Airlines struggle to meet transpacific GRIs as fares come under pressure

The trans-Pacific GRIs, imposed by airlines in mid-April ahead of the finalization of annual contracts, are beginning to lose steam as container spot rates from Asia to the US come under renewed pressure.

Xeneta’s XSI Asia-US West Coast component is down 9% this week to $1,484 per 40 feet, while Freightos Baltic Exchange FBX’s average spot rate is down 10% to $1,527 per 40 feet.

For the Atlantic Seaboard, FBX for ports from Asia to US East and Gulf Coast fell 4% to $2,407 per 40 feet.

During Maersk’s first-quarter earnings conference call yesterday, CEO Vincent Clerc commented on the relative success of the GRIs in the transpacific, adding, “There’s been a rebound as it looks like things are firming up a bit, eh is positive.”

In addition, he said the liner industry’s “more rational behavior and better behavior” prevented rates on the route “going all the way down”.

However, Mr Clerc said there were still risks associated with the huge amount of newbuild tonnage to be delivered this year and next. He explained: “At the operational level there seems to be a lot more rationality; At the order level, we are still concerned to see the order level and what needs to be rolled out by 2023 and 2024.”

Like Yang Ming Chairman Cheng Cheng-mounte, Mr Clerc downplayed any notion of a earlier-than-expected recovery on the trade lane, saying, “We continue to expect volumes to recover in the second half of the year.”

Meanwhile, airlines are pressuring BCOs to close annual contracts just above current spot levels, according to US-based consultant Jon Monroe, but he reported that some deals with larger-volume shippers have been closed lower.

“I hear big BCO contracts for $1,200 on the US West Coast and $2,200 on the East Coast,” he said.

Elsewhere, en route from Asia to Europe, the spot market continued its positive trend of recent weeks as Drewry’s WCI for Northern Europe posted a 3% week-on-week increase to $1,645 per 40ft and a 2% increase for ports from Asia to the Mediterranean Sea. to $2,322 per 40 feet.

There are many rumors of a mid-May GRI to northern Europe, but with continued market weakness airlines will be concerned they will not be able to push through an increase.

As expected, transatlantic spot rates are beginning to normalize after airlines flooded the market with additional capacity. The FBX Northern Europe component of the US East Coast lost another 10% this week to $2,768 per 40 feet, while the monthly XSI fell 15% and 33% to $2,628 per 40 feet.

At this rate of erosion, the XSI will fall back to the historical average trade lane price of $2,000 per 40 feet before the end of the month. It remains to be seen if the airlines can keep the rate at this level and if the new entrants can survive on the route.

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