World Container Index, Shanghai Containerized Freight Index both show a drop
Spot rates in the Asia-Europe trade dropped this week, resuming their month-long pattern of declines after last week’s rebound.
The decline is reflected in two indexes that measure spot market rates on a week-over-week basis.
The World Container Index of spot prices in the trade from Shanghai to Rotterdam, compiled by Drewry and the Cleartrade Exchange in Singapore, fell by $117 on Aug. 9, or 3.3 percent, to $3,379 per laden 40-foot-equivalent unit. The decline eroded most of last week’s gain of $163 to $3,496 per FEU.
The Shanghai Containerized Freight Index of spot prices on the trade from Shanghai to the North European ports of Hamburg, Rotterdam, Antwerp, Felixstowe and Le Havre also fell this week to $1,612 per 20-foot-equivalent unit, a drop of $98, or 5.7 percent from $1,710 per TEU last week.
“The talk of SCFI Europe has surrounded some very weak volume data for June and the likelihood of further supply-side pressure in the fourth quarter,” said Benjamin Gibson, freight rate derivatives broker at Clarkson Securities in London. “It is not surprising therefore, that the spot rates have taken a larger tumble this week.”
Gibson said that while overall Asia-Europe cargo volumes are not falling as steeply as EU imports, they are also not booming. “Instead the dynamic between BCO contract rates and spot-paying NVOCCs seems to be driving the spot market ever higher,” he said.
Asia-Europe carriers, including the four members of the CKYH Alliance and Maersk Line, tried to limit capacity by skipping some port calls in China last month, but the impact of these measures appears to be fading.
Drewry expects some softening in pricing through the second half of the year as continuing market weakness weighs on rates. “There is still a lot of latent overcapacity,” said Philip Damas, director of Drewry Supply Chain Advisors.
This week’s WCI is 175 percent higher than the WCI of $1,230 per FEU on Jan. 5, which reflects carriers’ discipline in maintaining the four general rate increases they implemented in the Asia-Europe trade this year. It is also 122.4 percent higher than the index of $1,519 per FEU in the same week last year.
Journal of Commerce Online
