More blank sailings check rates decline, but eyes are on the carriers
The ‘drip-drip’ erosion of container spot rates on the transpacific and Asia-Europe tradelanes since the ...
With capacity remaining extremely tight ahead of Chinese New Year, shippers are bracing for a further wave of rate increases on container trades out of Asia.
The spot rate indices this week were virtually unchanged – the Freightos Baltic Index (FBX) Asia-North Europe component stable at $14,496 per 40ft, and its US west coast and east coast readings at $14,924 and $16,865 per 40ft, respectively.
However, The Loadstar understands that carriers are preparing to roll out GRIs (general rate increases) and FAK (freight all kinds) hikes of up to $1,000 per 40ft across Asia-Europe and transpacific routes from 1 January and, in some cases, reintroduce equipment and space guarantee premium fees.
And, in more unwelcome news for shippers, oil price hikes this quarter will trigger carrier bunker surcharge formula upgrades from 1 January, with, for example, CMA CGM resetting its Asia-North Europe BAF for Q1 22 at $345 per teu.
Judah Levine, head of research at Freightos noted that the recent outbreaks of Covid, including the Omicron variant, in China’s Zhejiang province could cause further disruptions to the supply chain and increase the pressure on rates.
Indeed, the continued feedback from The Loadstar’s forwarder contacts is that Asia-North Europe carriers are reluctant to quote for January shipments while they assess the take-up of their contract commitments.
Meanwhile, freight rate benchmarking firm Xeneta said that, based on the first batch of data sourced from its portfolio of shipper subscribers, most 2022 contracts will be agreed “at record high levels”.
According to Xeneta, contract bids were falling into three main price brackets: the lowest rates being offered by carriers required shippers to either agree to multi-year deals, or encompass a wider logistics participation; mid-range agreements consist of “traditional” carrier offers – albeit at considerably higher rates; and, unsurprisingly, according to the Xeneta data, the highest contract rate agreements are being reserved for freight forwarders.
Xeneta said the average long-term deals coming in for Asia-North Europe signed in the past three months, was $11,900 per 40ft – representing a considerable increase on 2021 contracts and include “a large range of offers”.
Xeneta chief analyst Peter Sand said shippers needed to decide whether they had “any real alternatives” to agreeing to these record high rates.
“Though the absolute level of the long-term rates coming in may leave you gobsmacked, the fact that they follow the spot market should come as no surprise, as the long- and short-term rates are correlated,” he said.
Xeneta said the importance of stability and predictability in global supply chains would be “the biggest priority for many shippers as they enter these tough negotiations”.