Ocean freight rates continue to tumble as peak comes to an early end
Spot freight rates on every major container lane continued to tumble over the past week ...
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Another week, another record freight rate low for container shipping lines on the Asia-North Europe trade, as this week’s Shanghai Container Freight Index (SCFI) sank to new lows across all the major east-west tradelanes out of Asia.
The Shanghai-North Europe leg dropped $41 per teu, a decline of 14.4%, to finish the week on $241 per teu; the Shanghai-Med spot rate was fell 17.6% to $312 per teu; the Shanghai-US west coast fell 7.3% to $1,341 per feu; and the Shanghai-US east coast was down by 4.6%, continuing its slide from the peak of several months ago.
During the height of the congestion crisis on the US west coast, spot rates to the east coast hit $5,000 per teu. Today the SCFI stood at $3,004 on the leg.
Analysts today talked of the Asia-North Europe rate being in negative territory once bunker adjustment factors are stripped out. The rate is 80% lower than at the same point last year and has been under $1,000 per teu for 16 weeks.
“At current levels, reports suggest that rates do not come close to covering the average industry BAF of around $360 per teu, suggesting a dire situation for those carries that are less financially sustainable,” said freight derivatives broker Richard Ward of Freight Investor Services.
Just as worrying for carriers is the fact that fuel prices are steadily edging up, with bunker fuel in Singapore now 30% more expensive than at the beginning of the year.
In response, carriers have begun to announce a new set of general rate increases for the beginning of July, with CMA CGM set to increase rates by $1,000 per teu, Maersk by $1,150 per teu and OOCL by $1,300 per teu.
In combination with this week’s news that the 2M partners are set to reduce their Asia-Europe capacity, and the G6 decision to blank its Loop 4 service, scheduled to depart Ningbo on 27 June, these might reverse the pessimism persisting among many forwarders.
One Asia-based agent said: “There is oversupply of capacity for all major shipping lines. The GRIs couldn’t stick in June and we all expect no GRI [to stick] in July as well.
“We think that the low rate situation will be extended until July, because we don’t foresee any blank sailing arrangement in July,”
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