Significant Increase in World Container Index
The latest update from Drewry’s World Container Index shows a 6% rise in global container spot rates to $1,461 per 40ft last week, contrasting sharply with a 32% decrease compared to the same period last year. This current rate also surpasses the pre-pandemic average of 2019 by 3%. However, the average rate for this year remains at $1,677 per 40ft container, which is notably $995 lower than the 10-year average inflated by the 2020-22 Covid period. Specific route analyses reveal a 15% increase in freight rates from Shanghai to Rotterdam and Genoa, with similar trends on other key routes like Shanghai to New York, and Los Angeles to Shanghai.
CMA CGM Initiates Major Rate Hikes on Asia-Europe Lane
CMA CGM is at the forefront of a significant rate increase initiative on the Asia-Europe tradelane. The company plans a substantial general rate increase (GRI) to $3,000 per 40ft container for its Asia to North Europe/west Mediterranean FAK rates starting January 1. Despite this, the spot market reaction remains subdued, with reports of cheaper rates offered through spot platforms and NVOCCs. Carriers seem to be employing ‘shock and awe’ tactics to influence the market, with some carriers reportedly not honoring short-term deals made via online platforms.
Capesize and Panamax Markets: A Week of Fluctuations
The Capesize market experienced significant rate fluctuations, with an initial rise followed by a sharp decline, ending last week at $35,320. This volatility is attributed to varied factors including market unease and a lack of major players in certain routes. The Panamax market similarly witnessed a shift from optimism to weakness, with rates declining across various routes and charterers gaining an upper hand in negotiations.
Introduction of New Ancillary Charges by Carriers
Facing low container spot rates, shipping lines are introducing a variety of surcharges to boost revenue. These include additional fees for the Panama and Suez Canals, alongside environmental ‘green fees’ and increased documentation charges in some areas. Carriers are also implementing charges for operational expenses such as container shifting, with varying rates depending on the port of origin.
Geopolitical Concerns Affecting the Air Freight Industry
At the ACE air freight forwarding event in Abu Dhabi, industry experts highlighted geopolitical tensions as the primary risk for 2024. The discussion focused on the interdependence of transport modes and the necessity for a stable maritime sector for the overall health of global trade. Despite potential benefits to air freight from disruptions in other sectors, a collaborative approach across all transport modes was emphasized as crucial.
House of Shipping Insight
The current shipping industry landscape is marked by dynamic rate changes, strategic shifts by major carriers, and emerging geopolitical concerns. While the World Container Index shows a notable increase, carriers like CMA CGM are aggressively pushing rate hikes on key tradelanes.
The mixed trends in Capesize, Panamax, Ultramax/Supramax, and Handysize markets reflect the sector’s complexity. The introduction of various surcharges by carriers in response to low spot rates indicates a new revenue strategy. Amidst these changes, the looming geopolitical tensions underline the need for resilience and adaptability in the global shipping industry.