Rates Woes Continue for Carriers Amid Claims of Transatlantic Price-Dumping

By Mike Wackett (The Loadstar) –

Asia-North European carriers are being obliged to discount rates at the time of year – the build-up to the peak season – when they would normally expect to obtain increases.

According to carriers The Loadstar spoke to at this week’s UK Multimodal show, there are new orders in the pipeline, but they are unlikely to convert into bookings until late July, early August.

This improved visibility is welcome news for carriers, although in the interim they will need to blank more sailings, or risk a race to the bottom in a rates bloodbath.

Indeed, Drewry’s Asia-North Europe component fell 7% this week, to $1,349 per 40ft, with the average spot rate now 86% lower than a year ago.

There is, however, better news for Asia-Mediterranean carriers, the tradelane’s robust demand supporting a stable rate environment. For example, the Freightos Baltic Index (FBX) reading was flat again this week, at a relatively healthy $2,366 per 40ft.

On the transpacific, the impact of the “tentative” new US west coast contract agreed this week between the Pacific Maritime Association employers and the ILWU is still to be seen in the routing of cargo. West coast ports are hoping it will slow the coastal shift of imports from the Pacific hubs to US east and Gulf coast ports.

After a brief spike in spot rates last week, attributed to the increased threat of industrial action at west coast ports and draught restrictions for Asia-USEC vessels transiting the Panama Canal, rates have started to decline again.

Xeneta’s XSI average spot rate from Asia to the USWC fell 6% this week, to $1,414 per 40ft, while Drewry’s USEC reading slumped 8%, to $2,783 per 40ft.

Elsewhere, on the transatlantic, spot indices suggest freight rate erosion may be coming to an end – for instance, the FBX North Europe to USEC average rate was flat this week, at $2,082 per 40ft, while the XSI reading edged down just 1%, to $2,057.

Nevertheless, there are rates touted by transatlantic carriers at much lower levels in the market – in some instances, just $1,200 per 40ft. This compares with March spot rates of $4,000 per 40ft, and up to $8,000 a year ago.

However, with freight rates on other trades declining sharply, carriers have injected more capacity into the transatlantic, thus putting pressure on freight rates and one carrier executive at Multimodal alleged some of its rivals were “dumping” rates on the route.

“I don’t think they know what they are doing; it’s just people on a rates desk that have been given the green light to undercut a competitor – and its often a big chunk, at that,” he said.

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