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Container prices in the Atlantic have come under renewed pressure this week, forcing shipping companies to cut supplies en route by offloading more sails.
Moreover, in an effort to reverse the trend and a new wave of price erosion on the commercial line, carriers have announced FAK rate increases for the next month.
Elsewhere, spot rate news is more positive for carriers, but one analyst thinks it won’t last.
The Freightos Baltic Index (FBX) from Northern Europe to the US East Coast has lost nearly 20% of its value this week, with the spot average dropping to $1,326 per 40ft.
However, the lowest spot rates in the trade right now are well below $1,000, with a sharp drop in the percentage of top-rated contract work. With haulage demand weakening, and rates from the US to northern Europe less than $500 per 40 feet, transatlantic carriers are ramping up loss-making voyages.
But they are now taking drastic measures to ‘stop corruption’, including 2M’s late cancellation of its 7,943 TEU western sail. MSC Agamemnon This week from Bremerhaven on Maersk/MSC’s TA2/NEUATL2 episode.
And CMA CGM announced new FAK rates across the Atlantic, effective September 4, from northern European ports to eastern U.S. and Gulf Coast ports, ranging from $1,600 to $2,000 per 40-foot.
However, it remains to be seen whether the two-pronged trans-Atlantic strategy of empty sailing and price hikes will work as well as it did on the larger trade lines across the Pacific, Asia and Northern Europe.
This week’s Asia and Northern Europe reading of Drewry’s WCI saw average spot prices rise another 6%, to $1,768 per 40ft, marking the fifth consecutive week of increases, while Asia to Mediterranean rates held steady. Strong, the WCI index rose 1%, to $2086. per 40 ft.
On the Pacific Ocean, Xeneta’s XSI Asia components to the US West Coast continued to gain value. It advanced another 2.5% this week at an average of $2,030 per 40 feet, having increased more than 60% since the end of June. And for the East Coast of the United States, the Panama Canal Restrictions Project helped lift the WCI reading by 5%, to $3,545 per 40 feet.
With the exception of the Atlantic, ocean carriers should be happy with the upward trend in spot exchange rates, especially after the bleak outlook for trade over the past few weeks.
However, carriers need to ensure that they maintain tight control over supply in the coming weeks in order to maintain stability in freight markets.
The “elephant in the room” is 2.4 million TEU of new construction tonnage scheduled for delivery. Drewry is one analyst who thinks things won’t go well for carriers in the most recent quarter.
It said that while further spot price increases are likely, the influx of new construction capacity will eventually reverse the gains, adding: “The addition of a large number of new vessels during the balance of this year will reverse those price increases from around October.” “.