure on the transpacific

11/08/2017

Asia-North Europe long-term contract rates are 70% higher than a year ago, bringing a big boost to the top line of ocean carriers in their critical third quarter.

According to the latest crowd-sourced data from ocean freight rate bench marker Xeneta, the market average market rate for sailings in August is just over $1,550 per 40ft, but with some rates being agreed at much higher, “premium” levels.

And with all the signs pointing to a strong peak season this year, ships from Asia will be full and carriers are likely to be selective with the containers they load.

Indeed, one forwarder source told The Loadstar recently that carriers were operating a two-tier system of higher- and lower-rated bookings, containers from the latter frequently being rolled-over or going in split shipments.

The forwarder also said shippers had become reluctant to put their cargo on the spot market unless it was non-urgent.

A year ago, the spot market accounted for more than 50% of containers loaded, but the ratio now is likely to be much lower as shippers try to achieve some certainty in their supply chains by agreeing medium- and long-term contract rates with carriers.

As a consequence, hitherto bellwether spot indices are not being followed as avidly by the industry.

In fact, the Shanghai Containerized Freight Index (SCFI) components for North European and Mediterranean ports have hardly changed in the past two weeks, with North Europe shown at $931 per teu and the Mediterranean at $849.

And to underpin these gains, carriers have announced another wave of increased FAK (freight all kinds) rates for 15 August. Maersk Line’s FAK rates to Rotterdam will rise to $1,125 per 20ft and $2,000 per 40ft, and for Felixstowe, to $1,175 per 20ft and $2,100 per 40ft.

APL has hiked its FAK rates to $1,300 per 20ft and $2,400 per40ft across the Le Havre-Hamburg range of ports.

Meanwhile, on the transpacific, carriers seem to have succeeded in holding onto their average $500 per 40ft gains, following a 1 August general rate increase, with spot rates on the SCFI steady at $1,641 per 40ft for the west coast and $2,620 for east coast ports.

However, Xeneta has noted that “the long-term market has dropped”, depending on when BCOs contracted with the market average for the west coast $1,200 per 40ft for recent deals, compared with $1,390 for contracts signed six months ago.

In contrast with the European market, Xeneta believes that, for the transpacific tradelanes, “the trend looks like the market is more on the buyer side for long-term contracts”.