Both OOCL and Maersk had indicated an implementation date of 15 January for general rate increases of $850 per teu and $800 per teu respectively on the Asia-Europe headhaul westbound leg, with Hapag-Lloyd also set to introduce an $850 per teu GRI on Monday 19 January.
However, this week’s Shanghai Containerised Freight Index’s Shanghai-North Europe leg rose just $33 to tip over the $1,000 mark to $1,008 per teu, compared with $975 per teu this time last week – representing a 3.4% increase compared with the 10% drop in the previous week.
According to container freight derivatives broker freight Investor Services, today’s rate is some 39% below the level at this point last year. This is partly explained by the fact that in mid-January 2014 the beginning of the Chinese New Year holiday was just over a fortnight away, whereas this year it begins on 19 February.
It would appear that carriers have instead targeted the beginning of February to look to raise rates again. Cosco last week announced a $350 per teu peak season surcharge on 1 February, and FIS broker Richard Ward said it was likely carriers would try to capitalise on the expected surge in volumes prior to China’s annual two-week shutdown.
However, the big question rate-wise is how carriers will review bunker adjustment factor (BAF) levels as oil prices have continued their descent, Mr Ward added.
“Post-Chinese New Year the outlook remains uncertain, particularly when considering the level to which carriers have reduced their Bunker Adjustment Factor as a result of recent events in the oil market.
“Some BAFs will drop by nearly 50% year-on-year in February and, although this doesn’t necessarily directly impact all-in market rates, it will be interesting to see whether savvy shippers use this knowledge to their advantage when discussing rates.
“Moreover, with fuel oil dropping so significantly and making up such a larger proportion of their costs, carriers could be tempted to drop rates to levels not seen since the 2011 rate war,” he said.
Certainly the break-even analysis on the world’s largest deepsea container trade has fundamentally changed in recent months, if comments from China Shipping vice-president Yu Zenggang to reporters in Hamburg this week were anything to go by.
Fairplay reported that Mr Yu said that a combination of the lower slot costs offered by its new 19,100 teu CSCL Globe and bunker prices having effectively halved meant that the break-even rate per teu on the headhaul leg was now just $600 per teu.
Before oil began to decline so precipitously, the break-even rate was commonly held to be $1,000 per teu.