Drewry’s World Container Index experienced a 7% increase in the latest week’s data, settling at $1,927 per 40-ft. container.
The uptick can be attributed mainly to rate adjustments on key trans-Pacific and Asia–Europe trade routes, the London-based analyst said. Notably, on the trans-Pacific headhaul spot rates displayed a recovery as of Dec. 4, reversing the downward trend observed over the preceding weeks. Rates from Shanghai to Los Angeles rose by 8% reaching $2,256 per 40-ft. container, and those to New York increased by 6% to $2,895.
The increase to the U.S. totaled approximately $160, failing to recover from the East Coast’s decline seen a week ago and unable to turn back two weeks’ price decline to the West Coast.
Traditionally, carriers have implemented general rate increases (GRIs) on a fortnightly basis. However, a shift towards a more frequent, weekly adjustment strategy has emerged. Drewry said that this new approach entails introducing smaller, more consistent rate hikes as opposed to larger, sporadic increases that tend to be less sustainable. The efficacy of this strategy is evident in the recent stability observed in spot rates, with forecasts suggesting continued steadiness in the short term.
In contrast, the Asia–Europe trade lanes have demonstrated an ability to sustain rate levels over a three-week period. For instance, spot rates on the Shanghai–Genoa route surged by 15%, to $2,648, while Shanghai to Rotterdam saw a more modest 4% increase to $2,241.
Spot rates for on-demand services are useful for determining indexes, which in turn guide contract pricing.
This stability has been supported by increases in freight all kinds (FAK) rates, which are strategically utilized to bolster spot rates ahead of annual contract negotiations. Shippers and carriers are well into the preparatory process, with formal negotiations expected to get underway in earnest next month.
However, the Asia–Europe trade lanes are not without challenges. The uncertainty surrounding the Suez Canal introduces a degree of volatility, as it remains the preferred route connecting these two regions. A full resumption of transits would potentially reintroduce as much as 2 million TEUs of total capacity into the market. While this could apply downward pressure on rates, the impact might be gradual due to potential port congestion resulting from the realignment of east-west networks.
Find more articles by Stuart Chirls here.
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