News / Ocean rates ex-Asia under pressure, while PSSs return to the transatlantic

Container freight rates from Asia are expected to come under renewed pressure in the usual soft-demand period following the Chinese New Year.

However, with spot rates on the transpacific and Asia-North Europe tradelanes having already plummeted below break-even levels, ocean carriers will not hesitate to blank sailings with little or no notice – over and above those already announced – if potential utilisation levels dip below a minimum.

The proactive blanking strategy achieved some success on the Asia-North Europe trade before the CNY holiday, with anecdotal reports to The Loadstar suggesting the vessels that did sail were reasonably full.

The clear message to shippers the lines will want them to note is that they succeeded in achieving equilibrium on the route pre-CNY, and that, however painful, they are prepared to slash capacity to keep load factors at an acceptable level.

Moreover, talk of ‘full ships’ to North Europe will assist the line negotiators in persuading reluctant shippers to sign new contracts and avoid the risk of their cargo being rolled when vessels are overbooked.

So far, the new Asia-Europe contract season has proved lethargic, with the lines simply extending ‘special’ low FAK rates to contract shippers on demand, but if space stays tight after CNY, then shippers, requiring a reliable supply chain  more than the lowest rates, could be persuaded to sign.

Meanwhile, Xeneta’s XSI Asia-North Europe component edged down 2% this week, to $1,786 per 40ft, comparedwith $14,524 in the same week of 2022.

For Mediterranean ports, Drewry’s WCI was flat, at $2,778 per 40ft, 78% lower than 12 months ago.

On the transpacific, the Freightos Baltic Index (FBX) spot rate from Asia to the US west coast bottomed out, at $1,326 per 40ft, compared with $15,485 a year ago. The FBX reading for east coast ports was also flat on the week, at $2,640 per 40ft, versus $16,986 the same week of last year.

Meanwhile, congestion has eased significantly at US east and Gulf coast ports, with the latest data from John McCown’s Blue Alpha consultancy recording an 18% year-on-year slump in import container throughput during December at New York & New Jersey terminals, to 321,452 teu.

On the transatlantic tradelane, the expected collapse of freight rates on the North Europe to US east coast leg, a consequence of carrier capacity upgrades and an influx of new services, is yet to be reflected in the spot indices. Indeed, both the XSI and the WCI North Europe to US east coast readings were unchanged this week, at $6,086 and $6,322 per 40ft, respectively.

And the robustness of the tradelane has prompted carriers to consider imposing rate increases. In fact, CMA CGM has announced a new PSS (peak season surcharge) from North Europe to the US, Canada and Mexico from tomorrow of $1,050 per 20ft, but strangely (possibly due to equipment availability) ‘only’ an extra $600 per 40ft.

CMA CGM has clarified that this PSS is not a new surcharge, but rather a revision of the previous PSS which was for instance; from North Europe to US east coast ports $1,300 per 20 ft and $1,100 per 40 ft – hence there is a reduction in the PSS.