Spot container rates may be on upswing

The SCFI surged 9.3 percent last week, while the WCI was relatively steady compared with the previous week.    Container freight rates may be building momentum again after slipping last week, according to two of the primary spot rate indices.
   The Shanghai Shipping Exchange’s composite Shanghai Containerized Freight Index, which aggregates spot rates on 13 different outbound trades from Shanghai, surged 9.3 percent on a sequential basis last week.
   The SCFI Friday’s reading of 821.18, however, was still down 10.6 percent from 918.83 as of June 30, 2017.
   The World Container Index, produced by London-based maritime shipping consultant Drewry, on the other hand, slipped 0.9 percent from the previous week to $1,378 per FEU, but was down just 0.2 percent on a year-over-year basis.
   Growth in the SCFI was broad-based, with rates from Shanghai to Europe, the Mediterranean and both the U.S. East and West Coast all showing improvement.
   SCFI rates from Shanghai to Europe grew 6.1 percent last week, from $834 per TEU to $885 per TEU, while rates from Shanghai to the Mediterranean ticked up 0.8 percent, from $905 per TEU to $913 per TEU.
   Pricing in the transpacific trades showed even stronger growth, with rates from Shanghai to the U.S. West Coast soaring 29.4 percent, from $1,194 per FEU to $1,545 per FEU, and rates to the U.S. East Coast jumping 15.7 percent, from $2,181 per FEU to $2,524 per FEU.
   According to Drewry, pricing from Shanghai to Rotterdam rose 1 percent sequentially to $1,617 per FEU last week, but was down 2 percent from the same time last year. Rates to Genoa, however, jumped 7 percent sequentially and 10 percent year-over-year to $1,729 per FEU.
   Eastbound transpacific rates from Shanghai to Los Angeles and New York fell 2 percent and 3 percent, respectively, from the previous week to $1,255 per FEU and $2,281 per FEU, but remained up 11 percent and 13 percent year-over-year.
   Transatlantic pricing also remained in positive territory, stagnating from the previous week but rising 6 percent from this time last year to $1,837 per FEU.
   In its weekly analysis, Drewry noted that the average composite WCI so far this year now stands at $1,371 per FEU, down 10.6 percent from the index’s five-year average of $1,532 per FEU.
   Drewry said it expects rates to see “marginal improvement” next week, which would be welcome news for container carriers, many of which have already reported less-than-inspiring results for the first quarter of 2018 after returning to profitability last year.
   The research firm in a recent report projected the container carrier industry “will only break even at best in 2018,” as stagnant rates, rising fuel prices and an inability to control costs are putting pressure on profit margins.
   As noted here previously, some discrepancy between the SCFI and WCI can be attributed to the fact that although the two indices measure many of the same rates, their composition and methodology are slightly different. The SCFI, for example, includes several “lesser” north-south trade lanes between Shanghai and the Middle East, Oceania, Africa, South America and even some intra-Asia pricing, whereas the WCI does not. The WCI also includes transatlantic rates, while the SCFI is dedicated to Asia trade.
   The SCFI also only tracks outbound — headhaul — rates from Shanghai, whereas the WCI tracks both headhaul and backhaul. As such, last week’s increase in the composite SCFI couple with a decline in the composite WCI can be attributed in part to rising headhaul rates that are being offset by falling backhaul rates in the WCI.
   Eastbound pricing from Rotterdam to Shanghai, for example, slumped 18 percent sequentially last week to $820 per FEU, a 43 percent decline from the same 2017 period, according to the WCI. Westbound transpacific rates held steady from the previous week at $493 per FEU, but were still down 10 percent year-over-year.
   Much like their headhaul counterparts, backhaul rates in the transatlantic trade also remained unchanged on a sequential basis, but climbed 4 percent year-over-year to $517 per FEU.