Container freight rates showed continued positive momentum last week after capacity cuts 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, grew another 3.1 percent on a sequential basis last week after an 8.8 percent jump the previous week.
However, the Friday SCFI reading of 890.52 still lagged 0.8 percent behind the index’s 897.28 reading as of Aug. 4, 2017.
On an individual trade lane basis, spot rates as measured by the SCFI from Shanghai to Europe ticked up just under 1 percent last week, from $926 per TEU to $935 per TEU, while rates from Shanghai to the Mediterranean slid 1.3 percent, from $893 per TEU to $881 per TEU.
Transpacific pricing fared much better, with rates from Shanghai to the U.S. West Coast surging another 10.5 percent, from $1,877 per FEU to $2,074 per FEU, while rates to the U.S. East Coast rose 8.8 percent, from $2,846 per FEU to $3,099 per FEU.
The World Container Index, produced by London-based maritime shipping consultant Drewry, grew even more than the composite SCFI, surging 13.5 percent from the previous week and 6.6 percent year-over-year to $1,697 per FEU.
Year-over-year growth in the composite WCI has been weighed down in recent weeks by 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 up 8 percent on a sequential basis at $1,784 per FEU last week, but were down 1 percent compared with the same 2017 period. By comparison, eastbound pricing from Rotterdam back to Shanghai was down 2 percent sequentially and 35 percent year-over-year to $817 per FEU as of the end of last week.
Spot rates from Shanghai to Genoa showed a similar pattern, rising 4 percent from the previous week but falling 3 percent year-over-year to $1,677 per FEU.
In the transpacific, eastbound WCI rates from Shanghai to Los Angeles skyrocketed 30 percent to $2,151 per FEU, a 28 percent increase compared with the same 2017 period, while backhaul rates outbound from L.A. were down 1 percent sequentially and steady on a year-over-year basis at $480 per FEU.
Rates to New York grew 18 percent on a sequential basis and 19 percent year-over-year to $3,211 per FEU.
Transatlantic pricing remained in positive territory as well, growing 5 percent from the previous week and 14 percent from the same week a year ago to $1,965 per FEU.
In its weekly analysis, Drewry noted that the average composite WCI so far this year now stands at $1,395 per FEU, down 8.5 percent from the index’s five-year average of $1,524 per FEU.
Drewry said it expects rates to “soften” again next week, as the positive effects of recent reductions in capacity begin to peter out.
According to a recent analysis from ocean carrier schedule and capacity database BlueWater Reporting, 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, resulted in a 1.7 percent drop in estimated weekly allocated capacity between Asia and North America and capacity will likely continue to fall in August.
If this happens, container pricing could increase further, but shippers and carriers should be keeping a close eye on the current tariff battle between the United States and China, as an escalation of reciprocal duties could cause volume growth in the transpacific to suffer, which in turn would put a major damper on rates.