Ship Sunk By Houthis Threatens Red Sea Environment
By Mohammad Ghobari ADEN, Yemen, March 2 (Reuters) – A UK-owned ship attacked by Houthi militants last month sank in the Red Sea, the U.S. military confirmed on Saturday, as it echoed...
By Mike Wackett (The Loadstar) –
Notwithstanding three attempts at GRIs (general rate increases) in 45 days, Asia-North Europe container spot rates have so far remained stubbornly low, which will make new contract negotiations onerous for carriers.
Despite huge FAK (freight all kinds) increases proposed by carriers for 1 November, 1 December and 15 December, Xeneta’s XSI Asia-North Europe component edged up just 1% this week, for an average of $1,244 per 40ft, and remains 50% below the level for the same week of last year.
However, the lines appear to be making better progress in restoring rate levels on the Asia-Mediterranean tradelane, in reaction to their GRIs for the same dates, with the Freightos Baltic Index (FBX) average increasing 7.5% on the week, to $1,605 per 40ft, although this is still around half the value of 12 months ago.
The failure to lift Asia-North Europe spot rates significantly as carriers are sitting down with shippers to negotiate new contract deals is a major obstacle for the shipping line key account representatives.
It is essential that carriers close new contracts at a healthy margin above the spot market. Spot cargo is generally regarded only as a ‘top-up’ for the more lucrative carrier contract business.
Ocean carrier third-quarter results confirmed the liner industry was quickly sliding into the red, with Q4 results likely to be substantially worse.
But those disappointing Q3 results would have plunged further towards negative territory if not for the effect of unexpired higher-rated contracts. Indeed, freight rate benchmarking firm Xeneta predicts that 2024 “could be even more brutal than expected for carriers”.
The Oslo-based company reported a further 4.7% fall in its XSI long-term contract index for October, which now stands at 62% lower than a year ago, and that decline will accelerate as new contracts are signed, according to Xeneta market analyst Emily Stausbøll.
“We can be absolutely certain the new contracts will be signed at much lower rates that those signed at this time last year,” she said.
“We always knew there was a storm coming in Q1 24, when the older contracts expired, but it seems as though it has arrived earlier than expected.”
Meanwhile, on the transpacific, there was more encouraging news for Asia-US carriers after a big splurge by American consumers on Black Friday, which, according to online data firm Adobe Analytics, saw $9.8bn of online sales, up 7.5% from a year ago.
This will have an some impact on reducing the bloated retailer inventories in the US that were halting new purchase orders, and thus reducing demand for sea freight carriage.
Drewry’s WCI Asia to US west coast component edged down slightly, by 1% this week, for an average spot rate of $1,971 per 40ft, with the rate just 3% lower than for the same week of last year.
With contract rate negotiations on the tradelane traditionally not starting until March for renewal in May, carriers have reason to be more optimistic about their forthcoming meetings with shippers.
Nevertheless, Asia-US east coast spot rates are still under pressure as shippers shy away from the route due to Panama Canal weight restrictions, the WCI spot reading down 41% year on year, albeit flat in the past week, for an average of $2,563 per 40ft.
Elsewhere, on the oversupplied transatlantic tradelane, spot rates remained at sub-economic levels, with the XSI average flat at $1,266 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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