News / Flat spot rates frustrate carriers’ bid to push March increases

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Container spot freight rates on the main east-west trades largely flatlined this week as weak demand and plentiful supply combined to squash carriers’ mid-month price hikes.

This week’s World Container Index (WCI) from Drewry remained unaffected by a series of new FAK rates introduced on the Asia-Europe trades on 15 March.

The WCI’s Shanghai-Rotterdam leg gained just 1% week-on-week to end at $2,478 per 40ft; while its Shanghai-Genoa route was flat at $3,108 per 40ft.

“Rates have gone up a little bit since the onset of the fighting and carriers were clearly thinking it would provide an opportunity to increase prices by more than they have,” a European freight forwarder told The Loadstar.

“But the bookings just haven’t been there – there’s certainly no post-Chinese New Year demand bounce that they might have hoped for and neither are there any issues with us finding space.

“Frankly, ships were already beginning to avoid the Middle East are so the actual effect on capacity of the war is minimal,” he added.

Meanwhile, carriers will have another attempt at rising spot rates next week, with MSC and CMA CGM intending to implement new FAK rates of $6,200-$6,400 per 40ft from on 22 March.

However, they will probably need to cut capacity to support these, as Drewry’s Container Capacity Insight currently indicates just three blank sailings have been announced on the Asia–Europe trade route for next week, “indicating steady capacity”.

It was a different picture on the transpacific trades, where the WCI recorded a 4% week-on-week gain on its Shanghai-Los Angeles leg to end at $2,591 per 40ft; while its Shanghai-New York rate was up 7% on the previous week to $3,310 per 40ft.

However, forwarders on the trade described it as effectively stagnating while both carriers and their customers gear up for the business end of the annual contracting season, with spot rate discounting hitting a floor of $1,500 per 40ft into the west coast and at $2,400 per 40ft for the east coast.

“Rather than engaging in a post-holiday rate war, carriers are maintaining a disciplined approach to capacity to prevent spot rates from falling into loss-making territory,” US west coast freight forwarder Freight Right said.

“Many shippers are likely holding back on large-scale bookings due to ongoing uncertainty regarding potential tariff changes and overall US consumer demand,” it noted, adding that most focus was now on the long-term contracts.

“The industry is entering a critical three-week window that will set the tone for the remainder of the year.

“While spot rates are expected to remain flat through the end of March, the focus has shifted entirely to the April/May contract negotiations… If demand remains tepid, shippers should expect carriers to implement more aggressive blank sailings to artificially tighten supply before long-term contracts are signed.

“Unless a significant surge in consumer demand occurs in the next 15-20 days, the market will likely remain in this uncomfortably cool state until the new contract season officially begins,” it added.

According to Drewry’s Container Capacity Insight, six sailings across both transpacific trades have been announced for next week.

Drewry also warned that despite flat spot rates, the Middle East conflict would inevitably lead to higher costs with fuel prices escalating fast.

“Rising costs have led carriers to introduce emergency fuel surcharges [and] these measures are expected to drive freight costs up which would in turn increase freight rates,” it said.