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More Blanked Sailings and Rate Increases for Transatlantic Shipping

The Loadstar
Total Views: 1388
August 18, 2023

By Mike Wackett (The Loadstar) –

Container spot rates on the transatlantic came under renewed pressure this week, obliging ocean carriers to cut supply on the route by blanking more sailings.

Moreover, in an attempt to reverse the trend and a new wave of rate erosion on the tradelane, carriers have announced FAK rate increases for next month.

Elsewhere, the spot rates news is more positive for carriers, but one analyst believes it will not last.

The Freightos Baltic Index (FBX) North Europe to US east coast component lost almost 20% of its value this week, with the average spot rate plunging to $1,326 per 40ft.

However, the lowest spot rates on the trade are now well below $1,000, with the percentage of higher-rated contract business in sharp decline. With backhaul demand weak, and rates from the US to North Europe below $500 per 40ft, transatlantic carriers are racking up loss-making voyages.

But they are now taking aggressive action to ‘stop the rot’, including the 2M’s late cancellation of the westbound sailing of the 7,943 teu MSC Agamemnon this week from Bremerhaven on Maersk/MSC’s TA2/NEUATL2 loop.

And CMA CGM has announced new FAK rates for the transatlantic, effective 4 September, from North European base ports to US east and Gulf coast ports, ranging from $1,600 to $2,000 per 40ft.

However, it remains to be seen whether the two-pronged transatlantic strategy of blank sailings and rate increases will work as well as they have done on the bigger transpacific and Asia-North Europe tradelanes.

This week’s Asia-North Europe reading of Drewry’s WCI saw average spot rates tick up another 6%, to $1,768 per 40ft, representing the fifth consecutive week of increases, while Asia to Mediterranean rates remained robust, the WCI edging up 1%, to $2,086 per 40ft.

On the transpacific, Xeneta’s XSI Asia to US west coast spot component continued to gain value. advancing another 2.5% this week for an average of $2,030 per 40ft, having increased by more than 60% since the end of June. And for the US east coast, the Panama Canal draught restrictions helped push up the WCI spot reading 5%, to $3,545 per 40ft.

With the exception of the transatlantic, ocean carriers should be pleased with the upward trend for spot rates, particularly after the gloomy forecasts for trade over the past few weeks.

Nevertheless, carriers need to ensure they keep a tight control of supply in the coming weeks in order to maintain stability in the freight markets.

The ‘elephant in the room’ is the huge 2.4m teu of newbuild tonnage due to be delivered. Drewry is one analyst that believes things will not work out well for carriers in the final quarter.

It said that, although there could be further spot rate increases, the flood of newbuild capacity would, ultimately, undo the gains, and added: “The addition of a large number of new ships during the balance of this year will reverse these rate increases from about October.”

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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