News / Container spot rates edge back up – but carrier hikes may not hold

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Container spot freight rates out of Asia on the deepsea trades to North America and Europe were lifted this week by carrier-led price increases.

This meant that after last week’s decline, spot rates on the Asia-Europe trades resumed the recent gradual increases seen over the latter half of October and through November.

The World Container Index (WCI), produced by Drewry, saw the spot rate on its Shanghai-Rotterdam leg gain 4% on the previous week, to end at $2,241 per 40ft, while the WCI’s Shanghai-Genoa route spot rate jumped 15% over the previous week, to finish at $2,648 per 40ft.

Xeneta’s XSI short-term rate index saw similar movements, with its Far East-North Europe route up 4%, to an average short-term market rate of $2,418 per 40ft, and Far East-Mediterranean up 13% week on week, to $3,314 per 40ft.

Source: Xeneta

“Far East to North Europe currently shows both demand and supply strength – carriers are adding capacity and rates are still edging up rather than softening,” said Xeneta chief analyst Peter Sand.

“Spot rate increases are even stronger from Far East to Mediterranean, with sustained double-digit growth over the past month, but this is fuelled by reducing capacity on this trade,” he added.

In addition, both routes saw new FAK rates levels introduced by carriers on 1 December on both trades, with further marginal hikes being published for 15 December.

Today, Hapag-Lloyd advised shippers that its 15 December FAK level for the Far East to Northern Europe would be $3,500 per 40ft and $4,200 per 40ft for Asia-Mediterranean shipments.

Similarly, MSC’s 15 December FAK levels are also aiming for $3,500 per 40ft to North Europe, but $4,750 per 40ft to West Med ports.

Xeneta data showed that carriers accompanied the 1 December FAK prices with a 5% increase in capacity into Northern Europe, while reducing it on the Asia-Mediterranean leg by 11%, compared with the previous week.

Source: Xeneta

However, spot rates to both North Europe and the Mediterranean are less than half their level at this point last year, when the WCI’s Shanghai-Rotterdam leg stood at $4,775 per 40ft, and Shanghai-Genoa was at $5,496 per 40ft.

A batch of general rate increases (GRIs), also applied on 1 December, saw spot rates finally turn the corner on transpacific trades this week, with the WCI’s Shanghai-Los Angeles leg gaining 8% on the previous week, to end at $2,256 per 40ft, while its Shanghai-New York leg was up 6% week on week, to end at $2,895 per 40ft.

However, there appears limited expectation in the market that these higher prices are likely to hold. Today’s Shanghai Containerised Freight Index, which often acts as a forward curve for the following week’s WCI as it records quoted rates, shows both Asia-US west coast and Asia-US east coast routes losing 5% next week.

The SCFI’s Shanghai-USWC base port leg today stood at $1,550 per 40ft, a price US forwarder Freight Right corroborated, noting that the 1 December GRI amounted to “roughly $400 per 40ft versus late-November levels, but at least one line reversed the increase within hours, and others are expected to follow”.

According to Xeneta data, capacity into the US west coast remained the same, week on week, and was down 3% into the US east coast, supporting the view that carriers are unlikely to hold onto this week’s gains.

“The backdrop is still one of oversupply compared to demand, and that is seen clearly in the fact that rates are still not back to where they were a month ago despite a fairly chunky increase in the past week,” said Mr Sand.

“Shippers should reflect on this weaker market the next time a carrier asks for a GRI, because it would not appear to be justified against the level of demand versus capacity,” he added.