North Europe rates still falling, while the transpacific spikes - The Loadstar
This week, prices for transporting containers from Asia to Northern Europe did not increase. However, rates for transport across the Pacific Ocean have gone up due to possible problems with the supply chain, connected to work stoppages on the west coast of the United States, as well as restrictions caused by low water levels in the Panama Canal.
The Freightos Baltic Exchange (FBX) Asia-North Europe section has suffered a setback of 16% in the last seven days due to the poor demand during the peak season. The current rate for a 40-foot container is $1,195, while the rate a year ago was $10,599.
European retailers are being cautious with their inventories due to persistent high inflation and the anticipation of more interest rate increases.
The CEO of the British Retail Consortium, Helen Dickinson, stated that due to the continued decrease in household incomes, it's improbable that there will be significant sales growth in the forthcoming months in the UK.
Ms Dickinson expressed that households have been facing squeezing pressures from the high living cost, causing a decline in their spending on non-essential items.
The markets in the Mediterranean region are currently displaying greater resilience. This is largely due to the anticipated boost from the upcoming holiday season. The Drewry's Asia to Mediterranean ratio only decreased slightly by 2% this week to reach $2,130 per 40ft, which is a good sign.
Although carriers have added more space between Asia and the Mediterranean, the current spot rates are not displaying any substantial indication of being vulnerable.
At the same time, shippers who transport goods from Asia to the United States are experiencing difficulties due to the uncertain labor situation on the west coast of the US. Recently, negotiations related to labor contracts were unsuccessful, resulting in work stoppages and slow movement of ships. However, it has been reported that both parties have resumed discussions and are working towards reaching a new agreement.
However, it seems that the ILWU local union representing the dockers and the PMA employers trade association still have disagreements on the topics of pay and the use of technology in ports. These issues remain unresolved.
If shipping companies choose to send their imports from Asia to ports located in the eastern and Gulf areas of the United States instead, they may experience some challenges in securing spots on carrier routes that travel through the Panama Canal. This is due to restrictions on the depth of vessels allowed in the canal, which has resulted in utilization levels for ships being reduced by up to 40%.
As expected, this week there has been a significant increase in spot rates for shipping from Asia to the US east coast. As an example, the FBX average rate experienced a sudden rise of 11.5%, now standing at $2,619 per 40ft.
The prices on the US west coast have also risen significantly as companies move their goods earlier to avoid any significant disruptions in labor. The XSI Asia to US west coast measurement has shown a growth of 16.3%, with the average cost being $1,501 per 40ft container.
In other areas across the Atlantic Ocean, spot rates are continuing to decrease as the market recovers from the effects of the pandemic and returns to a pre-pandemic state. This week, Xeneta's XSI reading for shipping from North Europe to the US east coast decreased by 8%, resulting in an average spot rate of $2,073 per 40ft container. This is significantly lower than the market rate of approximately $8,500 that was seen 12 months ago.
