The success of carrier capacity management signals further tariff increases

Container spot rates from Asia to Northern Europe have risen again this week and some shippers are holding back on bids for May deliveries ahead of expected General Rate Increases (GRIs).

Drewry’s WCI Northern Europe component is up 4% on the week to $1,598 per 40ft, but forward quotes for late April departures from China are well ahead of spot.

Indeed, a carrier contact is being offered $1,750 per 40 feet from Dalian, China to Felixstowe and $1,825 to Rotterdam for a late April crossing.

However, carriers are not yet showing their hands for May shipments as they gauge the market’s reaction to the current rate hikes.

Shipping lines serving the trade lane now appear to be managing their capacity more efficiently, and this week the Ningbo Containerized Freight Index (NCFI) commentary reported that “some voyages were short of space.”

A carrier contact confirmed headhaul load factors had “improved significantly” in recent weeks, adding, “Most of our departures are at full capacity this week and we need to roll some containers, especially if they are heavy.”

Elsewhere, spot rates from Asia to Mediterranean ports, which held up better during the price decline, were flat, with the Freightos Baltic Index (FBX) standing at $2,241 per 40 feet.

Meanwhile, the Asia-US West Coast FBX component in the transpacific remained at its lows of just over $1,000 per 40 feet, however a number of carrier GRIs scheduled from mid-month and trading between $500 and $1,000 per 40 feet appear to be trading foot to be committed to increasing spot rates on route again as volumes increase and carriers’ supply management tightens.

Port of Los Angeles Executive Director Gene Seroka said this week throughput at LA terminals was expected to be about 700,000 TEUs in April, up from the 623,234 TEUs processed last month.

those of the port signal Data emerging from the manifests of ships arriving and expected seems to support this positive outlook, showing that container imports from the 23 ship calls this week were 116,939 TEU, up 37% from the same week last year.

And spot rates from Asia to the Atlantic and Gulf coasts halted their decline this week, with the WCI value actually rising 2% to $2,552 per 40 feet.

Away from the main routes, spot prices for containers on the transatlantic trade route continue to fall from their historically high levels, but the pace of erosion may not be as rapid as expected. Xeneta’s XSI Northern Europe to the US East Coast is down a modest 2% to $3,326 per 40 feet this week.

Lines have been stacking more tonnage on the route to take advantage of relatively resilient demand and higher rates, which could result in more downward pressure on freight rates in due course.

For example, OOCL’s transatlantic shipments increased 25% to 128,233 TEU in the first quarter of the year compared to the same period in 2022, however, the average en-route price fell 16.5% to $2,432 per TEU.

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