Container spot freight rates on major east-west trade routes remained steady this week, as excess capacity and inconsistent demand prevented further price increases by shipping companies.
This week's World Container Index (WCI) from Drewry indicated that spot rates on the transpacific and Asia-Europe routes have stabilized after recovering from the impacts of the recent conflict in the Middle East.
The Shanghai-Rotterdam rates stayed unchanged from last week at $2,543 per 40ft container, while rates from Shanghai to Genoa increased by 2% week-on-week, reaching $3,529 per 40ft. This suggests that the new rates introduced by carriers on April 1 have not yet impacted the market significantly. CMA CGM, for instance, set a new rate of $3,500 per 40ft for Asia-North Europe shipments, which is still about $1,000 above current market prices.
Analysts from Linerlytica noted that carriers on the Asia-Europe routes seem to be focusing on volumes over prices.
“Asia-Europe rates fluctuate, as carriers announce price hikes only to lower them when demand doesn't support increased utilization,” the analysts reported this week.
“Maersk continues to undercut the market with discounts after raising rates, and this pattern is likely to repeat in April,” they added.
Drewry pointed out that only four blank sailings have been scheduled for next week. Therefore, unless demand surges during the Easter holiday, this trend is expected to continue.
The transpacific trade experienced similar conditions, with the Shanghai-Los Angeles route decreasing by 1% to $2,663 per 40ft, whereas the Shanghai-New York leg rose by 1% to $3,434 per 40ft.
However, recent data from Xeneta shows that shippers and forwarders are facing about a 30% rise in spot rates from late February to early April.
“With five weeks into the closure of the Strait of Hormuz, spot rates on all major East-West trade lanes have sharply increased, indicating that this conflict affects global ocean supply chains,” said Peter Sand, chief analyst at Xeneta.
“For trades directly impacted by the Middle East disruption, rates have climbed 31% and 30% since late February,” he noted.
“Even trades like Far East to US West Coast, which are far from the conflict, have seen a 29% increase in spot rates since the end of February,” he added.
Xeneta’s average spot rate for the Far East to US West Coast was reported at $2,430 per 40ft container, while rates to the East Coast stood at $3,382 per 40ft.
However, this upward trend appears to have paused for now. US west coast freight forwarder Freight Right mentioned that shippers could still find rates as low as $1,650 from China to the US West Coast and $2,450 to the US East Coast. Low demand in the US, exacerbated by rising fuel prices, has led carriers to adopt a very short-term pricing approach.
“After trying to increase prices in late March, carriers saw volumes drop, which forced them to lower rates slightly to attract cargo,” they explained.
“By committing to seven-day rate windows, carriers protect themselves against unexpected fuel price spikes or drops in demand,” they added.
Nonetheless, fuel costs remain a significant concern. Various emergency fuel surcharges will be introduced in the coming weeks due to the ongoing conflict, which is likely to raise prices further. However, Mr. Sand mentioned that carriers have other strategies to manage rising costs, although these options may not be appealing to shippers.
“Bunker fuel costs in Singapore, the leading bunkering hub, are now about double what they were before the crisis, but have slowly begun to decline after a sharp initial spike,” he said.
“Fuel prices in Rotterdam are still rising, and ship-to-ship fuel transfers in the Far East add to costs and complexity.”
“With no clear resolution to the crisis in sight, carriers are likely planning alternative strategies,” he noted.
“In the coming weeks, it will be seen whether slow steaming and alternative routes can maintain stability, or if blank sailings become the next decision point for carriers,” he added.