News / Transpacific box carriers see new threat on the horizon as rates tumble

Container spot rates on the Asia-Europe trade held firm this week, but carriers are likely to be concerned by a decline on eastbound transpacific rates.

Today’s Shanghai Containerized Freight Index (SCFI) recorded an increase of 7.3% for spot rates to North Europe to $921 per teu and a 4.5% uplift for Mediterranean ports to $882 per teu.

According to Patrik Berglund, chief executive of ocean freight pricing platform Xeneta, the average rates of contracts being agreed with carriers is “substantially higher” than last year, at $1,974 per 40ft compared with a figure below $1,000 12 months ago.

Mr Berglund told The Loadstar today long-term Asia-Europe contract rate levels currently being agreed were “pulling the market up”, which could eventually see freight rates on the route return to 2014 levels of some $3,000 per 40ft.

And carriers are also substantially pushing up freight rates on the eastbound backhaul legs to Asia as space tightens, partly due to the blanking of westbound sailings during and immediately after Chinese New Year.

Indeed, this week Maersk Line published new FAK [freight all kinds] rates from North Europe to Asia, effective 15 March, that are actually higher than the carrier’s westbound rates.

Maersk’s FAK rates from Shanghai to Felixstowe will be $1,100 per 20ft and $2,000 per 40ft; whereas in the reverse direction, $1,280 per 20ft and $1,600 per 40ft. Furthermore, its backhaul rate on the same route for the normally low-rated wastepaper and plastic scrap is even higher, at $2,125 per 40ft.

The Loadstar has heard complaints from some UK shippers that they are struggling to get export space, and at the same time their rates are being pushed up. This has all the hallmarks of developing into a similar situation to that of 2013’s “eastbound capacity crunch”, when carriers imposed a three-month eastbound “booking stop” after cancelled westbound sailings reduced backhaul capacity.

Container lines also hiked rates considerably during that period, prompting complaints from shippers that they were being held to ransom.

Meanwhile, Asia-US carriers are seeing a worrying fall in spot rates on the transpacific trade. For the third week running, the SCFI recorded a significant drop in spot rates on the route.

This week rates for the US west coast declined by 6.8% to $1,650 per 40ft, while for east coast, ports rates were down by 4.9% to $3,055 per 40ft.

Although spot rates are still much healthier than a year ago, as the contract season begins US shippers may feel that they should defer signing new deals for as long as the spot rates continue to fall.

Anecdotal reports suggest that the launch of HMM’s standalone service in April, Hanjin successor SM Lines’ new service in the same month and the new Zim loop are exerting pressure on spot rates for the route.

Mr Berglund warned that established carriers could not afford to be complacent and should be on the lookout for the potential threat from “new or daring liners”.