Spot Rates Roller Coaster for Container Shipping

By Mike Wackett (The Loadstar) –

Container spot rates on the transatlantic shot up this week and, ahead of Chinese New Year tomorrow, transpacific rates carried on climbing, while Asia-Europe rates lost more ground.

Xeneta’s XSI North Europe to US east coast average spot rate leapt by 44%, to $2,078 per 40ft, after carriers took advantage of the Red Sea crisis to take out capacity and launch huge GRIs (general rate increases).

“If the flood of capacity on this trade was responsible for the collapse in rates, then it stands to reason that it is a key driver for them starting to increase again,” said Xeneta’s chief analyst, Peter Sand.

He explained: “Smarter carrier tactics regarding capacity management became a focal point in Q4 23 and remain the primary factor in the lifting of rates this month, which saw an 18-month low for deployed capacity on this trade.”

Indeed, according to CTS (Container Trade Statistics) data, volumes shipped on the headhaul Europe to US tradelane fell every month last year, and were down 11% overall on 2022.

Having restored spot rates on the transatlantic from sub-economic levels to a historical average $2,000 per 40ft, it remains to be seen whether the lines can hold on to these gains against a background of weak demand.

Meanwhile, with revised carrier Asia-Europe networks incorporating longer voyage times around the Cape of Good Hope now baked into shipper supply chains, and a weak demand forecast for after CNY, spot rates on the route are beginning to fall rapidly.

Drewry’s WCI Asia-North Europe component declined another 5% this week, for an average of $4,426 per 40ft, while Asia-Mediterranean spot rates slumped 11%, for an average of $5,225 per 40ft.

Asia-North Europe spot rates have fallen by 11% in the past two weeks, versus an 18% drop for Asia-Mediterranean rates, however they remain 158% and 97% higher respectively than a year ago.

Moreover, anecdotal reports to The Loadstar this week from shipper contacts suggest the lines will be back with begging bowls held out after CNY in order to fill their allocations, with some diversion surcharges likely to be reduced, or waived altogether.

Elsewhere, on the transpacific, the enigma of the continued rise in spot rates from Asia to the US continues, given that only a minor percentage of the trade has been impacted by the Red Sea crisis.

The XSI Asia to US west coast spot put on another 12% this week, to $4,533 per 40ft, while the Freightos Baltic Index (FBX) Asia-US east coast reading improved 4%, to $6,373 per 40ft.

For the US west coast, spot rates are around 130% higher than 12 months ago, with rates to the east coast double what they were this time last year.

Although demand ahead of CNY from Asia to the US has been more robust than for Asia to Europe, there appears to be no logical reason why spot rates have not eased in keeping with European trades, notwithstanding the lesser affect on the trades from the Suez Canal diversions.

Carriers will be keen to hold on to as much of the spot gains as they can, as they head into the transpacific contracting season, however shippers and BCOs will likely attempt to defer signing new annual contracts, or opt for a quarterly deal, until short-term rates have settled.

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.