Ocean carriers plan to implement significant FAK rate hikes on major east-west tradelanes to improve voyage profitability, while also preparing to shed unprofitable cargo ahead of the 2024 budget season. For instance, MSC recently announced a $4,400 per 40ft base rate from Antwerp to New York, effective from 17 November.
Rate Hike Impact
- Transatlantic container spot rates have plunged by approximately 80% in the past year due to increased carrier capacity and new market entrants.
- Hapag-Lloyd and CMA CGM’s Asia-North Europe FAK rates at around $1,800 per 40ft, effective from November 1, are showing some impact, with some shippers experiencing doubled November rates.
- Despite this, Asia-North Europe container spot indices remain just under $1,000 per 40ft, and there is uncertainty about carriers’ ability to maintain the rate increases.
Transpacific Rate
“NVOCC November rates are now $1,100 per 40ft for the month, with the expectation that this will go down after the first one or two sailings,” said AGX today.
Drewry’s US west coast rates dip 1% to $1,979 per 40ft, while US east coast rates remain unchanged at $2,629. Carriers face mounting pressure, especially on east-west routes, with unsustainable loss-making voyages.
Unsustainable Losses
“It’s not realistic to expect shipping lines to keep losing money,” said Xeneta CEO Patrik Berglund in the firm’s 2024 Outlook for Ocean Freight Shipping publication. “They are effectively subsidizing shippers to move their cargo around the world.”
“Shipping lines will jack-up the market, look at those contracts and, in many cases, deem them non-profitable. They are going to be inclined, at every chance they get, to not pick up those boxes,” warned Mr. Berglund
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Source: The LoadStar
