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Carriers on the key Asia-Europe trades saw container shipping spot freight rates lift this week in advance of introducing new FAK levels on 1 June next week.

According to this morning’s Shanghai Containerised Freight Index (SCFI), spot rates between Shanghai and North European ports increased 4% to reach $825 per teu, while rates from the Chinese export hub to Mediterranean ports ticked up by 6.7% to $848 per teu.

The upwards trajectory will give carriers some hope that new FAK rates they hope to apply next week – CMA CGM has announced a rate of $950 per teu on the route, for example – may at least be partially achieved.

In contrast, Hapag-Lloyd’s efforts to raise its FAK rates to $1,200 per teu on the same date would appear likely to come up short, on today’s evidence.

There was less positive news for carriers on the routes between Asia and North America – today’s SCFI showed a 1.9% decline on spot rates from China to the US west coast, to $1,283 per 40ft, while shipments to east coast ports declined 2.6% to $2,271 per 40ft

However, in the wake of difficult first-quarter financial results recently posted by carriers, analysts are mixed about the industry’s prospects this year.

In a commentary earlier this week, analysts at Jeffries argued that rates should rebound in the second half of 2018 as capacity injections tail off.

“We continue to believe the container shipping sector is set to benefit from a rapidly improving market balance, with expected high capacity growth of 8% for the second quarter, in line with the first quarter, followed by a slowdown to low-single digit growth for the second half, based on today’s record-low order book.

“Container demand increased by 4.8% the first quarter, in line with expected growth of 4%-5% this year, while the risk of an escalating trade war between the US and China has been reduced, after tariff increases on Chinese imports were put on hold,” it said.

But Alphaliner was far less sanguine, arguing that capacity additions would increase as carriers continued to battle for market share.

“Faced with the stark choice of cutting back on capacity or risking continued freight rate weakness, carriers have thus far chosen the latter course. Average capacity operated by the top-13 carriers has increased by 9.1% year-on-year, as essentially everyone is still chasing market share at the expense of securing higher freight rates.

“The aggressive capacity additions are expected to continue through the summer, with a raft of newbuildings due to come on stream. Charter rates will maintain their upward path on the back of strong vessel demand,” it said.

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