Container freight rates seem unfazed by global issues and remain above par

Covid lockdowns in China, war in Ukraine and the threat of hyper-inflation are a toxic mix of unpredictability for liner trades, but they have so far not had an impact on container freight rates

Indeed, container spot rates, although trending down, are broadly in line with normal seasonal falls and, moreover, ocean carriers are succeeding in driving-through significant contract rate increases.

 

However, in the short-term, the lack of availability of containers to load in China, due to intermodal restrictions, could lead to carriers discounting rates to capture as much cargo as possible and thus ensure ships do not sail light.

 

“We are seeing a high degree of uncertainty and significant delays on the network,” said Maersk, “while restrictions and stringent checks at transhipment hubs have impacted the readiness of export cargo from Asia.”

 

Nevertheless, across the spot market indices this week, there were just modest fall of between 1% and 2% on the Asia-North Europe components, with the readings of Drewry’s WCI, the Freightos Baltic Index (FBX) and Xeneta’s XSI at $11,099, $12,095 and $12,699 per 40ft, respectively.

 

“This means the spot rate remains substantially above the level that seasonality would otherwise imply,” commented Vespucci Maritime’s Lars Jensen.

 

Meanwhile, Drewry, while suggesting that some of the downside risks were now stacking up for the container lines, said it did not think it would be the end of the bull run for container freight rates – but it added a caveat: “The market is extremely volatile and things can change very fast.”

 

On the transpacific, the WCI recorded a significant drop for its US west coast and east coast readings, while the FBX and the XSI were virtually unchanged. The WCI west coast component fell 8%, to $9,112 per 40ft, while its east coast reading recorded a decline of 6%, to $11,531 per 40ft.

 

Mr Jensen said the west coast spot rate fall was down to “a point matching the normal seasonal downturn after Chinese New Year”, and that the east coast rate decline was “now lower than could be expected from normal seasonality”.

 

Judah Levine, head of research at Freightos, suggested the dip in exports due to factory closures could be an explanation for the easing of rates, but he was bullish on the medium term.

 

“All signs point to continued elevated volumes and rates in the coming months, partially driven by importers pulling some demand forward in anticipation of summer delays, and a possible strike at west coast ports,” he said.

 

But less optimistic was Project 44’s SVP global supply chain insights, Josh Brazil, who pointed to a variety of negative factors influencing a fall in retail demand in the US, including inflation, the halting of stimulus cheques and increased spending on services.

 

To mitigate freight rate volatility, ocean carriers have used the baseline of highly elevated spot rates to lock shippers into long-term and multi-year contracts.

 

According to the latest monthly report from freight rate benchmarking firm Xeneta, long-term rates increased by an average 7% in March. propelling the year-on-year contract rate gain to almost 100%.

 

“Yet again, another bumper month for the carrier community, with climbs across all major trade corridors,” said Xeneta CEO Patrik Berglund.

 

Source: theloadstar.com

Writer: Mike Wackett


Related News

PREDICTIONS OF SUPPLY CHAIN CHAOS AS SHANGHAI RESUMES SHIPPING
PREDICTIONS OF SUPPLY CHAIN "CHAOS" AS SHANGHAI RESUMES SHIPPING

1445 Views

Predications are growing throughout the shipping industry of renewed disruptions, backlogs, and even possibly “chaos” as China works to ramp up operations at Shanghai and resume manufacturing and supply chain operations after the eight-week lockdown due to its zero-tolerance COVID-19 policy.

FORWARDERS LOOK TO SHIPPER-OWNED CONTAINERS TO BOOST RELIABILITY
FORWARDERS LOOK TO SHIPPER-OWNED CONTAINERS TO BOOST RELIABILITY

1467 Views

With the pressure on equipment capacity showing no sign of abating, freight forwarders are increasingly turning to “shipper-owned containers (SOCs)” to minimise the risk associated with port congestion and potential penalties, amid Covid-induced supply chain dysfunction.

MSC JOINS SHIP-SCRAPPING SPREE, BUT OVERCAPACITY STILL A PROSPECT
MSC JOINS SHIP-SCRAPPING SPREE, BUT OVERCAPACITY STILL A PROSPECT

889 Views

MSC is to scrap a containership for the first time in nearly four years, as demolitions in the sector continue to rise amid the lacklustre freight market.

 


Comment
  • Your review
main.add_cart_success