Container freight rate rises continue

With no signs of demand diminishing, ocean freight spot rates out of China this week are around 9% higher than in early October – usually the end of the peak season – and more than double their level last year

Amid continuing and unexpectedly strong demand, container freight rates on key east-west trades are resuming their rise in what is normally a seasonal post-peak slow period, with ocean freight spot rates out of China this week around 9% higher than what is usually the end of the peak season, China’s Golden Week in early October.

Analysis by logistics investment analyst Jefferies noted that the average rates on the Shanghai Containerized Freight Index (SCFI) increased 9% to $1,665/TEU yesterday morning, “a new record-high since the data began”, and is 109% ahead of this week last year, and up 34% on average pricing for the year to date (YTD) – “reflecting record-low retail inventories” – while idle capacity now stands at only 1.6%, indicating most available container shipping tonnage was currently deployed in the market.

Meanwhile, the broader China Containerized Freight Index (CCFI) Composite Index increased 3% this week to $1,111/TEU and is 33% ahead of this week last year, and up 11% on average YTD, Jefferies noted.

“The SCFI and CCFI are now up 15% and 9% since Golden Week, the start of the slow season (in) early October,” Jefferies added, noting that these further price rises could cause a significant further rise in container line profits that would “trigger another round of guidance upgrades” by analysts of lines’ profitability. That follows upgrades already in late September, reflecting the fact that container lines had been benefiting in recent months from “historic consolidation, rational capacity management and a fast bounce-back in demand post-lockdown”.

Stable prices last week

This week’s rises follow relatively stable prices last week, as illustrated by Drewry’s composite World Container index of eight key east-west trades, which increased by 0.5% in the past week to $2,627.94 per 40ft container – 81.5% up when compared with same period of 2019.

That overall rise of 0.5% reflected small rises in prices on the Asia-Europe trades, balanced out by small decreases in the transpacific.

Rates on Shanghai to Rotterdam climbed 4% – an increase of $87 and touched $2,306 per feu. Likewise, Shanghai to Genoa rates nudged up by 2% to $2,733 for a 40ft box, Drewry said.

Conversely, spot rates on Shanghai to Los Angeles declined 2% – a change of $84 to $4,054 for 40ft container. Drewry expects rates to increase marginally this week, a prediction that figures from the SCFI and CCFI – which track bookings for the week ahead – confirm.

Asia-Europe demand continuing

Meanwhile, on the Asia to Europe (Far East West bound) trade, it confirmed that rates had increased following a GRI on 1 November that had been implemented, with a further GRI on 15 November also likely to be implemented.

It also highlighted Peak Season Surcharge of US$150/TEU effective 1 November, and Port Congestion Surcharges for the UK’s two largest container ports Felixstowe and Southampton of US$150/TEU, effective 1. November.

With capacity tight, it recommends “advance booking notice at least 21 days prior to CRD”, adding that the market was “expected to be very strong through the end of November.

It also highlighted that a “very severe equipment shortage may require equipment substitution (40’ST, 40’NOR and 20’DC instead of 40’HC)”.

In the UK, the serious port congestion in Felixstowe is spreading to other UK ports, e.g. Southampton. Further delays and port omissions are taking place. Carriers are looking to reduce cargo into the UK due to slow turnaround of containers and haulage limitations. They have put various restrictions in place.

Container freight rate rises continue

Fortitude Global Logistics Limited is committed to delivering the highest level of Worldwide service to all clients, no matter of their logistical requirements

Container Quick Search