Mar 14--Shanghai Containerized Freight Index, U.S. West Coast, week ending Mar. 14, 2014.Full-size imageSpot container freight rates from Shanghai to U.S. ports saw some implementation of the upcoming general rate increase in the week of March 14. Both East and West Coast lanes saw increases of more than $100 per FEU.
Member carriers in the Transpacific Stabilization Agreement planned a $300 per FEU increase to take effect on March 15 on the Asia-U.S. trade lanes.
The spot rate as indexed by the Shanghai Containerized Freight Index to the U.S. West Coast was $1,931 per FEU, climbing 8.2 percent or $147 from last week. This was a 49 percent acceptance rate of the aforementioned $300 GRI. Today’s rate is 6.4 percent or $116 above the Jan. 1 level, but remains down 9.0 percent year-over-year. This is comparable to the Hong Kong-to-Los Angeles spot freight rate reported by Drewry this week, which was released only two days ago and remained flat at $1,886 per FEU.
The rate from Shanghai to the U.S. East Coast was $3,287 per FEU, up 3.2 percent or $101 per FEU from last week. This reflects a 33.7 percent implementation rate of the GRI. The current rate remains up 4.8 percent or $150 from Jan. 1, and up 0.2 percent from the same week in 2013, the first positive year-over-year change since November 2013.
Asia-Europe lanes fell by roughly $100 per TEU this week for a fifth consecutive week, which is a “shocking decline,” said Michael Rainsford, a commodity broker for Morgan Stanley, who said his views are his own and do not necessarily represent the views of the firm. “The decline in just five weeks now represents a 43.3 percent decline in the market.”
The rate from Shanghai to North Europe dropped 10.1 percent or $100 per TEU to $888, the lowest rate in this lane in 20 weeks. The rate on this trade is down 49.7 percent or $877 since Jan. 1, and tumbled 37.6 percent year-over-year. The rate from Shanghai to the Mediterranean is $935 per TEU, its first dip below the $1,000 per TEU mark since late October 2013, declining 9.5 percent or $98 per TEU this week. The rate has fallen 47.8 percent or $856 since Jan. 1, and is 31.6 percent below the rate in the same week of 2013.
“Taking a look at the orderbook today, for 10,000-TEU vessels and above, the orderbook now stands at a whopping 75 percent of existing capacity of 10,000-TEU vessels. With average vessel sizes getting bigger, the on/off need for these vessels is going to exacerbate volatility even more going forward,” Rainsford said. “The forward market is pricing in a high probability that the April 1 GRI will be implemented on the Asia-Europe trade. Spot rates are now at $888 per TEU and falling 10 percent a week. The April forward price is trading today at $1,150 per TEU. This implies that the GRI will be implemented, however the expectation is also that it will also be very quickly eroded.”
There have been several April 1 GRIs announced in the Asia-Europe lanes, ranging from $500 to $525 per TEU for carriers such as CMA CGM, Maersk, MOL and Hapag Lloyd.
(Source: JOC)