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Asia-Europe ocean freight rates down 20%

Capacity-curbing efforts by lines on the transpacific eastbound ocean trade failed to shore up rates this week, while the Asia-Europe trade also saw further losses.

Spot rates from Shanghai to Genoa fell $88 to reach $1,291 per feu yesterday – down 6% week-on-week and now fully 20% lower than a year earlier, according to the World Container Index as assessed by Drewry.

Freight rates on the Shanghai to Rotterdam trade also lost further ground, down 5% week-on-week to $1,300 per feu. 

The transpacific, which has benefitted from capacity cuts and tariff-driven frontloading in recent weeks, also suffered spot rate declines over the last week. Shanghai-Los Angeles rates fell 7% week-on-week to $1,531 per feu yesterday, according to Drewry, while Shanghai-New York rates fell 2% to $2,656 per feu.

However, while both the headhaul Asia-Europe and Transpacific markets suffered rates losses this week, the year-on-year performance of the two lanes illustrates a stark difference in rates performance for carriers. While the two Asia-Europe lanes assessed by Drewry are now down 20-22% year-on-year, the two Transpacific trades are up 3-4% year-on-year.

With US demand still buoyed by tariff frontloading and capacity cuts now biting, analysts expect more of the same into the peak season. Freightos said GRIs on China-US West Coast services on July 1 found traction and, with space tight, “another price rise seems imminent for August 1”.

Eytan Buchman, CMO, Freightos, said with several carriers having announced blanked sailings for August on the Transpacific, peak season surcharges could soon be introduced. “This strategy to keep supply in check is working, with substantial price rises in early June and early July, including China-US West Coast prices 10% higher month-on-month and 5% year-on-year,” he said.

“More impressively, that’s been achieved despite the Brent Crude index dropping 14%. With successful price rises at the beginning of the last two months, some carriers have already started to warn about a mid-month rate increase.

“Several carriers recently introduced war-risk related surcharges for the Persian Gulf, but with supply in check, it won’t be long before they also bring in standard peak season surcharges." 

While rates are holding up on the transpacific, the outlook for European trades is less certain. Flexport predicted the downturn in Asia-Europe rates would prompt carriers to blank more sailings through July “which may cause space crunches in certain weeks”.

Asked if the current ocean freight liner business had become a two-speed market, with demand and spot rates on Asia-Europe substantially outperformed by those on the Transpacific, a spokesperson for Maersk said the current market required continual assessment of ocean network deployment and logistics support.

“To that effect, we can make short term adjustments in ocean capacity through peak extra loaders, and/or moving capacity between networks as demand shifts,” she added. 

“We are supporting our customers’ growth in the Pacific trade by continuously adjusting our network, together with our partners, to where demand is. Examples of this are our extra-loader programs on the US East Coast and Gulf, our new enhanced TP88 product and our new partnership with ZIM on the US Pacific North West trades which has right-sized capacity there.

“With the new TP88 product we now have a very competitive product offering to cater to this market. Both inbound and outbound. A large part of the reason for launching the TP88 is that the Panama draft restrictions have curtailed our intake on the existing network. The effective capacity injection is hence significantly less than such new Panamax string would suggest.”


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