Asia-Europe carriers have been granted some relief with news that their planned general rate increases for the start of December have been partly accepted by the market.
With demand growth still worryingly low and overcapacity on routes from Asia to Europe rife, there were concerns that the spot market would largely reject the latest round of GRIs.
Lines operating the key east-west trade, including CMA CGM, Maersk Line and Hamburg Süd, were looking for price hikes of up to $1,000 per teu. However, on the Asia-Mediterranean trade only half of this was achieved and on Asia-north Europe services, just over a quarter.
The latest Shanghai Containerised Freight Index shows that freight rates on the Asia-north Europe trade, using Shanghai as a base port of departure, jumped $259 to $554 per teu, while on the Asia-Mediterranean they climbed $311 to $626 per teu.
But with the winter slack season now firmly upon us, carriers will be hoping that their respective moves to reduce capacity will help rates to be sustained at their current level, particularly considering the disappointing results published by lines in the third quarter as a consequence of the Asia-Europe rate woes and ahead of annual contract negotiations.
On the transpacific trade, container lines are seeking hefty rate increases of their own in the coming weeks in the lead up to the renewal of annual contacts for the 2016-2017 season.
Last week members of the Transpacific Stabilization Agreement notified its customers of a series of phased rate increases as well as service contract guidelines.
TSA lines, which include virtually all the top carriers, are recommending adjustments to minimum rates across the board, on December 1 and on January 1.
The lines say that in the first round, they want to restore the lowest current market rate levels to at least $950 per feu to the US west coast; $1,700 per feu to the US east and Gulf coasts; and $2,950 per feu for intermodal moves to key Chicago-area inland point destinations.
Carriers are recommending that in the following month, a general tariff rate increase be filed in the amount of $1,200 per feu to the west coast and $1,600 per feu to the east and Gulf coasts.
Meanwhile, spot market prices last week on the SFCI show that freight rates to the Asia-US west coast and Asia-US east coast remained relatively unmoved, climbing 1.5% and 0.7% to $936 and $1,699 per feu respectively.
However, the omens for the TSA carriers don’t look good. Drewry, whose own Hong Kong-Los Angeles benchmark fell $100 this week to $918 per feu, said that if lines continue to drag their feet adjusting capacity to cooling winter demand levels, the index is likely to soften further in the coming weeks.
Finally, gains on the Asia-Europe trades meant that the SCFI Comprehensive Index rose 10.6%, or 51.08 points, last week to 532.22 points. The index, representing a weighted average of 15 trades out of Shanghai, is still tracking some 44% below last year.