Market insight: Frustration boils over in the bunker
In logistics, keep a cool head and move on isn’t enough anymore.
Container spot rates from Asia to Europe slid for the second week running, but held at above $700 per teu – a level carriers seem unprepared to breach, given the current “full” status of westbound voyages.
The Shanghai Containerized Freight Index (SCFI) recorded a 16.7% fall in spot rates to North Europe, which declined by $156 on the week to $776 per teu.
Meanwhile, spot rates for Mediterranean ports fell by 20.3%, or $193 per teu, down to $758.
However, according to ocean freight benchmarking firm Xeneta, crowdsourced data from shippers and forwarders operating on the tradelane indicates that rates will remain on an upward curve, at least through to the end of September.
The Oslo-based company claims to have thousands of shippers, forwarders and NVOCCs signed up to its platform, contributing spot, short-term and contract freight rate data.
Chief executive Patrik Berglund noted that both short-term and contract rates were rising.
“The market is clearly trending upwards,” he said, during Xeneta’s second quarter rates review and Q3 outlook.
Some carriers on the route have recently announced another raft of general rate increases (GRIs) for August 1, while others will increase their FAK (freight all kinds) rates on the same date.
In a deal struck with the European Commission last week, after December 7, carriers will no longer be able to implement GRIs; instead, if they choose, lines can publish all-inclusive maximum freight rates for the route.
The FAK announcements – which have to include base rate, bunker surcharges, security surcharges, terminal handling charges and peak season surcharges – must not be made more than 31 days beforehand and must be considered as maximum prices for the declared period of validity.
However, carriers are, of course, still free to offer lower rates to shippers. Recently, Maersk Line and China Cosco Shipping followed Hapag-Lloyd in announcing FAK increases instead of GRIs, in advance of the December deadline.
Meanwhile, the European Shippers’ Council (ESC) has complained that although the new FAK model may bring more transparency, “it does not solve the price-fixing problem”.
The ESC claims the use of FAKs “still enables the liner operators to test their new price policy without incurring the risk of losing customers”.
Elsewhere, spot rates on the transpacific trade ticked up this week, with the SCFI recording a 20% hike to the US west coast, to $1,421 per 40ft, and a more modest 8.3% increase to US east coast ports, taking the spot rate to $1,871 per 40ft.
However, the SCFI star performer continues to be the Asia-South America east coast route, where spot rates jumped another $335 per teu to an incredible $2,626 per teu this week.
It is an impressive recovery for a trade where container spot rates were less than $300 per teu six months ago – before carriers decided on a series of radical capacity cuts on the route.