Asia-Europe Spot Container Rates Soar
Asia-Europe spot container rates soar as carriers hard line the 1 July GRI against a background of weak market fundamentals. Shanghai-Rotterdam container freight rate index increased by $1,632 per 40ft container
Chart: World Container Index Shanghai-Rotterdam Benchmark (US$/40ft)
The World Container Index’s Shanghai-Rotterdam freight rate assessment increased by 165%, to US$$2,622 per 40ft box, marking the latest of several huge price swings in the Asia-Europe container shipping market.
The weekly World Container Index assessed by Drewry, which captures freight rates with a contract validity of up to one month, confirmed today that the price increases announced by container shipping lines from 1st July were largely accepted by the market.
“Over three quarters of the planned $1,000 per TEU rate increases was implemented, based on our market assessments in China and Europe,” said Richard Heath, director of World Container Index.
Martin Dixon, research manager freight rate benchmarking at Drewry, commented: “We expect this rate increase to be partly reversed in the next few weeks. However, the price correction will also serve to forestall any further erosion in contract rates that were originally agreed at the start of the year when the market was stronger.
Drewry stressed that week-to-week increases in rates are less significant than how long the increase holds for.
By last week the World Container Index benchmark had fallen to a 19-month low, tumbling to within $46 per 40ft of December 2011’s trough in the midst of the last carrier price war. If sustained, this week’s increase brings Asia-Europe rates back to the same level as they were at the start of the year (see chart).
Drewry urges shippers to consider adopting index-linking as a mechanism to avoid contract default in the current environment of major price volatility.
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