Container freight rates showed some positive momentum last week after carriers cut capacity in the major east-west trade lanes, according to two of the primary indices for measuring spot market pricing.
The Shanghai Shipping Exchange’s composite Shanghai Containerized Freight Index, which aggregates spot rates on 13 different outbound trades from Shanghai, jumped 8.8 percent on a sequential basis last week.
However, the Friday SCFI reading of 863.59 still lagged 6.7 percent behind the index’s 925.45 reading as of July 28, 2017.
On an individual trade lane basis, spot rates as measured by the SCFI from Shanghai to Europe grew 7.3 percent last week, from $863 per TEU to $926 per TEU, while rates from Shanghai to the Mediterranean grew 2.8 percent, from $869 per TEU to $893 per TEU.
Transpacific pricing fared even better, with rates from Shanghai to the U.S. West Coast surging 16.2 percent, from $1,616 per FEU to $1,877 per FEU, while rates to the U.S. East Coast rose 7.4 percent, from $2,650 per FEU to $2,846 per FEU.
The World Container Index, produced by London-based maritime shipping consultant Drewry, showed more muted growth compared with the previous week, ticking up just 0.5 percent from the previous week to $1,495 per FEU, but up 6 percent from the same period last year.
Year-over-year growth in the composite WCI was weighed down by a slight decrease in pricing from Asia to Europe and large drops in rates for backhaul Asia-Europe and transpacific routes. As noted here previously, one of the primary differences between the SCFI and WCI indices is that the WCI includes backhaul trades — i.e. from Europe to Asia and North America to Asia — while the SCFI measures outbound rates only.
According to Drewry, westbound rates from Shanghai to Rotterdam were unchanged on a sequential basis at $1,657 per FEU last week, but were down 2 percent compared with the same 2017 period. By comparison, eastbound rates from Rotterdam back to Shanghai were down 39 percent year-over-year to $832 per FEU as of the end of last week despite a 1.5 percent increase from the previous week.
Spot rates from Shanghai to Genoa, also unchanged from the previous week, were up 1 percent from the same time last year at $1,616 per FEU.
In the transpacific, eastbound WCI rates from Shanghai to Los Angeles grew 1.3 percent to $1,653 per FEU, a 36 percent increase compared with the same 2017 period, but backhaul rates outbound from L.A., while steady sequentially, were down 10 percent year-over-year at $486 per FEU.
Rates to New York grew 2 percent on a sequential basis and 25 percent year-over-year at $2,731 per FEU, and even backhaul pricing from the U.S. East Coast bucked the negative trend, ticking up 2.4 percent from the previous week and 13 percent from the same time last year to $591 per FEU.
Transatlantic pricing took a slight step back, sliding 3.3 percent from the previous week to $1,878 per FEU, but remained 9 percent ahead on a year-over-year basis.
In its weekly analysis, Drewry noted that the average composite WCI so far this year now stands at $1,385 per FEU, down 9.2 percent from the index’s five-year average of $1,525 per FEU.
Drewry said it expects a “marginal increase” in rates next week, as recent reductions in capacity have begun to put upward pressure on pricing.
As a result of service suspensions by the 2M Alliance of Maersk Line and Mediterranean Shipping Co. (MSC) and ZIM, as well as the carrier members of THE Alliance, estimated weekly allocated capacity between Asia and North America has already dropped 1.7 percent since the end of June and will continue to fall in August, according to a recent analysis from ocean carrier schedule and capacity database BlueWater Reporting.
Tighter capacity should continue to cause increases in pricing, but volume growth in the transpacific could suffer if the current tariff battle between the United States and China continues to escalate, putting a major damper on rates.