OX: Hormuz good and bad; freight rates' eternal tango; rebuilding the UK
Waiting for the green light again…
Container spot freight rates on the largest east-west trades continued to diverge for a second consecutive week, with transpacific carriers seeing some success with their latest GRIs as Asia-Europe rate declines persisting.
Buoyed last week by 1 September GRIs which had lifted spot rates on the transpacific routes, this week saw further pricing gains, with Drewry’s World Container Index (WCI) seeing a 6% week-on-week increase, to $2,678 per 40ft on its Shanghai-Los Angeles leg.
Similarly, the WCI’s Shanghai-New York leg recorded a 2% rise, to end the week at $3,743 per 40ft. The other main indices – the Shanghai Containerised Freight Index (SCFI), Xeneta’s XSI and the Freightos FBX, all recorded similar movements and spot rates in the same range.
“Transpacific container rates climbed on September GRIs, following weeks of decline,” said Freightos’s lead analyst, Judah Levine.
“These increases still put prices at about a third of their levels a year ago, but may hold for now on some bump in demand in the lead-up to Golden Week – though overall container demand into the US is trending down – and increases in cancelled services and blanked sailings,” he added.
The next round of transpacific carrier GRIs – ranging from $1,000 to $3,000 per 40ft, depending on carrier – are scheduled for next Monday, 15 September, indicating further increases could be imminent.
Additionally, Xeneta chief analyst Peter Sand suggested that carrier preparations for the 14 October implementation of the US Trade Representative’s 301 port fees on Chinese vessel operators and Chinese-built ships could also be propping up transpacific pricing.
“Carriers are swapping China-built vessels on services into the US ahead of USTR port fees – this could be one of the factors behind increasing spot rates on transpacific trades,” he said. “Swapping out China-built ships may not result in lower capacity or blanked sailings, but it will cause disruption, with the potential to impact rate development.
“For example, Gemini is swapping out a total of 60 000 teu across six China-built vessels on the US2 service, which calls at both the US east and west coasts – it’s clear this is a concerted effort to minimise China-built teu on these trades,” Mr Sand added.
Meanwhile, it was another week of double-digit declines on the Europe-Asia trades, with the WCI’s Shanghai-Rotterdam leg down 10% week on week, to $2,143 per 40ft, and Shanghai-Genoa down 12%, to $2,342 per 40ft, confirming that the brief period in which rates to North Europe and the Mediterranean were in parity has come to an end.
“On 1 August, average spot rates on trades from Far East to North Europe and Mediterranean were aligned, but the spread has now increased to $500 per 40ft,” Mr Sand said.
“This is a fascinating story, because the spread is caused by North Europe falling harder, while Mediterranean is holding firmer on both short- and long-term markets.
“One factor is found in stronger demand at ports in the Western Mediterranean, which is helping to hold spot rates up, in comparison with North Europe,” he explained.
It appears increasingly clear that the height of the Asia-Europe peak season happened in early in July, when the WCI spot rate stood at $3,468 per 40ft, and then remained at a slightly lower level for the remainder of the month. Today’s WCI is some 38% down on that.
And the most recent pricing data released by Container Trades Statistics underscored the structural weakness undermining pricing on the trade, with its Far East-Europe price index (PI) for July, which records prices paid both under spot and contract, standing at 96, some 47% below the July 2024 PI level of 181.
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