News / No rate relief for ocean shippers as hopes of usual post-CNY slump sink

Long Beach, © trekandshoot | Dreamstime.com

Ocean carriers are determined to keep container spot rates at their highly elevated levels for as long as possible, as they look to lock in annual contract customers with rate increases of 100% or more. 

And with no sign of a spot rate decline following the beginning of Chinese New Year last week, shippers that have held off sitting down with their carriers, expecting the normal rate erosion after CNY, are now having to bite the bullet and agree much higher contract rates, rather than taking their chances on the spot market. 

Commenting on the dire market situation for shippers, Gordon Downes, CEO of digital contract platform New York Shipping Exchange, said he did not believe rates would retreat after the pandemic, “for a few years”. 

“In fact, I think the industry is at the beginning of a structural upcycle,” he added.

Indeed, today’s reading of the Asia to North Europe component of the Freightos Baltic Index (FBX) is up 3.6% on the previous week, at $8,455 per 40ft, up 145% since early December and a massive 428% since the same week last year. 

Moreover, spot shippers are obliged to pay a raft of extras, including container retention and expedited booking fees, with UK importers paying an average $2,000 per box on top – unofficially termed by some carriers as “an out port surcharge”. 

“Shipping lines are accepting bookings based on profitability or long-term strategic importance, and hence small– to medium–sized shippers are being sacrificed,” complained Toto Dirgantoro, chairman of the Asian Shippers’ Alliance this week. 

Despite a shortage of haulage in China, due to drivers quarantining prior to CNY, carriers apparently still have a substantial amount of previously rolled cargo to sweep up before they have to start chasing bookings. 

And a cynical UK forwarder suggested to The Loadstar this week that the 2M’s last-minute cancellation of the sailing of the MSC Erica on Sunday had “more to do with keeping capacity tight than improving schedule reliability”. 

Elsewhere, spot rates from Asia to east Mediterranean ports, as recorded by the FBX, were up 2.9% on the week, at $7,875 per 40ft, having increased by 270% on 12 months ago. 

On the equally hot transpacific tradelane, demand for space from Asia to the US is unrelenting: according to Los Angeles port Signal data, vessels stemmed for arrival next week are loaded with 189,000 teu of imports, as per manifest, which is 340% up on the same week of last year. 

However, ships are having to wait up to 10 days for berths at LA and Long Beach, with reports of 35-40 ships at anchorages on a daily basis and, as a consequence, carriers are seeking alternative ports. 

After plateauing for several weeks, spot rates from Asia to the US west coast increased by 7% this week, according to the FBX, to reach a new record of $4,640 per 40ft, and achieved another record for east coast ports of $5,639 per 40ft – up 6.3% on the week before. 

“The continued peak and congestion has some US retailers worried that Easter-related goods won’t arrive in time, while carriers are reporting fully booked ships through to the end of the month,” said Freightos research lead Judah Levine.