Box rates ease, but 'things may get worse for shippers before they get better
It appears increasingly likely that the main east-west container trades have now entered an early peak season – which, combined with disruptions such as equipment shortages, port congestion and schedule volatility, has caused the recent spike in spot rates.
There were tentative signs this week, however, that the pressure might be easing.
After three weeks of consecutive double-digit rate increases, this week saw low-to-mid single-digit rises, indicating that the upward spiral has begun to taper off.
Both the Drewry World Container Index’s (WCI) Shanghai-Rotterdam leg and Xeneta XSI’s Asia-North Europe saw spot rates rise 5%, to $5,270 per 40ft and $5,280 per 40ft respectively, while on the transpacific, the WCI’s Shanghai-Los Angeles leg was up 2%, to $5,390, and the XSI rose 4.5%, to $5,170.
“The current spot rally on Asia-North Europe will start to reverse in June, while the transpacific will stabilise or soften in the second half of 2024,” predicted Drewry senior manager of container research Simon Heaney in the company’s Freight Loop briefing
Xeneta’s head analyst, Peter Sand, agreed that this week’s market may appear a silver lining, but warned that some shippers could continue to encounter supply chain issues.
“While average spot rates will increase again on 1 June, the growth is not as rapid as it was during May, which may hint towards a slight easing in the situation,” he said.
“This cannot come soon enough for shippers who are already having their cargo rolled – even for containers being moved on long-term contracts signed only a matter of weeks ago.
“Carriers will prioritise shippers paying the highest rates. That means cargo belonging to shippers paying lower rates on long-term contracts is at risk of being left at the port. It happened during the Covid-19 pandemic, and it is happening again now.
“We are also seeing freight forwarders being hit with new surcharges and being pushed onto premium services to have space guaranteed onboard ships. In such cases they have no other option than to pass these costs on directly to their customers.”
And he added: “Carriers will continue to push for higher and higher freight rates, so the situation may get worse for shippers before it gets better.”
