Asia-Europe Carriers Adjust FAK Rates

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Ocean carriers operating on the Asia-Europe trade lane are revising their Freight All Kinds (FAK) rates for April as container spot rates continue to decline, particularly on the Asia-Europe route, says an article published on loadstar website.

Summary

  • Ocean carriers operating on the Asia-Europe trade lane are adjusting their Freight All Kinds (FAK) rates for April in response to the continuing decline in container spot rates, particularly on the Asia-Europe route, according to an article on the Loadstar website.
  • Hapag-Lloyd has announced new FAK rates for Asia-North Europe at $1,600 per 20ft container and $3,000 per 40ft container, while rates for western Mediterranean ports will be $2,800 and $3,500 respectively.
  • Similarly, MSC’s new FAK rates for North Europe will be $2,280 per 20ft container and $3,800 per 40ft container, and for the west Mediterranean, rates will be $3,150 and $4,300 respectively.
  • Carriers are making these adjustments to mitigate revenue erosion and sustain profitability amid the ongoing weakening market conditions, driven by the accelerated decline in Asia-Europe spot rates.

New FAK Rates

  • Hapag-Lloyd’s new FAK rates for Asia-North Europe will be $1,600 per 20ft and $3,000 per 40ft, while rates for western Mediterranean ports will be $2,800 and $3,500.
  • MSC’s new FAK rates for North Europe will be $2,280 per 20ft and $3,800 per 40ft, and for the west Mediterranean will be $3,150 and $4,300.

Addressing Revenue Erosion

Carriers are adjusting FAK rates in response to the accelerated decline in Asia-Europe spot rates. They aim to mitigate revenue erosion and maintain profitability amidst weakening market conditions.

Spot Rate Trends

  • Despite recent gains due to the Red Sea crisis, Asia-Europe spot rates have declined by half in the past month.
  • Drewry’s WCI average spot rates for North Europe and the Mediterranean have not reached the level of Hapag-Lloyd’s new FAK rates, but they continue to decrease.

Market Outlook

  • The demand for market transportation remains weak, with carriers resorting to underselling rates to secure more shipping orders, further driving down freight rates.
  • Carriers anticipate spot rates to remain above pre-crisis levels but acknowledge the ongoing decline in rates from Asia to Europe.

Transpacific And Transatlantic Market Dynamics

  • Spot rates on the transpacific remain elevated, driven by disruptions in the Suez and Panama canals and robust demand in the US.
  • Shippers may renegotiate annual contracts for the transpacific market as spot rates remain high.
  • Carriers are managing to maintain spot rates above $2,000 on the transatlantic route.

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Source: loadstar