Container spot rates hold steady as carriers adjust capacity for CNY holiday

© Sheila Fitzgerald

After a strong finish to 2018, container spot rates on the major east-west routes, as recorded by the Shanghai Containerized Freight Index (SCFI), nudged down slightly this week – but they remain notably higher than a year ago.

And with carriers announcing significant blank sailing programmes across their east-west networks around the Chinese new year holiday next month, rates look likely to hold reasonably steady in the coming weeks.

The European components of the SCFI were both 1.7% lower on the week, with spot rates from Asia to North Europe at $979 per teu and rates to Mediterranean ports $980 per teu.

This week saw the two biggest alliances on the tradelane announce void sailings around the Chinese new year holiday, which commences on 5 February.

The 2M was first, on Monday, with Maersk Line and MSC advising Asia-Europe customers they would be cancelling two sailings to North Europe and one to the Mediterranean in weeks six, seven and eight.

The void sailings include the 2M’s AE2/Swan loop to Rotterdam and Felixstowe which was only reactivated in December after being suspended at the end of September due to soft demand projections for bookings after the Chinese Golden Week holiday.

By blanking two out of its six loops the 2M will take out up to 40,000 teu of its weekly headhaul capacity.

The Ocean Alliance responded even more radically by pulling half of its weekly capacity to North Europe in weeks six and seven, with the blanking of three loops, suggesting that carriers are committed this year to using the full extent of their capacity management tools to balance supply and demand.

Indeed, having worked hard to successfully push through FAK rate increases, it appears that the carriers are not prepared to see rates in the first quarter erode to the level of March last year, when they slumped to around $600 per teu.

Meanwhile, on the transpacific tradelane, carriers have adopted a similar strategy of blank sailings around the CNY period.

They are also intent on protecting the current healthy rate levels on the trade, which have been driven by the pre-US duty tariff hike cargo boom on imports from China and are around 25% higher to the US west coast and 17% to the east coast than than a year ago.

This week’s SCFI recorded a modest decline of 2% for the US west coast to $1,895 per 40ft and a 2.5% fall on spot rates to the east coast to $3,040 per 40ft.

A 25% duty on the import of some 5,700 Chinese products to the US was deferred until 2 March to enable trade issues between the two nations to be resolved, and with negotiations currently under way in Beijing, shippers will be looking for early indications of the outcome of the talks to determine their forward planning.

George Griffiths, editor global container freight market at S&P Global Platts, told The Loadstar today: “Questions still remain in the market over the support in demand that will come from the delay in tariffs between the US and China for the transpacific routes, with importers heard to be looking to boost stocks before the deadline hits at the end of February.”