Spot rates for containerized ocean freight have climbed across three leading Far East export corridors after the latest round of General Rate Increases (GRIs) from carriers, says an article from Xeneta.
Fighting For Control
The news, revealed by Oslo’s Xeneta, provides welcome relief for a segment that has been “up against the ropes” for much of 2023, fighting against declining demand and volumes, married to escalating overcapacity and continuing economic uncertainty. Spot rates are now back above long-term contracted rates on all three routes, giving shippers, freight forwarders and carriers much to ponder ahead of upcoming, peak season contract tenders. “We’ve grown accustomed to witnessing a protracted downward trajectory for ocean freight rates since last summer,” comments Peter Sand, Chief Analyst, Xeneta; “with spot rates falling below contracted rates on key routes as carriers fight for volumes in a climate defined by weak demand…”
Steady Increase
Xeneta’s real-time data, crowd-sourced from leading global shippers, shows that August’s GRIs have helped rates rally on the crucial Far East to US West Coast, Far East to North Europe, and Far East to Mediterranean corridors. The Far East to North Europe trade lane has experienced the most dramatic short-term climb (from the end of July), rising USD 500 from a spot rate that has been sub-USD 1500 per FEU since early May. This amounts to a 39.6% hike. This has also pushed the spread between this route and the more expensive Far East to Mediterranean lane down to just USD 670 – the closest it’s been this year.
Peak Timing
Sand comments: “With many carriers looking for GRI-driven increases in the range of USD 1000 per FEU, these ‘bumps’ fall far short but, given the recent industry context, will no doubt be welcome by carriers nonetheless. “It’s also important to note that the climbs come ahead of peak season and a new wave of contract tendering. Of course, whether the increases hold in an atmosphere of weak fundamentals remains to be seen – they certainly haven’t done so earlier this year, but then we haven’t seen climbs as pronounced as this either.”
Certain Uncertainty
Sand concludes that much will hinge on whether these short-term boosts translate into lasting gains and how that plays into the next set of GRIs in September. “One thing’s for sure,” he notes, “many of the shippers who have been taking advantage of the weak short-term market and delaying signing new long-term contracts will be eyeing developments nervously. Have they left it ‘too late’ to negotiate? Has the market bottomed out before a rebound? Or is this simply a false dawn for carriers?…”
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Source: Xeneta
