News / Ocean carriers benefit from steady rates as new contracts are signed

Container spot rates between Asia and Europe held steady this week, while the erosion of transpacific rates slowed notably as annual contract negotiations intensified.

The Asia-North Europe component of the Shanghai Containerized Freight Index (SCFI) slipped just $4 to $815 per teu, after losing $17 and $45 in the two previous weeks.

This is exceptionally good news for ocean carriers on the route which have not only succeeded in negotiating “significantly higher” annual contract rates, but are benefiting from much higher spot rates than a year ago.

Indeed, for the corresponding week in 2016 the SCFI recorded a rate of $247 per teu from Asia to North Europe. And according to several of the carriers’ operational reports, spot cargo now makes up some 50% of their carryings on the route.

For Mediterranean ports, the SCFI component recorded just a $4 per teu decline to $798, following falls of $16 and $28 per teu previously.

Furthermore, a number of carriers have announced 1 April FAK (freight all kinds) rate increases on the route to coincide with the launch of the new alliances.

Meanwhile, on the backhaul route, with capacity remaining tight ahead of the new alliance structures next month, reports have reached The Loadstar of shippers paying in excess of $2,500 per 40ft to guarantee shipment.

One UK shipper told The Loadstar this week carriers “are not being consistent with their excuses”, some blaming the blanking of westbound sailings for the Chinese new year, the repositioning of ships for the new alliances, draught restrictions in Hamburg and others saying simply that the capacity crunch was the result of higher-than-expected demand.

The latter was the main reason given to The Loadstar by Maersk Line recently, and this week its 2M partner, MSC, said: “While MSC is receiving enquiries in high number for North Europe to Asia sailings for April and May, we are continuing to take bookings and have activated extra staff to best assist the needs of our clients.”

Elsewhere, container spot rates between Asia and the US – which have come under pressure in the past month – slid a modest 3.7% for the US west coast, to $1,288 per 40ft, and by 3.5% for east coast ports, to $2,625 per 40ft.

Spot rates for the transpacific have fallen away from the end-of-January highs of around $2,100 per 40ft for the west coast and $3,700 for the east coast, and carrier negotiators for contracts renewing in May have been forced onto the back foot.

Nevertheless, spot rates on the trade remain substantially higher than for the same week 12 months ago, when the SCFI recorded rates of $748 and $1,651 per 40ft respectively for the west and east coast ports.

Moreover, carriers are attempting to lift rates on the transpacific. Hapag-Lloyd, for instance, this week announcing a $700 per 40ft GRI (general rate increase) for implementation on 20 April.

Charles Deller, chief executive of California-based freight consultant 10XOceansolutions, described the price hike as “another shot across the bows” of the transpacific rate negotiations.