Carriers Pushing Rate Hikes Ahead of Likely Service Suspensions
Asia-Europe ocean carriers are attempting to increase rates on the troubled trade lane for next year.
Hapag-Lloyd has joined CMA CGM in raising its FAK (freight all kinds) Asia-North Europe 40ft rate to $3,000 from 1 January.
However, the lines still have a long way to go to meet their goals; for example, Drewry's WCI Asia-North Europe component is currently at $1,343 per 40ft this week, although it has increased by 15% in the past seven days.
Meanwhile, Hapag-Lloyd's new FAK rate for West Mediterranean ports will be $3,200 per 40ft from the new year, which is $200 higher than proposed by CMA CGM.
This week, the WCI Asia-Med spot also saw a 15% increase to $1,608 per 40ft. However, Lars Jensen of Vespucci Maritime argues that the rate jump needs to be put into perspective, as it only brings the rates back to mid-September levels.
Other carriers are expected to follow suit in the coming days, increasing their FAK rates by a similar amount, in an attempt to start 2024 on a firm financial footing.
Furthermore, carriers are blanking around 40% of their advertised sailings from China, which is squeezing the market and causing more shippers to report booking difficulties for December shipments. This is happening as carriers try to achieve a maximum percentage of their general rate increases (GRIs) before the start of the Chinese New Year holiday on 10 February.
Mr. Jensen believes that carriers will have to take more drastic measures to address the worsening supply/demand imbalance, such as idling vessels and closing down entire loops, especially after the Chinese New Year.
In the transpacific trade lane, the Asia-US west coast spot rate decreased by only 2% on the week to $1,939 per 40ft, which is just 3% lower than the same week last year. US east coast rates increased by 7%, reaching $2,747 per 40ft, but still 31% lower compared to 12 months ago.
On the other hand, carriers serving the transatlantic trade lane continue to suffer huge losses due to sub-economic rate levels. For example, Xeneta's XSI North Europe to US east coast spot rate is at an average of $1,305 per 40ft, which is an estimated $700 below break-even and significantly lower than the approximately $7,000 a year ago.