News / Spot rates ease, but 'no reason' to expect quick return to pre-pandemic levels

Source ONE

There was a further slight softening of container spot rates from Asia to the US and Europe this week, but carriers appear to have held their nerve and avoided any significant discounting after China’s Golden Week holiday.

The Freightos Baltic Exchange (FBX) US west coast component declined by 2%, to $17,069 per 40ft, while the east coast reading edged down by 1%, to $20,501 per 40ft.

Meanwhile, Drewry’s World Container Index (WCI), which does not include premium fees, was unchanged for the US west coast, at $10,898 per 40ft, but down by 1% for east coast ports, at $13,939 per 40ft.

According to the Ningbo Containerized Freight Index weekly commentary, freight rates on the transpacific are being kept elevated due to “the serious stagnation of ships at the port of destination”.

Indeed, the number of vessels at anchor or drifting in the San Pedro Bay area awaiting berths at Los Angeles and Long Beach has climbed back over 70 this week.

Nevertheless, there is some evidence that demand is easing, according to data from the port of Los Angeles’ Signal cargo forecaster, which shows manifested cargo on ships arriving in the coming week is just 1% higher than for the same week of last year, at 142,719 teu.

Meanwhile, the FBX reading for North Europe slipped by 1.5%, to $14,259 per 40ft, with Drewry’s WCI as flat at $14,555 per 40ft.

Conversely, for Mediterranean ports, the FBX was unchanged, at $13,361 per 40ft, while the WCI showed a decline of 1%, to $13,544 per 40ft.

In many cases, shippers from Asia to Europe are obliged to pay premium fees, to secure equipment and guarantee prompt shipment, of up to $3,000 per 40ft.

Several of The Loadstar’s shipper contacts have reported standard 20ft containers becoming more difficult to get in Asia than 40ft boxes and that carriers were asking around $10,000 for prompt shipment from China.

On the transatlantic, spot rates, as recorded by the FBX, were flat, at $7,178 per 40ft with the WCI down 1%, at $6,157 per 40ft.

The question most asked by shippers attending the Multimodal event in Birmingham this week was ‘when will freight rates return to normal?’. Patrik Berglund, CEO of ocean freight benchmarking platform Xeneta, doesn’t expect this to happen any time soon. Xeneta’s short-term freight rate index has recorded a 900% increase in the past 12 months alone.

And Mr Berglund paints a gloomy picture for shippers on both short and long-term deals, against a backdrop of continued supply chain disruption.

“There is no reason to think container rates will drop back to pre-covid levels, surcharges disappear or that schedule reliability will improve as supply chain problems worsen,” he said.