Container rates continue to decline on major trades

Seven of the 15 routes measured by the Shanghai Containerized Freight Index fell to all-time lows this week, according to Richard Ward, a container derivatives specialist at Freight Investor Services.    The Shanghai Shipping Exchange’s Shanghai Containerized Freight Index (SCFI) fell 0.9 percent from last week’s reading of 404.18 to a reading of 400.43.
   The SCFI, which is released each Friday, is created by panelists from liner companies and shipping lines that estimate spot rates from Shanghai to 15 regions around the world.
   Seven of these 15 routes experienced all-time lows this week, said Richard Ward, a container derivatives specialist at Freight Investor Services.
   Since last week, rates from Shanghai to Northwest Europe dropped 2.8 percent, from $211 per TEU to $205 per TEU. In addition, rates from Shanghai to the Mediterranean fell 3.9 percent, from $203 per TEU to $195 per TEU.
   These current levels are putting carriers into the negative freight rate territory, Ward said. “By comparison, Maersk Line’s Bunker Adjustment Factor for Q1-2016 on the Asia-North Europe trade stands at $380 per TEU and therefore substantially above the current all-in freight rate of $205 TEU,” Ward said.
   Maersk Line issued a general rate increase from Far East Asia (excluding Japan) to North Europe and the Mediterranean April 1.
   MSC will also increase rates on the Asia to Europe trade April 1, Ward said.
   In addition, CMA CGM will increase rates from the Far East and Japan to the East Mediterranean and Black Sea March 20; and from the Far East and Japan to the West Mediterranean, Adriatic and North Africa April 1. The French carrier will also increase rates from all Asian ports to North Europe April 1.
   Hapag-Lloyd, OOCL and APL will also increase rates on the Asia to North Europe and Mediterranean trades April 1.
   While most of these increases will range between $400-$600 per TEU, Hapag-Lloyd said its increases will be $800 per TEU and $1,600 per FEU for cargo from East Asia (excluding Japan) to North Europe and the Mediterranean.
   Meanwhile, spot rates from Shanghai to the U.S. West Coast fell 6 percent since last week, from $810 per FEU to $761 per FEU. Rates to the U.S. East Coast dipped 3 percent, from $1,710 per FEU to $1,659 per FEU.
   The Ningbo Containerized Freight Index (NCFI), a composite of prices for 20-foot, 40-foot and high cube containers from Ningbo to Europe, the Mediterranean (East and West) and the Middle East, reported declines on all trades except to the Middle East, according to the Baltic Exchange, which publishes the NCFI on its website each Friday.
   Since last week, from Ningbo to Europe, the index fell from 142.36 to 126.54; from Ningbo to the West Mediterranean, it fell from 152.33 to 136.24; from Ningbo to the East Mediterranean, it fell from 142.67 to 138.95; and from Ningbo to the Middle East, it rose from 182.22 to 216.49.
   In addition, the World Container Index’s (WCI) composite index fell 26.2 percent yesterday compared to the prior Thursday, from $701 per FEU to $674 per FEU. The WCI is jointly owned by Drewry and ClearTrade Exchange and its composite index incudes spot rates from 11 east-west container shipping routes.