Container freight rates in westbound Asia-Europe corridor increased by 19% for the week ended May 3 to US$3,878 per 40ft container, influenced by general rate increases of about US$400/TEU from May 1: World Container Index

Kendall Sinclair

LONDON , May 3, 2012 (press release) – The World Container Index shows that box rates on Asia-to-Europe rose strongly on this week’s GRIs but by contrast Transpacific Eastbound pricing remained unchanged.
3rd May 2012, London. Today’s Shanghai-to-Rotterdam container freight rate assessment from the World Container Index (WCI), a joint venture between Drewry and The Cleartrade Exchange, shows that container freight rates in the westbound Asia- Europe corridor increased by 19% this week. But pricing on the eastbound transpacific trade was unaffected by carrier GRI attempts.

The rise in Asia-to-Europe pricing represents the third large rate increase in as many months, adding further upwards pricing pressure on shippers. But pricing is expected to ease as weakening load factors impact the sustainability of current rate levels. Meanwhile, the failure of this week’s GRI on the transpacific eastbound signifies the underlying weakness in the market.

“The readings for this week’s World Container Index assessed by Drewry illustrate the divergence in freight rate trends between the ascendant Asia-to-Europe trade and moribund transpacific routes,” said Drewry’s freight rate research manager Martin Dixon. “Tighter capacity on the former has enabled lines to press ahead with aggressive rate restoration programs, while weaker load factors on the transpacific have held such attempts in check.”

The World Container Index’s Shanghai-Rotterdam container freight rate sub-index went from US$3,249 per 40ft container on 26 April to US$3,878/40ft on 3 May, a rise of US$629 per feu.
Carriers in the key Asia-Europe headhaul trade had announced General Rate Increases (GRIs) of about US$400 per teu (or US$800 per 40ft container) from 1 May. The index shows that carriers were able to enforce the majority of the requested price increase.

The World Container Index’s Shanghai-Los Angeles container freight rate sub-index went from US$2,314 per 40ft container on 26 April to US$2,321/40ft on 3 May, a rise of just US$7 per feu.

Transpacific Stabilization Agreement carriers had announced GRIs of US$500 per 40ft container for eastbound cargo destined for west coast ports and US$700 per feu for east
coast ports, effective from 1 May. The index shows that carriers failed to enforce their intended GRI.

Elsewhere, pricing has recovered strongly on North-South and Middle Eastern trades. For instance, rates between Asia and the Middle East rose as much as 70% in the two months to March, according to Drewry’s Container Freight Rate Insight. Other trade routes covered by the Container Freight Rate Insight showing notable rate recovery include Asian trades into Latin America and Oceania while pricing on African routes softened. Also intra-Asian trades have seen some appreciation in pricing since the start of the year with Drewry Intra-Asian Freight Rate Index rising 3.4% in the two months to March.

But Dixon cautioned that the rally in rates may be losing steam. “We do not expect Asia- to-Europe freight rates to increase further,” said Dixon “Some carriers are already offering pricing reductions on cargo bookings for later in the month, indicating that the market may now have peaked.”

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