News / Freight rate recovery 'more about demand than blanked sailings'

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Container spot rate pricing momentum was firmly behind Asia-Europe carriers this week, with double-digit increases seen on the routes into North Europe and the Mediterranean.

This week’s World Container Index (WCI) from Drewry showed how the 15 May FAK (freight all kinds) rate levels implemented by carriers continued to stick this week; the WCI’s Shanghai-Rotterdam leg was up 15% week on week, to end at $2,773 per 40ft, while the Shanghai-Genoa route increased 10%, to finish at $4,082 per 40ft.

The price increases were also supported by strong demand, as the trade appears poised to replicate last year’s early peak season.

“According to Drewry’s Container Capacity Insight, only three blanked sailings have been announced on the Asia to Europe trade route for next week, indicating higher capacity deployment to accommodate peak season cargo.

“As the early peak season looms, with carriers continuing to raise FAK levels, Drewry expects rates to increase further in the coming weeks,” it said.

Source: Drewry

This week also saw carriers announce new FAK rates levels for 1 June implementation, with CMA CGM following MSC’s announcement last week of $4,700 per 40ft to North Europe, and Mediterranean shipments in the range of $5,500–$5,700 per 40ft; while Hapag-Lloyd is going for $4,300 to North Europe and $5,500 to the west Mediterranean.

On top of that, CMA CGM has also unveiled a $500 per teu peak season surcharge on the Asia-North Europe trade, from 1 June.

“Overall shipping demand increased this week – liner companies subsequently announced freight rate hikes for early June, further boosting market shipping sentiment,” a port source in Ningbo told The Loadstar.

At this week’s TOC Europe event in Hamburg, DHL Global Forwarding’s senior VP of global ocean freight LCL, Markus Panhauser, predicted spot rates would rise further over coming weeks.

“The strong demand is driving that,” he said, adding: “Look at the short-term rates, the SCFI last Friday jumped, we jump again next week, and it will jump again the week after, because the Christmas season started to shift.

“The transatlantic is strong and the transpacific is also recovering, so if you look at global trade from a carrier’s point of view, the recovery of freight rates is predominantly about demand rather than blank sailings,” he told delegates.

The WCI’s transpacific routes saw spot rates grow more moderately than Asia-Europe this week, with the Shanghai-Los Angeles leg up 1% week on week, to $3,385 per 40ft, while the Shanghai-New York route grew 2%, to $4,317 per 40ft.

Drewry added that it expected to see the peak season also arrive early on transpacific trades, citing ONE’s 1 June PSS of $2,000 per 40ft as an example.

Analysts at Linerlytica also noted that Amazon rearranging its summer sale to take place a month early was also creating a mini-peak in demand.

“Transpacific rate hikes on 15 May are sticking, with space remaining tight on the back of increased e-commerce cargo, driven partly by Amazon’s decision to move its Prime Day sale from July to June, which has created a compressed window for cross-border shipments.

“The increased demand has already prompted Maersk to add a seasonal USWC extra loader service, with more expected to follow,” it added.

However, at the same time, carriers have continued restrict proforma capacity: according to Drewry, seven blanked sailings are due on the transpacific next week, “indicating tighter capacity and creating scope for carriers to implement higher FAK rates”.

MSC today announced two more blanked sailings on its Asia-US east coast network, with the America service due to be skipped in week 23 and the Empire service to be skipped in week 24.