Priority ocean services on the rise as air freight capacity becomes scarce
Soaring airfreight rates have left some commodities on the ground, but expedited ocean services offer ...
There was a modest uptick this week for spot rates to North Europe, a decline for the Mediterranean ports and a rate hike respite for transpacific shippers.
The Shanghai Containerized Freight Index (SCFI), published yesterday due to a public holiday in China today, saw rates to North Europe up 1.1% to $658 per teu, while Mediterranean rates fell by 1.9% to $711 per teu.
CMA CGM has extended its March Asia-North Europe FAK rates of $950 per 20ft and $1,700 per 40ft through until the end of April, but intends to increase them to $1,050 per 20ft and $1,900 per 40ft from 1 May.
Other carriers have announced 1 May FAK increases, which will coincide with expected soft demand after the May Labour Day holiday.
To mitigate the impact of the weaker demand and support their FAK hikes, ocean carriers have also announced a number of blanked sailings this month and next.
The Ocean Alliance partners, CMA CGM/APL, Cosco/OOCL and Evergreen, will cancel five Asia-North Europe loops and one Asia-Mediterranean departure between weeks 17 – 21 to tighten capacity.
The two other alliances are also expected to use the blanking tool to squeeze capacity and push spot rates back up before the all-important peak season, when container lines traditionally enjoy their most profitable quarter.
So far this year, spot rates have slumped by 34% and 29% respectively for North Europe and the Mediterranean, and carriers may need to take more radical blanking action in the coming months in order to see a rate recovery.
Meanwhile, following the GRI-induced surge in transpacific spot rates last week the Asia-US components on the SCFI were virtually flat this week, at $1,623 per 40ft for the US west coast and $2,644 per 40ft for east coast ports.
Despite spot rates on the tradelane having declined by 16% since the start of the year for the west coast, and by 15% for east coast ports, rates remain some 23% higher for the east coast than the same week of last year, while for the west coast there is a substantial 44% improvement.
Moreover, after the success of the 1 April GRIs, several carriers are reported to be set to announce another wave of hikes mid-month.
And the healthy spot rate environment will considerably improve the chances of transpacific carriers nailing down decent annual contract rate increases to commence on 1 May with their BCO customers.
And this positive sentiment will also be boosted by upbeat comments coming from the US-China trade talks in Washington this week. Donald Trump said yesterday the two sides “were nearing a successful conclusion”, and the president’s comments were supported by Chinese officials.
Vice premier and top trade envoy Liu He told reporters in the US capital the negotiations were “looking very good” and that the trade talks had “reached a new consensus on important issues”.