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Asia-North Europe Spot Rates in Free Fall

The Loadstar
Total Views: 919
September 22, 2023

By Mike Wackett

Container spot rates from China to North Europe are in freefall with average rates dipping below $1,000 per 40ft this week having lost almost half of their value since the start of the month.

Today’s reading of the Freightos Baltic Exchange (FBX) Asia-North Europe component saw its spot rate fall to $997 per 40ft, which compares with the FBX spot rate average of $1,743 per 40ft on 1 September.

Moreover, unsolicited offers to The Loadstar’s inbox this week have seen all-inclusive rates well below $1,000 per 40ft from China to Antwerp, Rotterdam or Hamburg via major alliance carriers, valid through to 14 October.

And the hitherto more robust Asia-Mediterranean tradelane is also coming under pressure with Drewry’s WCI recording a second consecutive weekly 10% decline for spot rates on the route taking its average down to $1,531 per 40ft.

Commenting on the dramatic spot rate erosion on the Asia-North Europe tradelane Vespucci Maritime’s Lars Jensen said that the speed of the rate collapse could be likened to the price wars of 2015/2016.

“For North Europe we have not seen the spot rate this low since early 2018 where the level was lower for a brief two weeks,” said Mr Jensen.

“At that time bunker fuel prices were around $470 per ton, whereas presently VLSFO fuel is around $680 per ton – notwithstanding the cost of inflation on all other elements,” said the analyst.

Indeed, a carrier contact suggested to The Loadstar that Asia-North Europe voyage results for the third and final quarters would be “horrendous”.

“The real concern is that despite the huge blankings we still can’t seem to fill the ships that do sail,” he said.

Until now Asia-North Europe carriers have avoided temporarily suspending services by blanking sailings for consecutive weeks, but it appears that this form of capacity management is failing.

In contrast, on the transpacific THE Alliance members, Hapag-Lloyd, ONE, Yang Ming and HMM announced this week that “in consideration of the present market situation” they were suspending their PN3 Asia to North America loop “until further notice”.

Xeneta’s XSI Asia-US west coast component saw average spot rates fall a relatively modest 4% on the week to $1,998 per 40ft, while Drewry’s WCI reading for the US east coast also declined by 4% to $2,900 per 40ft.

Interestingly, according to John McCown’s analysis of August import volumes at the top 10 US container ports, west coast gateways appear to be regaining some of the volumes lost to ports on the Atlantic coast in the past few years of so-called ‘coastal shift’.

According to Mr McCown’s data, US west coast ports saw import container throughput decline by 6.6%, year-on-year in August to 913,908 teu, while US east and Gulf Coast ports witnessed a substantial 18% fall to 962,512 teu, for a cumulative total of 1,876,420 teu representing a 12.9% fall on the previous year.

August 2022 however was the last of the ‘boom’ months for container shipping so Mr McCown’s September port throughput analysis will be eagerly anticipated.

Elsewhere, on the transatlantic, carriers may be having some success in halting the rapid decline of spot rates, which have sunk from the highs of $8,000 per 40ft a year ago to subeconomic levels below the pre-pandemic norm of $2,000 per 40ft.

According to Xeneta’s XSI North Europe to US east coast spot reading rates inched up by 1% last week to $1,366 per 40ft.

The Loadstar is known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.

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