Container spot rates on the two biggest tradelanes slumped again this week, as the optimism expressed by carriers for a satisfactory peak season all but evaporated.
The north Europe component of the Shanghai Containerized Freight Index (SCFI) fell a further 2.3%, to $793 per teu, which represents a massive 20% decline on rates since January, and is 17% below the level of 12 months ago.
Despite attempting to squeeze capacity and threatening to “100% roll cargo” in notifications to customers, Asia-North Europe carriers are having to face the reality of a ‘damp squib’ peak season and are already announcing rate discounts for next month.
For example, from 1 September, CMA CGM’s FAK rate from Asia to North Europe drops from $2,200 to $1,900 per 40ft, a 13.6% discount, with the prospect of more to come as post-peak season demand contracts.
The one bright spot for Asia-Europe carriers is the robust nature of the Asia to west Mediterranean tradelane, where lines were able to push through FAK increases and even PSSs (peak season surcharges) this month, evidenced by CMA CGM being able to maintain its rate of $2,400 per 40ft for September.
Although the SCFI recorded a 4.7% dip in spot rates this week, to $969 per teu, the current spot rate for the Mediterranean is around 22% higher than the market for North European ports, and is about 37% above the rates at the beginning of July.
Meanwhile, on the transpacific tradelane, there was even more woe for ocean carriers. Spot rates for the US west coast, as recorded by the SCFI, tumbled another 6%, to $1,286 per 40ft, while rates for east coast ports sank 4.2%, to $2,436 per 40ft.
Worryingly for carriers, spot rates for the transpacific are now around 40% lower for the US west coast and 27% below for east coast ports than a year ago.
Notwithstanding the better-than-expected 2.7% import growth at US ports last month, anecdotal reports to The Loadstar suggest August vessel utilisation levels are proving “very disappointing”, hence the downward pressure on rates.
“Peak season prospects are looking increasingly dim for carriers,” confirmed Freightos chief marketing officer, Eytan Buchman. He says the “telling sign” for transpacific carriers was the cancellation of mid-August price hikes, caused by the knock-on effect of front-loading to beat US import tariff hikes on Chinese goods.
“Since many August orders were brought forward by apparently justified tariff fears, demand this month was strongly impacted,” he said.
Cumulatively, the SCFI is 14% below the level of the same week of 2018, with a reading of 775, reflecting a generally soft market on all liner trades.
The only positive news for carriers, which should be enjoying the most remunerative period of the year, is that fuel prices have slumped 26% since the start of the quarter. This may help mitigate the impact of softening freight rates.
