News / Transpacific rates still under pressure but Asia-Europe space still tight

Container spot rates from Asia to the US came under more pressure this week, with the Shanghai Containerized Freight Index (SCFI) to both west and east coast ports falling sharply.

Spot rates showed a 10.3% decline on the week for US west coast ports, to $1,146 per 40ft, while for the east coast there was a drop of 6.8% to $2,081 per 40ft.

This further rate softening, just ahead of the all-important peak season, followed a 9.6% and 8% fall respectively the previous week.

Carriers will be alarmed that rates continue to fall despite robust Asian exports being handled at major US ports, although the weakness is predicted to ease.

US forwarder Flexport said in a market analysis this week that the 1 June general rate increase (GRI) of $150-200 had been only “partially implemented”, while the 15 June GRI was “abandoned altogether”.

However, it added: “Space will tighten in late June in preparation for back-to-school shipping.”

According to the latest monthly Global Port Tracker report, compiled by the US National Retail Federation (NRF) and Hackett Associates, volumes are set to hit all-time highs by the end of the summer.

NRF vice president for supply chain and customs policy Jonathan Gold said: “That’s because retailers are responding to strong consumer demand.”

Indeed, ports covered by Global Port Tracker handled throughput of 1.61m teu in April, up 11.3% year-on-year, which followed a 15.8% growth in March.

This growth is expected to slow significantly as figures start being compared with the strong volumes in the second half of 2016. However, the report predicts volumes in May to be ahead year-on year by 3.9% and in June and July by 4.1% and 3.5% respectively.

Carriers are endeavouring to stop the rate erosion with a mixture of GRIs and peak season surcharges for July and August.

For example, Hapag-Lloyd said it would implement a GRI from Asia to the US and Canada of $560 per 20ft and $700 per 40ft, effective 15 July.

On the same date, the carrier will introduce a PSS of $320 per 20ft and $400 per 40ft with the PSS increasing from 1 August by $240 per 20ft and by $300 per 40ft.

On the Asia-Europe trades, the SCFI recorded spot rates down a few percentage points this week to $880 per teu for North Europe ports and $877 per teu for the Mediterranean.

However, most Asia-Europe carriers are enjoying much higher contract rates than a year ago, and one container line executive told The Loadstar this week his company’s ratio of spot cargo had fallen to “below 25%” on recent voyages, as space from Asia remained tight, even before the start of the peak season, a situation confirmed by forwarders.

On the backhaul rout, carriers are continuing to benefit from unprecedentedly high rates. Drewry’s World Container Index (WCI) this week recorded a 21% hike in spot rates from Rotterdam to Shanghai, to $1,452 per 40ft.

This follows a 10% uplift in last week and means rates on the route are now 140% higher than a year ago, as shippers continue to experience capacity issues when booking containers.