Freightos Baltic Container Report – Week 3, 2019

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  • General Rates Increases (GRIs) net impact was a 4% week on week rise for both lanes.
  • China-West Coast went up from $2,031 to $2,110, and China-East Cost went up from $3,171 to $3,292.
  • GRIs are sticking currently because space is tight on sailings – post-Christmas replenishment is in full swing coupled with the Chinese New Year.
  • Several carriers have implemented mid-month Freight All Kinds (FAK) increases or fuel-related surcharges including Hapag-Lloyd’s peak season surcharge.

The January General Rates Increases (GRIs) was losing traction with mid-month round lifted transpacific prices on the rise again.

The net impact was a 4% week on week rise for both lanes. China-West Coast went up from $2,031 to $2,110, and China-East Cost went up from $3,171 to $3,292.

Transpacific pricing

Philip von Mecklenburg-Blumenthal, VP of FBX, Freightos commented that the transpacific pricing this quarter as expected, the last two transpacific GRIs stuck – space is almost always tight in the run-up to Chinese New Year. Carriers are canceling sailings for during the holiday, and for afterward as well, hoping that prices hold for the contract renegotiation season.

That strategy usually doesn’t work too well because, seasonally, that’s when demand is dropping off. For instance, prices dropped 20% across March and April last year (23% in 2018). However, the continuing uncertainty surrounding China trade tariffs has been keeping demand artificially high. Moving into spring, then, carriers may have more luck in preventing dramatic price falls.

Week’s report

Week 03 Week 02 Last year*
Global $1,624 3% 30%
China-US West Coast $2,110 4% 61%
China-US East Coast $3,292 4% 21%
China–North Europe $1,751 8% 17%
North Europe–US East Coast $1,400 -1% -1%
* Compared to the corresponding week in 2017

Constraints on sailing

Having lost ground following 1 January GRIs, the mid-month GRI picked up transpacific prices again. The net effect of dipping, then rising prices last week was a 4% week on week rise for both lanes. GRIs are sticking currently because space is tight on sailings – post-Christmas replenishment is in full swing coupled with the Chinese New Year (CNY) bottleneck fast approaching.

Increase in FAKs

China-North Europe prices continue to rise, good news for carriers looking for high prices during that lane’s contract negotiation season. Several carriers have implemented mid-month Freight All Kinds (FAK) increases or fuel-related surcharges including Hapag-Lloyd’s peak season surcharge. Once China returns to normal after the CNY shutdown, transpacific freight prices usually drop dramatically.

Last year, between 25 February and 29 April, West Coast prices fell by 19%, East Coast by 21%. In 2015, between 26 February and 30 April, the corresponding drops were 23% and 26%. Continuing uncertainty over China trade tariffs this year, however, may lift demand and lessen the extent of the seasonal price falls.

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Source: The Baltic Briefing

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