Carrier Discounts Push Container Spot Rates Lower Ahead of August GRIs

By Gavin van Marle (The Loadstar) – Container spot freight rates on the transpacific and Asia-Europe trades saw another week of single-digit declines, in the absence of carrier-led price hikes.

But, on the contrary, it appears that despite relatively tight capacity, carrier discounting on Asia-Europe and transpacific tradelanes was largely the cause of this week’s weakness.

Drewry’s World Container Index (WCI), saw the spot rate on its Shanghai-Rotterdam leg decline 3% week on week, to finish at $4,677 per 40ft, while the Shanghai-Genoa route was weaker, with a 6% drop to end the week at $5,630 per 40ft, and analysts at Linerlytica reported “carriers offering rates below $5,000 per 40ft, as support for the 1 August rate hike is quickly waning”.

Meanwhile, today’s Shanghai Containerised Freight Index (SCFI) – which records rates quoted for the forthcoming week and, as such, can indicate the behaviour of the following week’s WCI (as it did last week) – suggests further gentle declines next week, again in the absence of FAK hikes, with spot rates to North Europe and the Mediterranean both down 4% against last week.

Drewry noted that with “demand continuing to ease, carriers are focusing on capacity management through blank sailings to prevent further rate erosion”, and reports that “three blank sailings are scheduled on the Asia–Europe trade next week, compared with four this week”.

This will be likely supported by another attempt to hike rates through new FAK level in mid-August – MSC announced today that it intends to implement a new FAK level on 15 August, of $7,800 per 40ft, on Asia-North Europe shipments, and $6,700 per 40ft on Asia-Mediterranean.

Meanwhile, on the transpacific, carriers are expected to try and increase prices over the coming week, after the WCI this week saw its Shanghai-Los Angeles route fall 2%, to $5,739 per 40ft, while the Shanghai-New York spot rate was flat, at $7,578 per 40ft.

US west coast forwarder Freight Right said the transpacific drop came about after “ocean carriers allowed rates to fall to stimulate market demand and bring pricing back to temporary market equilibrium”.

Tomorrow – 1 August – will see the latest round of GRIs applied on transpacific shipments, the hikes ranging from $2,000 to $3,000 per 40ft, depending on carrier.

Today’s SCFI appears to reflect optimism among carriers (which make up around half of the index’s respondent set), with rates from Shanghai to both east and west coasts jumping 12.5% week on week.

“Whether those increases hold will largely depend on sustained cargo volumes,” Freight Right said.

“If demand remains steady, as importers continue shipping under the now-clearer tariff environment, carriers may be able to maintain rates near current levels, or modestly higher. However, if demand fails to strengthen, the market could quickly settle back toward today’s pricing after a brief August spike,” it explained.

Drewry added that carriers were hoping to support the GRIs through increased use of blanked sailings, “following softening demand and the slowdown in front-loading activity”.

According to Drewry’s Container Capacity Insight, eight blanked sailings are scheduled for next week, compared with seven this week.

In addition, this week also saw Chinese carrier BAL Container Lines cancel a plan to offer a one-off 14,000 teu extra loader to the US west coast, with the vessel instead being chartered to Maersk to be deployed on the Asia-Europe trades.

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