East-west freight rates continue to fall

Freight rates on the main east-west trade lanes have continued to fall this week but largely remain ahead of last year’s level.

freight Hapag-Lloyd

According to news reports, the latest figures from the Shanghai Containerised Freight Index show that average all-in spot freight rates on services from Shanghai to northern Europe declined for a second successive week, this time slipping by $99 to $1,188 per teu. Services from Shanghai to the Mediterranean also saw prices decline for a second week, this time slipping by $54 to $1,508 per teu. 

Prices on the transpacific were also down this week, with the Shanghai to US west coast declining $64 week on week to $1,923 per feu and slipping by $40 compared with a week ago to reach $3,384 per feu. Freight Investor Services container derivatives broker Richard Ward said he was expecting further declines in the coming weeks, even though carriers will attempt to increase prices at the start of June. 

“Further declines are expected in the run up to the June general rate increase, with its success still in question. 

“Reports suggest some carriers may have delayed the proposed June 1 implementation date pushing the increase back to the following week. The situation on the Mediterranean trades is somewhat different with rates falling less aggressively.” 

While the declines won’t be welcomed by shipping lines, they are in a better position than this time last year on three of the four trade lanes. In the same week in 2013, rates to north Europe stood at $641 per teu, to the Mediterranean prices were at $760 per teu and US east coast rates stood at $3,254 per feu. The only one of the four trade lanes behind last year’s level was the west coast, which stood at $2,093 per feu. 

Shipping lines have had a mixed start to the year in terms of overall freight rates from Shanghai. The overall SCFI Comprehensive Index, made up of a weighted average from 15 trade lanes from Shanghai, was behind the 2013 first-quarter weekly average of 1,180 points during the first three months of this year, dipping to 1,176 points. 

This has been reflected by the shipping lines that have reported first-quarter results, with both Maersk Line and Hapag-Lloyd mentioning a weak freight rate environment during the period. Reports have indicated that the situation has improved during the second quarter, the index climbing to 1,111 points compared with 1,052 points during the same period last year. Fuel prices have also declined during this period, which will have had an impact on the rates reported by SCFI.