Container freight rates in the transpacific and transatlantic trades are on the rise when compared with the same time period a year ago and despite a continued decline in the Asia-Europe and Asia-Mediterranean lanes, according to one of the primary indices for measuring spot rates.
The aggregate World Container Index, produced by London-based maritime shipping consultant Drewry, slid 0.9 percent last week from the previous week and at $1,414 per FEU was also down 3.5 percent compared with the same period in 2017.
Through the first portion of the year, the average composite WCI now stands at $1,370 per FEU, $164 lower than the five-year average of $1,534 per FEU container.
Loses in the composite index were fueled in large part by a 5 percent year-over-year decrease in Asia-North Europe rates to $1,623 per FEU and a 2 percent dip in Asia-Mediterranean rates to $1,732 per FEU. Backhaul pricing also was on the decline, with rates from Rotterdam to Shanghai plummeting 31 percent to $1,006 per FEU from the same week a year ago.
But according to Drewry, pricing in the eastbound transpacific and westbound transatlantic trades is bucking the overall year-over-year downward trend.
Rates from Shanghai to Los Angeles fell 4 percent from the previous week to $1,358 per FEU, but were actually up 3 percent compared with the same 2017 period. Pricing from Shanghai to New York likewise slid 3 percent on a sequential basis to $2,413 per FEU, but was up 10 percent year-over-year.
And at $1,837 per FEU, rates in the westbound transatlantic trade remained in positive territory, stagnating from the previous week but rising 5 percent from this time last year.
In its weekly analysis, Drewry said it expected rates to “soften” next week, and if rates were to resume their precipitous post-Lunar New Year decline, it could spell disaster for container carriers, many of which last year returned to profitability after losing billions in 2016 as overcapacity pushed rates to well below operating expenses.
Major carriers like Maersk Line, CMA CGM and Hapag-Lloyd, as well as smaller players like Yang Ming and ZIM, already have reported steep losses for the first quarter 2018 and with oil prices unexpectedly rising, many have looked to impose additional bunker surcharges in order to cover operating costs.
Those so-called “emergency” surcharges have raised the ire of shippers, however, so enforcing them may be easier said than done.
The European Shippers’ Council, for example, last week sent a letter to European Commissioner for Competition Margrethe Vestager in which it called the emergency bunker fees “unjustified.”
“Oil prices had indeed been rising during the last month, but the latest hike cannot be assimilated to an emergency,” the letter said. “Oil price fluctuations, up or down, had been frequently happening in the past years and no negative surcharge was applied when the barrel of oil went down to $40 some time ago.”
Earlier this week, Drewry published a report in which it forecast the container shipping industry to “break even at best in 2018,” as the mix of low freight rates, rising fuel prices and a collective failure to control costs continue to put pressure on margins and, therefore, profits.