Sea shipping rates reached a new low last week, according to Drewery’s World Container Index, which saw a 2 per cent decrease to 1,342 US dollars per 40ft container. The rate was 57 per cent lower than the same week last year. Overall, in 2023, sea shipping rates have decreased by 60 per cent, increasing competition with intercontinental rail significantly. The situation could intensify even more in the coming years
According to CMA CGM, westbound transatlantic ocean rates have now hit “unsustainable levels”.
The French carrier announced a raft of FAK (freight all kinds) increases on Friday, an endeavour to drive rates back up on a route that has become, what one liner executive described to The Loadstar as, “a total disaster”.
Indeed, Xeneta’s XSI North Europe to US east coast average rate per 40ft slumped from $7,700 a year ago to just $1,327 last week.
Moreover, The Loadstar recently saw a rate offer to a UK-based forwarder at below $1,000 per 40ft for relatively small-volume shipments from Liverpool to New York.
From 23 November, the French carrier will raise its FAK rates from North Europe and the Mediterranean to the US and Canadian east coast, with, for example, its base rate for a 40ft from Rotterdam to New York being $1,600.
This is still well short of average rates achieved by transatlantic carriers in 2019. Prior to the pandemic, the tradelane was considered to be one of the most resilient, compared with the extremes of volatility seen on Asian export routes.
Pre-Covid, headhaul rates for a 40ft from North Europe to the US east coast had hovered at around $2,000, and the market was known by carriers specialising in the tradelane as “robust but unexciting”.
“We never expected to make much money out of the transatlantic, but we certainly didn’t expect to lose our shirts on it,” a carrier contact told The Loadstar recently. “At the moment, it’s a total disaster,” he added.
The transatlantic was one of the last trades to experience the liner rate explosion contagion of the pandemic era. In fact, the surge in transatlantic rates was indirectly triggered by a boom on the transpacific, when carriers redeployed ships to the more lucrative tradelane.
Shippers also complained about shortages of equipment as carriers chose to redistribute boxes to the Far East. That, and the difficulty of getting space on the depleted transatlantic fleet, inevitably resulted in huge rate spikes.
But when demand on the transpacific and Asia-Europe trades hit the wall last September, carriers looked at the high rates still achievable on the transatlantic and piled in more capacity and upgrades.
The higher rates on the transatlantic also encouraged new entrants to the route, including Ellerman City Liners, which closed its Asia-North Europe loops and redeployed the tonnage to the North Atlantic.
However, the big increase in supply on the transatlantic, from capacity upgrades by CMA CGM and its peers, inevitably resulted in a collapse in freight rates to levels well below their historical average.
Uzbekistan has made a number of proposals to expand cooperation between SCO member states in the transport sector, Uzbek Prime Minister Abdulla Aripov said at the 22nd meeting of the Council of Heads of Government of the Shanghai Cooperation Organisation countries in Bishkek on 26 October.
According to AKI Press, Abdulla Apripov recalled that during the SCO Summit in July, Uzbek President Shavkat Mirziyoyev called the SCO region a space of enormous economic opportunities, as well as a platform and resource base for the development of all countries of the association.
The Uzbek Prime Minister then proposed strengthening transport and communications links in the SCO region.
He noted the active promotion of projects for the development of north-south and east-west highways. According to Abdulla Aripov, the start of construction of the China-Kyrgyzstan-Uzbekistan railway is particularly important.
“We are in favour of increasing multimodal transport along this route, as well as through Afghanistan to the ports of Iran and Pakistan,” said Prime Minister Aripov.
The implementation of such projects will reduce transport costs for countries in the region by a third.
The Uzbek government also proposed the development of a unified map of transport links between SCO member states.
Abdulla Aripov expressed hope that these issues would be discussed at the first SCO Transport Forum in Tashkent on 1 November.
These are just a few examples of new requests at week #43. To get more fresh inquiries and\or the best quotes click here or push the «request management» button in the left menu.
Looking for a reliable partner for cold chain transportation (agricultural products, seafood, etc.) for import and export?
Tân Nam Chinh is the most suitable and trustworthy choice for you! 🚛 🐟 🍌 ✈ 🛳
👍 With over 100 container trucks ready to serve, Tân Nam Chinh guarantees the most competitive prices for container transportation on the North-South route.
