Home » Breaking News, Maritime » Asia-Europe box rates gain steam for third time

The westbound Asia-Europe box rates rose strongly last week, rising 19 percent even as pricing on the eastbound trans-Pacific trade remained unchanged, according to assessment from the World Container Index (WCI).

The rise in Asia-to-Europe pricing is the third such large rate increase in as many months, adding further upward pricing pressure on shippers, according to WCI, a joint venture between Drewry Shipping Consultants and The Cleartrade Exchange.

But pricing is expected to ease as weakening load factors impact on current rate levels, research and consultancy specialist Drewry said in a media release.

Meanwhile, the failure of last week’s general rate increase (GRI) on the trans-Pacific eastbound signifies “the underlying weakness in the market,” noted Drewry.

The readings “illustrate the divergence in freight rate trends between the ascendant Asia-to-Europe trade and moribund transpacific routes,” said Drewry’s Martin Dixon, freight rate research manager. “Tighter capacity on the former has enabled lines to press ahead with aggressive rate restoration programs, while weaker load factors on the transpacific have held such attempts in check.”

The WCI’s Shanghai-Rotterdam container freight rate sub-index went from US$3,249 per 40-foot equivalent unit (FEU) on April 26 to $3,878 per FEU on May 3, a rise of $629 per FEU.

Carriers in the key Asia-Europe headhaul trade had announced GRIs of about $400 per 20-foot equivalent unit or TEU (or $800 per FEU) from May 1. The index shows that carriers were able to enforce the majority of the requested price increase.

The Shanghai-Los Angeles container freight rate sub-index went from $2,314 per FEU on April 26 to $2,321 per FEU on May 3, a rise of just $7 per FEU.

Transpacific Stabilization Agreement carriers had announced GRIs of $500 per FEU for eastbound cargo destined for west coast ports and $700 per FEU for east coast ports, effective from May 1. The index shows that carriers failed to enforce their intended GRI, said Drewry.

But Dixon cautioned that the rally in rates may be losing steam. “We do not expect Asia-to-Europe freight rates to increase further. Some carriers are already offering pricing reductions on cargo bookings for later in the month, indicating that the market may now have peaked.”

 

Photo: mikecogh

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