News / North-south freight rates on the up, but carriers not having it all their own way

Ocean carriers have succeeded in substantially hiking container freight rates on key north-south trades during the past year.

According to Alphaliner, judicious capacity management has pushed spot rates from China to South America to their highest level since the inception of the Shanghai Containerized Freight Index (SCFI) in 2009.

This week, the China-South America component of the SCFI added $48 per teu to hit a new high of $3,599 per teu, which, notes Alphaliner, “is light-years away from the market bottom in early 2016, when containers were shipped from Shanghai to Santos for as little as $100 per teu”.

It said rates from Asia to Africa and the Middle-East had “also recorded significant gains” after capacity cuts resulted in space shortages.

Elsewhere however, on east–west trades, carriers are not having it all their own way – in particular on the transpacific route.

Alphaliner says there is a worrying disconnection between volumes and rates on the trade. It said that despite headhaul volume growth on the transpacific, which grew 5.3% year-on-year between January and May – the steepest growth rate since 2011 – carriers were continuing to slash freight rates to capture market share.

Eastbound liftings in May show the most aggressive carrier that month was niche operator PIL, with a year-on-year increase of 108% in its carryings. HMM added 60%, OOCL 56% and the combined Japanese trio 28% more teu.

According to Alphaliner data, spot rates from China to the US have slumped to a 10-month low and have now lost all of the gains achieved since last September following the demise of Hanjin Shipping, which had controlled 7.5% of the market.

This week’s SCFI recorded a further 4.7% decline in spot rates from Asia to the US west coast to $1,092 per 40ft and a 3.3% fall in rates to US east coast ports to $2,013 per 40ft.

Meanwhile, spot rates from Asia to Europe, as recorded by the SCFI, were virtually unchanged on the week, at $882 per teu for North Europe and $878 per teu for Mediterranean ports.

This rate stability is very encouraging for carriers as they prepare for a fresh round of FAK (freight all kinds) hikes from 1 July and a raft of peak season surcharges (PSSs) the same month. For example, CMA CGM today announced a “new” PSS from Asia to all north European ports of $250 per teu, effective 3 July.

According to shippers who spoke to The Loadstar this week, most carriers are strictly implementing PSSs this year, with sales representatives being instructed that it is “not negotiable” if contracts were agreed subject to surcharges.

The shippers also confirmed that, on the backhaul route from North Europe to Asia and the Middle-East, space shortages were now much less of an issue, although the hefty rate increases imposed in mid-March have been maintained.

One shipper told The Loadstar yesterday that his rate for a 40ft from the UK to China leaped from £500 to $1,500 in the space of a few days in March.

According to Drewry’s World Container Index, spot rates from Rotterdam to Shanghai were flat on the week at $1,432 per 40ft – some 137% higher than a year ago.