News / More volatility expected as transpacific spot rates rebound after weeks of decline

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This week it was the turn of the Asia-North America spot rates to rebound after a long period of decline, while North Europe failed to keep hold of last week’s gains after a series of FAK rate increases.

The Shanghai Containerized Freight Index (SCFI) recorded an 8.9% jump in spot rates, to $2,428 per feu, in Asia-US east coast sailings, while the transpacific Asia-US west coast rates surged 11.8% to $1,413 per feu.

Thomas Sorbo, chief operating officer of freight rate benchmarking platform Xeneta explained that the past 12 months had seen some “extremely aggressive” general rate increases (GRIs) between China and the US west coast.

“These have lost momentum but there has been a general trend,” said Mr Sorbo. “As to whether rates will continue to rise, I expect continuous volatility.”

Xeneta recorded more muted growth in Asia-US west coast rates, which climbed 6.2% to $1,431 per 40ft – last year these rates were at $1,005 per 40ft.

Mr Sorbo said with contract negotiations having ended, long-term rates were spread “extremely” wide, and at a higher level than last year.

“There would appear to be a lot of insecurity among US forwarders,” he added. “With a wide spread between the most competitive.”

Senior manager for container research at Drewry Maritime Simon Heaney said he had yet to see an upswing in the figures – partly down to the way Drewry assesses rates – but a rise would not surprise him.

“The Transpacific routes have been buoyant compared to where there were last year and in 2015,” said Mr Heaney. “Rates from Asia to the US west coast are up 55% on last year, and the increase on US east coast is 46%.”

Mr Heaney said much of this is down to the fundamentals working in the carriers’ favour.

“The fourth quarter’s strong demand has carried over into this year,” he continued. “And carriers have combined this by curbing capacity.”

Compared to last year, said Mr Heaney, June’s capacity to the west coast is down 6.9% while on the east coast it has been reduced by 1.7%.

“Carriers should be much happier about this,” he added.

Nonetheless, this week’s SCFI spot rates are still some way below where carriers want them to be. Last week CMA CGM announced transpacific FAK increases, which ought to have come into effect yesterday, of $1,650 per feu to west coast ports and $2,650 per 40ft for Asia-US east coast represent a difference of 15.3% and 10% on Xeneta’s current rates respectively.

Figures from Hyundai Merchant Marine (HMM) indicated the increase was the result of a significant upswing in demand, with April’s volumes from Asia to the US west coast up 73% year-on-year.

The carrier said by the end of April it had been handling 13,186 teu a week, compared with the 7,604 teu in 2016, noting the growth was linked to its cooperation agreement with the 2M alliance. Volumes for HMM’s routes from Asia to the rest of the US rose at a comparable degree, up 67% to 17,932 teu a week.

“HMM has raised its market share along with its ranking, as its volume has shown dramatic increase compared to last year,” said a spokesperson for the carrier.

“We expect gradual improvements in profitability, since we’re heading into the peak season with higher volumes, and we’ll do our best to reward all customers who have shown trust in us.”

And it seems that volumes are faring well on the return leg, with HMM noting US west coast-Asia volumes were up to 7,336 teu a week.

Maersk capitalised on heightened demand by raising reefer rates from the US to the Far East – up $500 per 40ft from US east coast ports, and $200 per 40ft from inland locations.

European trades failed to hold their own this week. After a 5.7% upswing last week, Asia-North Europe rates dropped 4.5% to $920 per teu; Asia-Mediterranean also fell 2.6% to $920 per teu.

CMA-CGM, however, did decided to push through a $150 increase on rates from the Mediterranean to US east coast, which now stand at $1,250 per teu, and a $200 upswing per feu to $1,400.