Spot Rates Roller Coaster for Container Shipping
Container spot rates on the transatlantic surged this week and, ahead of Chinese New Year tomorrow, transpacific rates continued to climb, while Asia-Europe rates lost more ground.
Xeneta’s XSI North Europe to US east coast average spot rate jumped by 44%, to $2,078 per 40ft, after carriers took advantage of the Red Sea crisis to reduce capacity and launch significant GRIs (general rate increases).
“If the flood of capacity on this trade was responsible for the collapse in rates, then it stands to reason that it is a key driver for them starting to increase again,” said Xeneta’s chief analyst, Peter Sand.
He explained: “Smarter carrier tactics regarding capacity management became a focal point in Q4 23 and remain the primary factor in the lifting of rates this month, which saw an 18-month low for deployed capacity on this trade.”
Indeed, according to CTS (Container Trade Statistics) data, volumes shipped on the headhaul Europe to US tradelane fell every month last year, and were down 11% overall from 2022.
Having restored spot rates on the transatlantic from sub-economic levels to a historical average of $2,000 per 40ft, it remains to be seen whether the lines can maintain these gains against a backdrop of weak demand.
Meanwhile, with revised carrier Asia-Europe networks incorporating longer voyage times around the Cape of Good Hope now integrated into shipper supply chains, and a weak demand forecast for after CNY, spot rates on the route are starting to decline rapidly.
Drewry’s WCI Asia-North Europe component declined another 5% this week, averaging $4,426 per 40ft, while Asia-Mediterranean spot rates slumped 11%, averaging $5,225 per 40ft.
Asia-North Europe spot rates have fallen by 11% in the past two weeks, compared to an 18% drop for Asia-Mediterranean rates, however, they remain 158% and 97% higher respectively than a year ago.
Moreover, anecdotal reports to The Loadstar this week from shipper contacts suggest the lines will seek to fill their allocations after CNY, with some diversion surcharges likely to be reduced or waived.
Elsewhere, on the transpacific, the mystery of the ongoing rise in spot rates from Asia to the US continues, given that only a small percentage of the trade has been affected by the Red Sea crisis.
The XSI Asia to US west coast spot rate increased by another 12% this week, to $4,533 per 40ft, while the Freightos Baltic Index (FBX) Asia-US east coast reading improved by 4%, to $6,373 per 40ft.
Spot rates for the US west coast are approximately 130% higher than 12 months ago, with rates to the east coast double what they were at this time last year.
Although demand from Asia to the US has been stronger than to Europe ahead of CNY, there appears to be no logical reason why spot rates have not decreased in line with European trades, despite the lesser impact on the trades from the Suez Canal diversions.
Carriers will be eager to retain as much of the spot gains as possible as they enter the transpacific contracting season, however, shippers and BCOs are likely to try to delay signing new annual contracts or choose quarterly deals until short-term rates have stabilized.