Asia-Europe container shipping rates, volumes surge; Transpacific spot rate steadies

02/12/2010

Ocean container freight rates are surging on key Asia-Europe trade routes as traffic rebounds from a year-long downturn and carriers cull capacity, the Journal of Commerce (JOC) reported this week. In the Trans-Pacific trade, spot container rates have steadied as ocean carriers have culled capacity.

Spot container rates from China to North Europe have risen by 68 percent since October, according to Alphaliner, the Paris-based container shipping consultant.

The European Liner Affairs Association said its westbound price index rose to 90 in December from a low of 48 in March, while the eastbound index closed the year at 89.
Asia to Europe traffic rose 9.5 percent in December from a year ago, with volume for the year just over 11.5 million 20-foot units. That was down 14.8 percent from the 13.49 million TEUs carried in 2008.

Eastbound traffic increased by 46 percent in December from a year ago to the highest monthly total in 2009 and higher than any monthly figure in 2008, the Brussels-based ocean carrier group said.

Eastbound traffic rose 4.5 percent in 2009 to 5.47 million TEUs from 5.23 million TEUs in the previous year driven by a year-on-year increase of over 30 percent in the fourth quarter.

Meanwhile, JOC reports the spot rates for the Trans-Pacific market have steadied after sharp increases. The steep rise in the Drewry Container Rate Benchmark for shipping a 40-foot container from Hong Kong to Los Angeles came to an end in the week ended Feb. 8 as the rate settled at the same level as in the week ended Feb. 1.

The average spot rate on Feb. 8 was $2,012, the same as in the previous week, but 41.2 percent higher than the spot rate in the sixth week of 2009. In the week ended Feb. 1, the Drewry average spot rate jumped 20.5 percent over the previous week.

It appears that shippers’ frantic rush to secure vessel space before the Lunar New Year starts on Feb. 14 is over. Many Chinese factories will shut down for a week for the New Year as workers return to their homes for the holiday.
Carriers have cut so much capacity out of the trans-Pacific trade that vessel space was in short supply in the weeks leading up the New Year.

The 15 carriers that belong to the Transpacific Stabilization Agreement had implemented a $400 per FEU emergency increase in rates under their annual contracts with shippers, but they have been able to increase spot rates by more than double the TSA’s guideline as shippers scrambled to find scarce vessel space.

Drewry compiles the index of spot rates from data it collects from non-vessel-operating common carriers in Hong Kong. The amount of cargo shipped under spot rates accounts for only a small portion of the eastbound trans-Pacific trade, but the spot rates have taken on increasing significance in the last year as a barometer of the trade and were a significant factor in lowering the rates that shippers were able to negotiate in the 2009-2010 contracts that were concluded last spring.


Source: Journal of Commerce, February 10-11, 2010