SCFI: US rates climb, European rates fall
Rates responded poorly to carriers’ attempted general rate increases in the Asia to North Europe and Mediterranean trades, according to the Shanghai Containerized Freight Index as of Friday, but prices to the U.S. are trending upwards, as they have been for a few months. The spot rate to the U.S. East Coast, in particular, continued to climb as peak-season volumes arrive and capacity tightens.
The spot rate to the U.S. East Coast was $4,344 per 40-foot container this week, gaining $183 of the $600 per container carriers are aiming to get on eastbound trans-Pacific shipments as of Sept. 1. Spot rates to U.S. East Coast ports have gone up $1,130, or 17.2 percent per FEU since the end of May, as cargo diverted from the U.S. West Coast and peak-season shipments continue to keep pressure on capacity.
The spot rate to the East Coast has been above $4,000 per FEU for five straight weeks, the first time that’s happened since 2010. This week’s rate is 28.6 percent higher than the same week of 2013, and this is the fifth straight week of double-digit year-over-year percentage gains, showing continued strength in the Asia to U.S. East Coast trade.
East Coast ports have seen higher volumes this summer, in part because of shippers diverting cargo from the U.S. West Coast to avoid potential disruptions as labor negotiations with longshoremen continue. Natural peak season volumes have only exacerbated the issue. For example, from June to July volumes jumped 10.3 percent to 207,771 TEUs in Norfolk. In the same time period, volume in Savannah grew 8.8 percent to 268,119 TEUs.
Capacity has been tight on nearly all vessels heading to the East Coast. Earlier this week, JOC.com reported on cargo rolling in Asia that has some shipments to the U.S. East Coast delayed severely. A top executive at one of the world’s largest carriers said that because of smaller ships in the Asia to East Coast trade — ships in the trans-Pacific trade to the East Coast must be able to transit the Panama Canal, and thus generally are no larger than 5,000 TEUs — the strength in volumes has ships sailing at 100 percent capacity.
Rates to the U.S. West Coast also rose this week, with the SCFI now at $2,178 per FEU as of Friday. The rate dropped for three straight weeks after Aug. 1 general rate increases that netted $433 per FEU (of the $600 per FEU sought), but container rates have still been higher versus 2013 for the past five weeks. This week, the price per 40-foot container is 10.8 percent higher year-over-year.
The SCFI indicates price levels for the week ahead, which includes four days with new GRIs in effect. Members of the Transpacific Stabilization Agreement, a discussion agreement in the Asia to U.S. trade, proposed a rate hike of $600 per FEU earlier this month to take effect on Sept. 1, and will continue a pattern of increases intended to push rates up an average of $300 per FEU this year. The price to the West Coast has risen 20 percent, or $363 per FEU, so far this year. The spot rate to the East Coast is up $1,207 or 38 percent year-to-date as well.
Dropping rates for Europe, the MediterraneanThe SCFI rate from Asia to North Europe fell for the fourth straight week to $1,083 per 20-foot container. The rate declined 2.1 percent from the week before, putting spot rates 8.5 percent lower than the same week in 2013. It was the seventh straight week of year-over-year declines. The rate has eroded $372 per TEU during the past four weeks.
The decline occurred despite September GRI plans for many carriers in the lane. Rates from Asia to northern Europe have been some of the most volatile. The spot rate is down 38.6 percent or $682 per TEU since Jan. 1.
This is the closest this rate has come to dropping below the $1,000 per container benchmark since the week of March 21.
Spot rates from Asia to the Mediterranean also dipped, declining $235 per container in the past three weeks to $1,378 per TEU as of Aug. 29. Rates in that lane are the lowest they’ve been since April. The rate has dropped six out of the past eight weeks and is now fallen 23.1 percent since Jan. 1.