Container spot rates fall to fresh lows

The Shanghai Containerized Freight Index has posted continuous declines since the start of 2016, while the World Container Index has fallen 62 percent in the past year and is currently down 60 percent from its five-year average.    The Shanghai Containerized Freight Index (SCFI), the Ningbo Containerized Freight Index (NCFI) and the World Container Index (WCI) have all posted declines since last week, continuing a free-fall of container spot rates on the major east-west trades.
    “Rate reductions are spreading across all routes, as the shipping market continues to soften,” Philip Damas, division director at Drewry Supply Chain Advisors, said in a statement. “This is good news for shippers’ cost budgets, as the latest average index value of $701 per 40 foot container represents an expense of less than 10 cents per km and makes products competitive even in remote markets.”
   Drewry jointly owns WCI with Cleartrade Exchange.
   The Shanghai Shipping Exchange’s SCFI, which includes spot rate estimates from Shanghai to 15 regions around the world, fell 6.8 percent from last week’s reading of 433.46 to a reading of 404.18.
   Rates from Shanghai to the U.S. West Coast fell 8.4 percent since last week, from $884 per forty-foot container (FEU) to $810 per FEU; and rates from Shanghai to the U.S. East Coast fell 5.2 percent, from $1,804 per FEU to $1,710 per FEU.
   Richard Ward, a container derivatives broker at Freight Investor Services, said there have been “questions raised over the decision by CMA CGM to deploy six 18,000-TEU vessels on the Asia-USWC trade where freight rates are already under pressure.”
   Hapag-Lloyd plans to increase rates from East Asia to the U.S. and Canada April 1 by $320 per TEU; and $400 per FEU and 45-foot containers.
   Since last week, rates from Shanghai to Northwest Europe experienced an 8.7 percent decline, from $231 per TEU to $211 per TEU. Rates on the trade are 70 percent lower from the corresponding period in 2015, said Ward. From Shanghai to the Mediterranean, rates tumbled 14 percent, from $236 per TEU last week to $203 per TEU.
   And once again, carriers will attempt to implement general rate increases on these trades in the coming weeks.
   “After the failed GRI attempt in March carriers have announced plans to increase rates on the Asia-North Europe trade effective April 1st,” wrote Ward. “The increases range between $400-500 TEU with Hapag-Lloyd the notable outlier announcing plans to increase rates by $800 TEU.”
   OOCL also has plans to increase rates from the Far East (excluding Japan) to North Europe and the Mediterranean during this time, and CMA CGM issued increases from Asia to the Mediterranean (the East Mediterranean and Black Sea), scheduled to take effect March 20; and from Asia to North Europe and Asia to the Mediterranean (West Mediterranean, Adriatic and North Africa), scheduled to take effect April 1.
   Meanwhile, the NCFI, a composite of prices for 20-foot, 40-foot and high cube containers from Ningbo to Europe, the East Mediterranean, West Mediterranean and Middle East, fell since last week, according to the Baltic Exchange, which publishes the NCFI on its website each Friday.
   From Ningbo to Europe, the index fell 15.2 percent since last week, from 167.94 to 142.36. The index tumbled 20.8 percent from Ningbo to the West Mediterranean, from 192.26 to 152.33. On the Ningbo to East Mediterranean trade, the index fell 11.8 percent, from 161.83 to 142.67; while from Ningbo to the Middle East, the index dropped 8.4 percent, from 198.96 to 182.22.
   Additionally, the WCI’s composite index, which includes spot rates from 11 East-West container shipping routes, fell from $739 per FEU last week to $701 per FEU yesterday.
   “The World Container Index’s composite index is now 60 percent lower than the average of the past 5 years and has decreased by 62 percent in the past year,” WCI director Richard Heath said in a statement.
   “Elsewhere the recent rally on the Asia-Santos trade, which occurred after rates hit an all-time low of $99 TEU, has subsequently collapsed,” added Ward. “Rates have now declined $345 from their post GRI high of $817 TEU, suggesting recent measures by carriers to cut capacity have not been enough to sustain the increase.”