North European exporters to Asia are paying the price of the extensive headhaul blank sailing programmes of ocean carriers.
Rates are skyrocketing on the route as they scramble for space.
According to the latest assessment by freight rate benchmarking platform Xeneta, short-term 40ft rates from North Europe have hit a high of $2,000, from a low of $500 in January, as shippers “fight for space” on the few export vessels with port calls that change daily.
One freight buyer commented that the space allocation to cover volumes under Europe-Asia annual contracts was actually greater than the capacity of the vessels sailing.
Yesterday, Xeneta’s average rate on its short-term database for North Europe to Asia stood at $1,450 per 40ft, double the level recorded in January.
Also yesterday, CMA CGM announced that from 15 May it would impose an emergency space surcharge (ESS) of $100 per container on its short-term contracts from North Europe to Asia.
According to one forwarder, next week could be particularly painful for European exporters and their forwarders, as there has been an unexpected surge in demand – “almost overnight” – on the backhaul route, coinciding with the week in which there is least capacity, estimated to be down by as much as 49%.
This is expected to lead to large numbers of Asia-bound containers being rolled-over at European loading ports, a situation likely last for another fortnight or so, with the hope that some capacity will return to the market by week 22.
Meanwhile, on the headhaul westbound route, despite collapsing demand carriers have so far succeeded in protecting rates through capacity reductions and rate discipline. This week’s Shanghai Containerized Freight Index (SCFI), published yesterday, saw a modest 1.9% decline in spot rates for North Europe to $739 per teu.
According to UK-based forwarder Westbound Logistics, the “muddled and conflicting advisories” on network changes from carriers – even within the same alliance – is partly responsible for the relatively robust rates.
Nevertheless, new rates supplied by The Loadstar’s agent contacts in China appear to suggest signs are emerging that a few carriers are beginning to break ranks and starting to discount rates.
Short-term rates from Shanghai to North Europe, valid from 1-15 May, being quoted by Maersk, MSC, OOCL, Cosco, Hapag-Lloyd, ONE and Evergreen, range between $1,160 and $1,300 per 40ft.
However, rates quoted by Yang Ming and HMM are said to be “more flexible”. Indeed, a local agent said Yang Ming would normally be cheaper, but “had space problems in May”.
The same sales agent offered lower rates from HMM saying that the South Korean carrier’s rates were “always cheaper than the other lines”.
Interestingly, short-term rates from Asia to the Mediterranean appear to be holding better, with the SCFI recording just a slight dip of 0.5% this week to $840 per teu.
On the transpacific, spot rates have spiked as a consequence of carrier GRIs introduced today. The US west coast component of the SCFI jumped 15.3% to $1,724 per 40ft, while spot rates for the east coast ports were up 5.8% to $2,773 per 40ft.
Transpacific carriers have so far blanked around 20% of all scheduled headhaul sailings in May, according to data from eeSea, with the 2M alliance leading the way, withdrawing 17 sailings, or 31%, of its planned 55 voyages this month.