Spot container rates spike upwards

Ocean carriers Hapag-Lloyd and Maersk announced plans for rate increases on August 1.    Spot container rates as measured by the Shanghai Shipping Exchange’s Shanghai Containerized Freight Index (SCFI) spiked upwards Friday, reflecting general rate increases implemented by carriers on major shipping lanes out of China. The overall SCFI, which combines rates on 15 routes out of Shanghai to ports around the world, was up 16 percent or 104.81 points to $745.45 on July 3.
   Individual components of the SCFI showed sharp increases on spot rates on the major routes out of Shanghai to Europe: the spot rate to North West Europe was up $331 per TEU to $879 per TEU and up $266 to $941 to Mediterranean ports. It was the second week rates had risen sharply after bottoming out at $205 per TEU to North Europe and $274 per TEU to the Med last month. The exchange determines the spot rates by polling a panel of liner executives and forwarders.
   The London-based consultants Drewry said Sunday, “The actions that some carriers are taking in both the North Europe and Mediterranean markets to cut capacity all point to spot rates improving from 1 July for the duration, at least, of the peak season. After four months of relentless falls in the headhaul spot rates, carriers are now being forced to reduce capacity.”
   “The severe hemorrhaging of open market rates has inflicted more pain on the carriers in the Mediterranean trade because there is a lower proportion of fixed-term service contract cargo moving than in the North Europe market,” added Drewry.
   Carrier in the Asia-Med trade sought general rate increase on July 1 of $900 to $1,300 per TEU and Drewry said “it is imperative that a good chunk of this sticks if the carriers’ contract customers, whose terms are over $1,000 per 40ft higher than the current spot rate, are not to be totally alienated.”
   The Shanghai Shipping Exchange said last Friday that spot container rates were also up on routes out of Shanghai to the U.S. After falling $39 per 40-foot container (FEU) on June 26, the rate to the U.S. West Coast jumped $192 per FEU on July 3 to $1,421 per FEU. Similarly, after falling $38 per FEU on June 26, the rate to the U.S. East Coast jumped $85 FEU on July 3 to $2,951 per FEU.
   Rates on trades to the U.S. were expected to go up as the Transpacific Stabilization Agreement, a discussion agreement consisting of 15 of the largest container carriers in Far East-U.S. trades had recommended its members institute a $600 per FEU general rate increase and $400 per FEU peak season surcharge on July 1.
   Further increases in the Far East to U.S. trade are planned. Both Hapag-Lloyd and Maersk announced last week that they planned a general rate increase in August amounting to $600 on standard 40-foot containers. Details on other size containers are available in the carriers’ individual announcements.