Container freight spot rates on the major trades continued to slide this week, forcing carriers to prepare price hikes for next month, particularly on the Asia-Europe trades.
In response to weeks of falling spot rates, carriers announced a series of new FAK [freight all kinds] levels for ex-Asia shipments to North Europe and Mediterranean ports.
Drewery’s World Container Index (WCI), which records prices paid over the past seven days, saw its Shanghai-Rotterdam leg decline 8% week on week, to $2,887 per 40ft, dropping below the $3,000 mark for the first time since April last year.
The WCI’s Shanghai-Genoa leg fell 2% week on week, to $4,163 per 40ft, while today’s Shanghai Containerised Freight Index (SCFI), which records quotes for the forthcoming week, suggested more pricing pain for carriers was on its way, with the Shanghai-North Europe leg seeing an 11% decline, and to the Mediterranean, a 7% decline.
Reports from Asia also continued to note that the Gemini carriers were offering spot rates below market averages.
“There’s a two-tier dynamic going on, with Gemini dropping spot rates and other carriers holding firm comparatively,” one forwarder said.
However, he added that “long term rates on the table still remain elevated and we don’t see any carriers capitulating yet”.
Following the end of the Chinese New Year holiday, it would appear the contracting season on Asia-Europe may finally get under way, with one forwarder noting that his clients had begun launching their 2025 tenders this week.
Another forwarder said he sensed opportunities to play carriers hunting for cargo against each other: “For a limited time, I am targeting $2,100 per 40ft at the moment,” he said.
Nonetheless, carriers have begun to target new FAK prices from the beginning of March, with Maersk quoting $4,000 per 40ft on Shanghai-Rotterdam, while Hapag-Lloyd is quoting $4,100, Cosco $4,125, and CMA CGM $4,335.
New FAK rates for Asia-Mediterranean shipments have been set higher, with, for example, Hapag-Lloyd seeking $5,300 per 40ft and CMA CGM $5,500 for west Med destinations.
Meanwhile, the WCI’s Shanghai-Los Angeles fell 7% week on week, to $4,392 per 40ft, and the Shanghai-New York leg lost 5% week on week, to $5,874 per 40ft.
However, a number of unsolicited quotes received this week suggest some spot shipments are being booked for considerably less, with one quote for Shanghai-Los Angeles coming in at $1,950 per 40ft.
Drewry said it expected further spot freight rate declines across all trades over the course of next week, largely due to low demand, and noted that carriers would need to further cut capacity to push rates up.
“Freight rates continue their downward trend despite the rise in blank sailings, ” it said. “This decline is primarily driven by the seasonal post-Chinese New Year slowdown, which traditionally leads to reduced demand.
“Cancelled sailings are set to rise from 104 in January to 133 in February, but it seems that this adjustment in effective capacity deployed is unlikely to be sufficient to offset the broader market pressure caused by slowing demand, resulting in an overall decline in rates on the major east-west routes,” it is said in its weekly cancelled sailings tracker.
