A divergence in container spot freight rates between the Asia-Europe and Asia-North America trades emerged this week, with pricing declines into Europe getting sharper, while rates to North America strengthened, week on week.
Market sources believe it was the widespread reduction of capacity through aggressive blanked sailings that prevented transpacific rates from crashing through the floor, and this week’s Drewry’s World Container Index’s (WCI) Shanghai-Los Angeles leg was up 5% week on week, to hit $2,713 per 40ft.
Similarly, the WCI’s Shanghai-New York leg was up 4% week on week, to hit $3,646 per 40ft.
The Shanghai Containerised Freight Index (SCFI) saw its Shanghai-US west coast base port leg gain 3% week on week, to $2,347 per 40ft and the Shanghai-US east coast base port grow 1.5%, to $3,335 per 40ft.
According to Maersk CEO Vincent Clerc, some 22% of transpacific capacity has been cut since the tariff announcement on 2 April that created an almost immediate transpacific eastbound volume drop of some 35%.
But the capacity cutbacks have come in different forms: the Ocean Alliance has collectively represented around half of the 90 blanks announced so far on services to both the US west and east coasts, while Mr Clerc explained that the Gemini Cooperation had reduced its capacity on the trades by 21%, by deploying smaller vessels.
MSC, meanwhile, has taken the more dramatic step of suspending several services, the latest announced on Wednesday – the Empire and Pelican Asia-US east coast service it operates with Zim as a slot-charterer, with several ports inserted into its remaining four strings on the trade, the America, Amberjack, Emerald, and Lone Star.
“These changes will take effect from week 19 and remain in place as part of an interim network. MSC intends to reinstate the current network once the demand returns to normal,” the carrier said.
It may also be that the demand picture on the trade is looking up, after a meeting between President Trump and several CEOs of the country’s largest retailers on Easter Monday.
According to the port of Los Angeles’ PortOptimizer platform, 86,630 teu is expected to arrive next week, representing a 14% gain on this week, but 12% down year on year. However, in the week beginning 18 May, 103,105 teu will be heading for the port, which would be 56% up year on year.
Meanwhile, on the Asia-Europe trades, weak demand appears to be combining with additional capacity to continue pushing spot rates down.
The WCI’s Shanghai-Rotterdam leg lost 7% week on week, to end at $2,046 per 40ft, while the Shanghai-Genoa route dropped 4%, to finish the week at $2,766 per 40ft, and hopes among carriers, that the demand reduction seen in the US may be made up for by Europe, seem to be in vain.
“I have to say so far there are no signs of any peak season happening anytime soon on the Far east westbound,” a prominent Asia-Europe forwarder said. “Short-term rates have been dropping since Chinese New Year, and look like they will continue to decline.
“Overcapacity appears to be the driving factor, and early rate offers we have received for the second half of May indicate rates will continue to fall, while the blanked sailings so far seem to have had minimal effect,” he added.
Depressed pricing also spread to the transatlantic this week, with the WCI’s Rotterdam-New York leg breaching the $2,000 benchmark, and dropping 3% week on week, to $1,972 per 40ft.
French carrier CMA CGM this week postponed a planned 15 May $800 per 40ft peak season surcharge on Europe-North America shipments until 1 June.
