Asia-Europe rates take off ahead of Chinese New Year

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Asia-Europe rates take off ahead of Chinese New Year

2015-01-26

The rate was $248 per TEU higher than last week and the 24.6 percent increase pushed the price to its highest level since the last GRI was imposed on the trade in mid-December. Although this week’s rate was 30 percent lower than during the same week last year, the 2014 rate was recorded just after a GRI was levied by the carriers.

FIS Container Derivatives said in its weekly commentary that lines were attempting to squeeze as much income from the market as possible before its likely crash post Chinese New Year.

“Although utilisation is reportedly in the 90 percent plus range, sentiment is more bearish than it was 12 months ago when many shippers struggled with the huge spike in rates just before the holiday period,” the FIS report said.

A host of new GRI’s and peak season surcharges have been announced by the lines in anticipation of Chinese New Year. Evergreen will implement a GRI of $400 per TEU effective Feb. 1 along with Hanjin, which will also increase rates at the start of the month via a peak season surcharge of $300. Hamburg Sud will implement a peak season surcharge of $300 per TEU from Feb. 2, while Maersk will push through a GRI of $400 per TEU on Feb. 1.

Spot rates on the Asia-Mediterranean trade also continued to show positive growth this week, with the SCFI registering a price of $1,460 per TEU, up $100 over last week, or 6.8 percent. It is the highest the rate has been since May last year.

On the trans-Pacific, the $600 GRI by members of the Transpacific Stabilisation Agreement (TSA) on Jan. 15 achieved less than 30 percent and lasted a week before beginning to fall, dropping $26 to $2,063 per FEU. A giant $1,000 per 40-foot container GRI imposed by the TSA on Dec. 12 followed the same path, achieving barely 50 percent before falling after one week.

The TSA carriers plan to leverage Chinese New Year volumes to implement a $600 per 40-foot container GRI on Feb. 9 that will apply to all origins and destinations. According to the TSA, the Feb. 6 increase is intended to ensure that carrier costs are adequately recovered coming out of the slower winter season.

“This is a very challenging operating environment for transpacific container lines,” said TSA executive administrator Brian Conrad, “and it is critical to maintaining service levels that they not leave money on the table during the Lunar New Year period.”

Conrad said that while some carriers have reported profitability in the trade in recent quarters, it has come almost entirely from cost-cutting as revenues have shown only marginal improvement over time.

The most stable east-west route remained the Asia-U.S. East Coast, where the spot rate rose just $1 over last week to $4,748 per FEU. This was after last week’s rise to its highest level in more than a year as the West Coast port chaos drives shippers in search of alternative gateways into the U.S.

According to the SCFI, the rate was 27.7 percent higher than during the same week last year.

January is the peak period for shippers importing products for the Easter and early summer sales, but cargo owners using the trans-Pacific continue to be frustrated by the deadlock in negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union.