Friday, March 27, 2015

SPOT FREIGHT RATES FROM CHINA

Spot container rates from China drop

Carrier general rate increases seen as "increasingly arbitrary and stratospheric."

   Spot container rates, as measured by the Shanghai Shipping Exchange's Shanghai Containerized Freight Index fell this week on major trades routes out of China.
   The rate from Shanghai to the U.S. West Coast fell by $87 to $1,748 per FEU and to the US East Coast by $214 to $4,355 per FEU. Earlier this year the rate to the East Coast had been over $5,000 per FEU.
   Rates to Northwest Europe from Shanghai fell $88 to $620 per TEU and to the Mediterranean the rate fell $148 to $808 per TEU.
   The container spot rates are estimates made by a group of panelists from shipping lines and forwarders.
   Richard Ward, a freight rate analyst at Freight Investor Services wrote that the information firm Alphaliner "has argued that the most recent attempt to increase rates on the Asia-Europe route is difficult to justify given the demand and supply conditions remain unfavorable from a carrier’s perspective. The falling value of the Euro is also expected to curb head-haul volume growth this year, whilst shipping lines are still pushing ahead with additional capacity increases on the route."
   Ward added that general rate increases (GRIs) "have also become an almost monthly ritual with the quantum of the increases becoming increasingly arbitrary and stratospheric. Alphaliner highlighted the BAF changes as an additional example of an arbitrary increase with Maersk’s BAF 29 percent higher than the market average despite having some of the most efficient ships on the trade.
   "Although it’s reasonable for carriers to earn a decent return for providing their services, the current freight pricing system can be argued to be untenable," said Ward.