Asia-ECNA carriers keep a fragile hold on price gains

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HK portOcean carriers on the Asia-East Coast of North America (ECNA) lane held on to the big jump in spot freight rates they made in January, keeping prices up through February, March, April, and the beginning of May even though market conditions were less than favorable, said Drewry.

According to the World Container Index, average freight rates from Shanghai to New York increased from US$3,000 per 40-foot-equivalent unit at the beginning of January up to $3,400 per FEU by the end of the month, then stayed there in February, before slipping back slightly to $3,280 per FEU in March and $3,340 per FEU in April/first half of May.

Drewry forecasts that when long-term contracts expired at the end of April, Asia-ECNA carriers may be more preoccupied with maintaining market share than with increasing contract rates, which “augers badly for ocean carrier profitability again this year.”

This preoccupation with market share is also being pushed by Evergreen’s new association with the CKYH alliance and the pending introduction of the P3 alliance’s joint schedules in the second quarter of 2014, developments that are keeping carriers antsy.

Drewry added that this would make the Transpacific Stabilization Agreement’s (TSA) recommended general rate increase of $300 per FEU on May 15, followed by a peak season surcharge (PSS) of $400 per FEU on June 15, a bit hard to implement.

On the other hand, eastbound freight rates could benefit from the temporary transfer of cargo from U.S. West Coast ports to U.S. East Coast gateways during late May and early June, allowing container lines to increase spot rates significantly. With this development, the TSA’s PSS on June 15 may push through despite carriers’ jitters, said Drewry.

On the westbound trail, freight rates from the East Coast of North America back to Asia fell slightly between February and April as ships remained less than two-thirds full. According to Drewry’s “Container Freight Rate Insight,” the average price for spot cargo from New York to Shanghai dropped from $1,530 per FEU in February to $1,490 per FEU in March, and then to $1,470 per FEU in April.

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