Container rates trending up after lengthy decline
Date: Thursday, May 10, 2018
Source: American Shipper
After a week in which two of the primary indices tracking container freight rates seemed to be telling two very different stories, both the Shanghai Containerized Freight Index and Drewry’s World Container Index gained ground on a sequential basis last week.
The composite SCFI, which measures spot rates on 13 different outbound trades from Shanghai, continued to rise, creeping up another 2.1 percent from the previous week after climbing 12.8 percent the week before.
Due to several weeks of sustained losses leading up to the last two weeks, however, the SCFI’s Friday reading of 776.88 was still down 13.1 percent from 894.43 as of May 5, 2017.
According to the SCFI, rates from Shanghai to Europe ticked up 1.8 percent from the previous week, from $774 per TEU to $788 per TEU, while rates from Shanghai to the Mediterranean grew 8.9 percent, from $694 per TEU to $756 per TEU.
Rates from Shanghai to the U.S. West Coast rose 4.6 percent, from $1,403 per FEU to $1,468 per FEU, while rates to the U.S. East Coast climbed 2.6 percent, from $2,371 per FEU to $2,433 per FEU.
Apparently lagging behind the SCFI, the composite WCI was still trending in the opposite direction two weeks ago, slipping 1.9 percent before surging 22.3 percent last week.
Drewry noted, however, that at $1,415 per FEU, the composite index reading from Friday was still 12 percent lower than at this time last year and at $1,364 per FEU, the average composite WCI through the first portion of the 2018 calendar year is down $86 per FEU (5.9 percent) from the five-year average for the index of $1,450 per FEU.
On an individual trade-lane level, pricing from Shanghai to Rotterdam spiked 31 percent from the previous week to $1,492 per FEU, and rates from Shanghai to Genoa skyrocketed 50 percent to $1,642 per FEU, according to the WCI. Despite the sequential growth, however, Asia-North Europe and Asia-Mediterranean rates were still down 22 percent and 13 percent, respectively, from the same week a year ago.
Eastbound transpacific rates from Shanghai to Los Angeles likewise jumped 27 percent from the previous week to $1,476 per FEU, but were still down 3 percent year-over-year, while pricing from Shanghai to New York rose 13 percent week-over-week and were actually up 3 percent from the same 2017 period at $2,614 per FEU.
However, rates in the transatlantic trade, which had been bucking the previously mentioned negative trend, remained 11 percent higher than at this time last year despite sliding 2 percent from the previous week to $1,972 per FEU.
The question now becomes whether carriers can continue to increase rates, or at the very least maintain them, in order to remain profitable. Last year saw a resurgence of carrier profits following a disastrous 2016, and analysts are still on the edge of their seats wondering just how everything will play out in 2018.
In its weekly analysis, Drewry said it expected rates to increase last week as proposed general rate increases came into effect on May 1, but anticipates rates will soften again in the coming week.
Click here to read the entire article from the original source.
Have the News Delivered to you
Like what you see here? Why not let us send it directly to you?
Sign up to receive our Weekly Industry Newsletter, a compilation of all news articles that matter to you and your business.