Freight forwarders are running out of niche businesses as pressure mounts and freight rates fall

Transatlantic container spot rates took a sharp tumble this week, shedding over 20% of their value, and pressures have also mounted on other previously resilient trade lanes where shipping companies have injected more capacity.

Xeneta’s average XSI price from northern Europe to the US east coast is down 22% over the past seven days to $1,590 per 40 feet after collapsing from around $7,000 earlier in the year.

Lines decided to take advantage of the more robust transatlantic route by adding vessels and increasing tonnage, but the extra weekly capacity on the market inevitably led to a sharp drop in prices, with some lines now offering just over $1,000 per 40 feet , which is about half of pre-pandemic market rates.

And on the Asia-Mediterranean route, where shipping lines have also added ships and introduced new services, container spot prices fell below $2,000 per 40 feet this week, with Drewry’s WCI down a further 2% to $1,993. dollar fell.

Additionally, this rate weakness comes ahead of the launch of HMM’s new standalone China-India-Med service next month, which will use 8,500-11,000 TEU vessels that the South Korean carrier is shifting out of the competitive trans-Pacific market.

Elsewhere, Asia-Middle East services have also been upgraded, with vessels cascading from Asia to northern Europe as newly built 24,000 TEU megaships are phased in, but the extra capacity is negatively impacting tariffs. According to this week’s Ningbo Containerized Freight Index commentary, supply has exceeded demand from China to the Middle East and “the market rate continues to fall.”

Meanwhile, transpacific shipping lines could benefit from the fallout of Canada’s west coast port strike, which has shut down key container hubs Vancouver and Prince Rupert since July 1 and blocked an estimated $12 billion worth of cargo imports.

Shippers are expected to divert some imports that normally transit through Vancouver to ports on the US west coast, driving up tariffs.

In fact, the XSI Asia-US West Coast rose 19% this week to $1,453 per 40 feet, while other indices also posted notable gains.

On the U.S. East Coast, spot prices also rose, with the Asia-USEC component of the Freightos Baltic Index (FBX) rising 8% on the week to $2,374 per 40 feet.

And this week both Maersk and CMA CGM attempted to reverse the sharp discounting trend on the Asia-Northern Europe route by significantly increasing their FAK rates in August to $1,900 and $1,950 per 40 feet, respectively. However, average spot rates on the trading floor, as tracked by the XSI, fell a further 1.5% this week to $1,207 per 40 feet, requiring shipping lines to use significant capacity to sustain these increases.

One analyst said he couldn’t see MSC following its 2M partner Maersk with a similar surge.

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