Desperate attempts by carriers to implement General Rate Increases (GRIs) are currently bolstering spot rates on the Asia-Europe route
2 weeks ago
Desperate attempts by carriers to implement General Rate Increases (GRIs) are currently bolstering spot rates on the Asia-Europe route
This week, container shipping lines operating on major east-west routes successfully ended a 15-week streak of declining spot freight rates by implementing a general rate increase (GRI) on shipments departing from Asia.
According to the latest Drewry World Container Index (WCI), spot rates for the Shanghai-Rotterdam route surged by 8% week-on-week, reaching $3,396 per 40-foot container, while the Shanghai-Genoa route saw an even larger increase of 11%, climbing to $3,648 per 40-foot container.
A European freight forwarder noted that the recent uptick in rates was primarily influenced by a GRI that took effect on November 1, which was communicated to customers the previous week for shipments scheduled for loading from Asia starting today. For instance, MSC announced a new freight all kinds (FAK) rate of $5,000 per 40-foot container for shipments from Asia to Northern Europe.
However, the forwarder cautioned that many of these GRIs are already being scaled back, and they do not anticipate that elevated rates will persist beyond November. "This appears to be more of an effort to halt the downward trend following Golden Week," they remarked.
Feedback from customers indicates that they currently have sufficient stock, leading to expectations of lower demand over the next three months, suggesting that sustained elevated rates are unlikely. "While bookings have been somewhat constrained, this is mainly due to blank sailings rather than an increase in demand," the forwarder explained.
Data from the eeSea liner database revealed that out of 168 liner services scheduled for October between Asia and North Europe or the Mediterranean, only 147 actually sailed, resulting in 21 blanked sailings. This reduction in capacity amounted to around 300,000 TEUs, dropping the scheduled 1.88 million TEUs to 1.57 million.
Looking ahead, another rate hike attempt is planned for November 15, although the proposed amounts vary significantly between carriers. MSC has set a new FAK rate of $5,500 per 40-foot container for Asia-North Europe shipments, while Hapag-Lloyd announced rates of $3,500 for North Europe and $3,700 for the West Mediterranean. CMA CGM aims for a $5,700 rate on Asia-West Mediterranean shipments.
Peter Sand, chief analyst at Xeneta, characterized these spot rate increases as "desperate," viewing them as part of carriers’ negotiation strategies as discussions for 2025 contracts—typically running from January to December for Asia-Europe—are already underway.
"Tender season for new long-term contracts is in full swing for many European shippers," he noted, emphasizing that carriers are eager to keep spot market rates high to strengthen their negotiating position.
While European shippers may be concerned about the recent rise in average spot rates, Sand pointed out that the overall market trend remains downward. "It's crucial for European shippers to closely monitor market conditions throughout November, as these frantic attempts by carriers to boost spot rates are unlikely to last, which could significantly impact the long-term rates they negotiate for new contracts starting in January."
Meanwhile, spot rates for transpacific and transatlantic routes remained stable week-on-week.
Source: The Loadstar