- Rates hold steady as shippers prioritise getting exports to market and the comprehensive index of the SCFI edged down just 1.3% this week.
- Trend shows for now, rates are less important to shippers desperate to get their exports to market.
- Manufacturing in China is recovering from the coronavirus outbreak lockdowns, still container transport reports “scarce and expensive”.
- CMA CGM announced a $500 increase on its FAK rate from Asia to North Europe to $2,500 per 40ft and a PSS of $300 per container from North Europe to Asia.
- ONE carrier announced an FAK rate of $3,000 from 1 April, backed by a guarantee of shipment and had applied a $200 per 20ft surcharge on the same route.
- SCFI recorded a 3.6% decline on Asia-North Europe spot rates, to $804 per teu, and a 5% drop for Mediterranean ports, to $928 per teu.
Rates seem to be less important to shippers desperate to get their exports to market, writes Mike Wackett for an article published in The Load Star.
Steady rates
Though demand is weak, the comprehensive index of the Shanghai Containerized Freight Index (SCFI) edged down just 1.3% this week, with the US west coast component actually recording a gain.
Rates are less important
This shows that at least for now, rates are less important to shippers desperate to get their exports to market.
China recovering from virus outbreak
- Manufacturing in China is slowly recovering from the coronavirus outbreak lockdowns.
- Container transport is still reported as “scarce and expensive”, meaning intermodal movements are unreliable.
Carriers cancelled sailings
A Drewry analysis shows, ocean carriers cancelled 105 sailings from Asia to Europe and Asia to the US this month. The ships that have sailed departed with very poor utilisation levels.
Blanked sailings
Notwithstanding the revenue lost on well over 1m of teu by carriers due to the blanked sailings, the voyage losses recorded on the vessels that have been sailing are likely to be high.
FAK and GRI increase
In order to mitigate the losses, container lines are rolling out FAK and GRI increases for 1 April. The hope is by then, tens of thousands of containers with pent up orders will be working through to ports.
CMA CGM $500 increase
CMA CGM, for instance, announced a $500 increase on its FAK rate from Asia to North Europe to $2,500 per 40ft.
Rate hike backed with guarantee of shipment
It is reported that ONE carrier announced an FAK rate of $3,000 from 1 April, backed by a guarantee of shipment.
Backhaul trades to China
Moreover, on backhaul trades to China, there are reports of
- severe shortages of equipment and
- boxes being stranded on the quay for weeks in certain cases awaiting a nominated loader.
Peak season surcharge
Many carriers have also imposed a “peak season surcharges” on backhaul lanes.
CMA CMG
CMA CMG today announced a PSS of $300 per container from North Europe to Asia from 15 March.
According to a UK forwarder ONE had applied a $200 per 20ft surcharge on the same route.
SCFI readings
SCFI recorded on 28th February –
- a 3.6% decline on Asia-North Europe spot rates, to $804 per teu, and
- a 5% drop for Mediterranean ports, to $928 per teu.
The SCFI reading for the same week of last year showed $796 for North Europe and $810 for the Med. Although current spot rates should also include an allowance for an IMO 2020 low-sulphur surcharge.
US components of the SCFI
- The US components of the SCFI were both up on the week, with a 2% rise for the US west coast to $1,394 per 40ft and a slight tick up for east coast rates to $2,690 per 40ft.
- Twelve months ago, still buoyed by pre-tariff front-loading, the west coast rate was $1,549 and east $2,640, showing the more-robust transition-led east coast market.
Coronavirus impact on contract rates
Meanwhile, according to Oslo-based Xeneta’s ocean freight benchmarking platform, long-term contract rates are “currently standing firm in the midst of growing coronavirus concerns.”
CEO Patrik Berglund said: “Despite the virus shockwaves, the XSI has retained its upward trajectory through February, albeit only just.”
Decrease in spot rate
However, he added that spot rate decreases of 20%-25% since the beginning of the year could soon impact the long-term market.
He said, “In that respect, we anticipate long-term rates will also begin to decrease in March. In fact, we already have some reports of slight decreases in the negotiated contracts coming into our platform from our leading global shippers.”
Freight bookings
According to marketplace data, China’s share of searches on its platform for freight bookings returned to 91% this week. This is the same as before the new year holiday after dropping by around 15% at the start of the shutdown.
In Supply Chain Summit & Compliance Conference in Houston, Texas, global logistics provider BDP International chief executive Richard Bolte said US importers and exporters were “very concerned” about the current situation.
He said that they are advising importers to look at other source options for their products, as they have already done on the tariff issues.
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Source: The LoadStar
