11 May 2017
Spot container freight rates from North Europe to China rose 45% last week to a four-year high of more than US$1,000 per feu due to unexpectedly strong eastbound volumes, especially to China, plus service cuts post-Chinese New Year.
The ‘World Container Index assessed by Drewry’ market reading on the route from Rotterdam to Shanghai jumped to $1,076 per 40ft dry container last Thursday, from $740 previous week.
“Our sources reported that ships are currently full and that carriers have demanded much higher rates – only some prior rate agreements remain in place,” said Philip Damas, head of Drewry’s logistics practice.
European exporters needing to ship export containers from Europe to Asia and the Middle East have been facing unusually tight capacity for the time of year for several weeks leading to rising rates, booking restrictions, and backlogs.
Drewry noted that it was “highly unusual for the ‘backhaul’ route from Europe to Asia – where vessels normally have load factors of less than 70% – to see such spikes in rate levels and capacity shortages”, noting: “In Drewry’s opinion, the sailings cancelled by carriers in China following Chinese New Year contribute to a capacity crunch, which has now reached Europe.”
By contrast, it said rates from China to North Europe continued to level off, with reported average prices of $1,643 per 40ft container last Thursday, down from $1,756 the previous week and $2,212 on 12 January.
However, lines told Lloyd’s Loading List that the current eastbound capacity crunch was at least partly due to unexpectedly strong eastbound volumes, especially to China.
A spokesperson from Mediterranean Shipping Company (MSC) said: “The demand for space for cargo going east of Suez is currently extremely strong.
This, in combination with a number of sailings omissions as a result of the recent Chinese New Year slowdown, has resulted in a high level of requests and bookings. We are naturally prioritising our loyal customers, and, additionally, our offices have allocated extra staff at the European booking desks in order to assist at this particularly busy time.”
Maersk also said there had been an increase in eastbound demand, “driven by several factors”. These included:
Domestic policies in China stimulating demand and hence requiring raw materials (industrial input like chemicals, wood, paper and recyclables); a decline in Asian imports from Europe for the last 12-18 months now requiring re-stocking; and strong demand continuing in areas like food and beverages – commodities such as meat, milk powder and alcoholic beverages.
Drewry said that last week, the composite index of the ‘World Container Index assessed by Drewry’, which takes into account rates on 11 routes to and from Europe, the US and China, was 110% higher than this time last year, when the container shipping market was facing weak traffic volume and a price war.
The container shipping analyst and data and rates benchmarking specialist said the latest jump in the Europe-to-Asia index would mean that shipper contract rates governed by an index mechanism will be adjusted upwards in the next few weeks.
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