Container spot freight rates on the transpacific and Asia-Europe routes have experienced another week of slight declines of less than 10%, primarily due to a lack of price hikes from carriers.
Interestingly, even with relatively tight capacity, discounts offered by carriers on Asia-Europe and transpacific routes contributed significantly to the drop in rates this week.
According to Drewry’s World Container Index (WCI), the spot rate for shipping from Shanghai to Rotterdam decreased by 3% from the previous week, ending at $4,677 for a 40-foot container. The rate for the Shanghai to Genoa route fell even more, dropping by 6% to $5,630 per 40ft. Analysts from Linerlytica mentioned that some carriers are now offering rates below $5,000 per 40ft, as support for the rate hike that occurred on August 1 is fading.
Additionally, the latest Shanghai Containerised Freight Index (SCFI) indicates that gentle declines in rates may continue into next week, again due to the absence of Full Container Load (FAK) increases. Spot rates to North Europe and the Mediterranean are both down by 4% compared to last week.
Drewry pointed out that as demand continues to decrease, carriers are managing capacity with blank sailings to avoid further rate reductions. They noted that three blank sailings are scheduled on the Asia-Europe route next week, down from four this week.
Carriers plan to support rates through a new set of FAK levels in mid-August. MSC announced that it will implement a new FAK level on August 15, with rates set at $7,800 per 40ft for Asia-North Europe shipments and $6,700 per 40ft for Asia-Mediterranean shipments.
On the transpacific side, carriers are expected to attempt to raise prices in the coming week. The WCI reported that the Shanghai-Los Angeles route dropped by 2% this week to $5,739 for a 40ft container, while the Shanghai-New York rate remained steady at $7,578 per 40ft.
Freight Right, a US west coast forwarder, explained that the recent decline on the transpacific route occurred as ocean carriers allowed rates to drop to boost market demand and return pricing to a temporary state of balance.
Tomorrow, August 1, marks the implementation of the latest General Rate Increases (GRIs) for transpacific shipments, with hikes ranging from $2,000 to $3,000 per 40ft, depending on the carrier.
The current SCFI shows some optimism among carriers, as rates from Shanghai to both the east and west coasts jumped by 12.5% week over week.
Freight Right commented that the sustainability of these rate increases will depend on consistent cargo volumes. If demand remains steady, with importers continuing to ship under the clearer tariff conditions, carriers might maintain rates near current levels or see modest increases. However, if demand fails to grow, the market may quickly revert to current pricing after a brief spike in August.
Drewry mentioned that carriers aim to support the GRIs by increasing blank sailings due to decreasing demand and a slowdown in front-loading activities. According to Drewry’s Container Capacity Insight, eight blank sailings are planned for next week, up from seven this week.
Furthermore, this week, Chinese carrier BAL Container Lines canceled a plan to offer a one-time 14,000 TEU extra loader to the US west coast. Instead, the vessel will be chartered to Maersk for deployment on Asia-Europe trades.