Container spot rates slipped again this week, ahead of the Chinese Golden Week holidays, which commence tomorrow.
Ocean carriers, particularly between Asia and Europe, now face some challenging weeks in which they must prevent spot rates tanking prior to annual contract negotiations with shippers in the final quarter.
Spot rates recorded by the Shanghai Containerized Freight Index (SCFI) fell by 8.5% on the week for Asia-North Europe, to $699 per teu, and for Mediterranean ports the decline was greater, with rates down by 12.6% to $583 per teu.
Once again, the transpacific tradelane proved more robust, with spot rates recorded by the SCFI ticking down slightly to $1,686 per 40ft for the US west coast, and $2,416 per 40ft for the east coast.
In the wake of the Hanjin collapse on 31 August, ocean carriers succeeded in hiking spot rates by 40-60% on both trades, but the container lines operating between Asia and Europe have been unable to hold these gains.
Indeed, spot rates prior to the Hanjin collapse stood at $695 per teu for North Europe and $553 per teu for the Mediterranean, meaning that rates are virtually back where they were before the South Korean carrier entered receivership.
According to Alphaliner, vessel utilisation levels on some Asia- Med sailings are reported to have fallen below 90% – a load factor level generally regarded as critical for the European routes.
Indeed, the consultant notes that plans by HMM to deploy extra loaders to the Mediterranean and North Europe to compensate for its compatriot’s demise have had to be significantly scaled back due to weak market demand.
One carrier source admitted to The Loadstar this week that demand was disappointingly weak, but said that without the Hanjin effect “things would be much worse”.
Traditionally, 1 October marks the end of the peak season for Asia-Europe and, at the same time, carriers have launched their next wave of general rate increases and minimum FAK (freight all kinds) rates, coinciding with a raft of blanked sailings.
The carriers are very conscious that they need to tighten supply and push spot rates up – or at least hold them steady – in the lead up to annual contract negotiations in November and December.
A year ago soft rates prevented deals being done, as shippers did not want to be tied down and carriers did not want to negotiate against a backcloth of very low spot rates.
One UK forwarder told The Loadstar he already had container lines asking for meetings to talk 2017 volumes and rates.
He said: “It is somewhat early, but not surprising I guess, given recent events.”
He added: “Last year they were running for cover and you couldn’t pin them down, now they want meetings!”