👍 Specializing in sea freight to key markets such as China, India, South Korea, Taiwan, Japan, the Netherlands, and the United States (EU), with over 18 years of experience, we promise to provide the best service for you.
👍 We also offer short-term rental of refrigerated containers, large cold storage facilities, agricultural product processing, and even packaging material rental services when processing at the factory (such as durian, bananas, dragon fruit, etc.).
📑 In addition, Tân Nam Chinh provides customs clearance, inspection, and CO certification services for agricultural and frozen seafood products. We will help you quickly and conveniently complete all import and export procedures
Great! Where to see your freight rates here?
Ocean carriers are planning a wave of sizeable FAK rate hikes across the major east-west tradelanes next month, in an attempt to swivel voyage results back into the black.
And, with the 2024 budget season looming, the shipping lines will want to jettison unprofitable cargo from their customer portfolios.
For example, MSC this week announced new freight rates, effective 17 November, from the Mediterranean and North Europe to the US, Canada and Mexico, including a $4,400 per 40ft base rate from Antwerp to New York.
Container spot rates on the transatlantic have collapsed by around 80% over the past 12 months, driven down by carrier capacity upgrades and new market entrants – for instance, Xeneta’s XSI North Europe to US east coast component this week was down at $1,336 per 40ft.
Meanwhile, the Hapag-Lloyd and CMA CGM-led circa-$1,800 per 40ft new Asia-North Europe FAK rates, valid from 1 November and supported by radical capacity management, are starting to have some impact on the market.
Indeed, a UK-based shipper told The Loadstar his November rates from all but one of his regular carriers this week had doubled.
However, this has yet to be reflected in the Asia-North Europe container spot indices, which remained flat this week at just under $1,000 per 40ft.
Moreover, according to Singapore-based AGX, a collaboration platform for forwarders and importers, there is still some doubt whether carriers will be able to get a decent percentage of the rate hikes to stick.
“NVOCC November rates are now $1,100 per 40ft for the month, with the expectation that this will go down after the first one or two sailings,” said AGX this morning.
On the transpacific, carriers have underpinned container spot rates with a huge blanking programme around the Chinese Golden Week holiday, peaking next week with North American west coast terminals receiving 19 fewer vessels than advertised.
This was evidenced by Signal operational data from the port of Los Angeles, which shows only 11 vessels due to arrive next week, compared with 17 this week and 18 the following week.
As a consequence of their judicious capacity management, carriers have been able to stabilise spot rates, with for instance, Drewry’s US west coast component edging down by just 1% this week, to $1,979 per 40ft, while spot rates for the US east coast were unchanged at $2,629.
Ocean carriers are under considerable pressure, particularly on the east-west routes, and the loss-making voyage
The amount of containership capacity idled has surged again, the latest survey from Alphaliner reporting 315 vessels (1.18 million teu) in lay-up, representing 4.3% of the global fleet.
In its fortnightly review of the inactive container vessel fleet, the consultant recorded a big jump from the 271 ships, for 942,035 teu, shown as idled two weeks previously.
It said the idle tonnage figures had been boosted by the addition of several larger ships, including four 12,500 to 18,000 teu vessels and three of more than 18,000 teu, either anchored, or sent to shipyards for surveys and repairs.
Hitherto, the main increase in the inactive containership fleet has come from small and medium-sized vessels, but increasingly carriers are deciding to mothball their surplus large ships that have been displaced by even bigger newbuild arrivals.
Moreover, a ratcheting-up of carrier blanking programmes, including introducing winter service schedules to mitigate weak demand prospects, has resulted in de-facto network reductions and a consequential tonnage oversupply.
For example, according to maritime and supply chain intelligence firm eeSea, next week will see the peak of this quarter’s cancelled sailings from Asia to the North American west coast.
“There are 19 blanks in week 43 alone across the major west coast ports (Canada included),” said Destine Ozuygur, head of operations at eeSea.
“I suspect this is the two-to-three-week transit time ‘ripple effect’ of Golden Week blanks coming out of Asia. These week 40 Golden Week blanks on last-load ports out of Asia would be arriving sometime between weeks 42 and 44 and peaking on week 43, if we are looking at their first discharge arrivals into North America,” she said.
