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Spot container freight rates on the transpacific and Asia-Europe are coming under intense pressure ahead of a weak outlook for the markets following China’s Golden Week holiday factory shutdown the first week of October.
Today’s readings of the Shanghai Containerized Freight Index (SCFI) show further declines, the North Europe component falling 6.2%, to $710 per teu, while rates to west Mediterranean ports were down 2%, to $877 per teu.
Spot rates for North Europe are about a third lower than at the start of the year and continued to fall during peak season, even with anecdotal reports of ships leaving China with 95% utilisation levels, a situation that must be extremely concerning for carriers ahead of the traditional slack season.
One forwarder source told The Loadstar this week he had already received “big discounts” on rates for October.
“They are clearly very worried about what they are seeing in their booking forecasts,” he said.
Indeed, the latest edition of the North European container hub Global Port Tracker is pessimistic about import throughput for the rest of the year and into 2020.
“For North European imports we project the second half of 2019 to barely hold onto positive growth, and the first half of 2020 to be negative,” said the report’s author, Ben Hackett.
Meanwhile, the 2M alliance announced this week it was suspending its AE2/Swan loop from the end of the month, removing some 20,000 teu of weekly capacity from the tradelane, adding that the service would be reactivated in mid-November, “provided market demand recovers”.
Maersk and MSC also confirmed a void voyage of their AE7 and Condor service for week 41, in connection with the upcoming Golden Week, taking out about 17,000 teu of capacity.
The rival Ocean and THE alliances have also blanked sailings around Golden Week, but unlike the 2M, had already removed more than 150,000 teu of capacity during the peak season in an endeavour to shore up rates.
Elsewhere, after last week’s GRI-fuelled 26% jump in spot rates from Asia to the US west coast, today’s SCFI recorded a 3% decline, to $1,566 per 40ft, and for the US east coast the index is down 2.2% on the week, to $2,631 per 40ft.
After deploying extra loaders during the peak season, transpacific carriers are now preparing for the soft demand following tGolden Week and have announced nine blank sailings next month to the US west coast and six to the US east and Gulf coasts.
Notwithstanding this seasonal weakening, carriers are also seeing demand fall due to the impact of the additional raft of US import tariffs on Chinese goods that kicked in on 1 September.
“With the hard fought GRIs at the start of September already starting to slip, Chinese Golden Week now starting to draw focus and the new US-China tariffs, there seems little positivity on the transpacific tradelanes at present,” George Griffiths, editor, Global Container Freight Market, at S&P Global Platts told The Loadstar today.