Anger as Cathay Pacific Cargo adds GRI to blocked space agreements
Cathay Pacific has added extra fees to some of its blocked space agreements, the first ...
Ocean carriers, encouraged by the success of November GRI and FAK increases, have ramped up the pressure on shippers and hit them with sizeable 1 December price hikes.
Today, OOCL announced a $850 per teu general rate increase to North Europe and the Mediterranean, while CMA CGM will raise its freight all kinds rates by 52% on Asia to Northern Europe.
Although this week saw another slip in the Asia-Europe components of the Shanghai Containerized Freight Index (SCFI) – prices to North Europe declined 9.3% to $788 per teu, while o Mediterranean ports they dipped by 2.5% to $710 per teu – they are significantly higher than a year ago.
Spot rates this time last year were in freefall – the SCFI for 20 November recorded rates to North Europe of just $295 per teu and for the Mediterranean at $315 per teu. This destroyed carrier aspirations for the new year and obliged them to agree 2016 contract rates substantially below those of the previous year.
However, for 2017 Asia-Europe contract talks, the carriers have the upper hand.
“We are in a better position,” said Maersk Group chief executive Soren Skou on 2 November, anticipating that its container division would achieve contract rate increases.
Mr Skou’s optimism was echoed this week by Hapag-Lloyd chief executive Rolf Habben Jansen, who said of the freight rate outlook: “We increasingly see signs that things are getting better.”
Holding on to as much of possible of the November rate increases has been critical, and data from freight rate benchmarking platform Xeneta suggests that carriers have reason to celebrate.
Chief marketing officer Katherine Barrios said: “When we compare how GRIs fared earlier in the year, November is by far the one that seems to have held its own.”
Despite the trade entering the slack winter season, Asia-Europe carriers clearly feel confident enough to roll out increases for December. And with the Chinese New Year festivities falling early next year – on 28 January – load factors after the Christmas holiday should be reasonably robust, strengthening the foundations of the rate increases.
Meanwhile, transpacific carriers face a longer test of nerve, given that annual contract rates are typically set at the end of April. Nevertheless, spot rates between Asia and the US are also holding up better than a year ago.
The SCFI today recorded a 6.7% decline in rates to the US west coast to $1,687 per 40ft, and a 1.8% drop to the US east coast, to $2,623 per 40ft.
But again, in comparison with a year ago when the SCFI recorded $922 for west coast ports and $1,688 for the east coast, it represents a far healthier position for carriers.