Weekly GRI roundup
Hapag-Lloyd will increase its cargo rates May 8. Rates on all cargo from East Asia (excluding Japan) to all North Europe and Mediterranean destinations will increase $525 per TEU; rates on cargo shipments from North Europe and the Mediterranean to East Asia, the Indian Subcontinent and Middle East destinations will increase $100 per TEU.
On Friday, April 11, the Shanghai Container Freight Index was set at 1067.42, up 2.55 points from April 4. The SCFI components for cargo moving to the U.S. were $1,872 per FEU, up $64 to the West Coast; and $3,281, up $19 to the East Coast.
SCFI Analysis (Richard Ward of Freight Investor (UK) provides occasional analysis and insight into the Shanghai Container Freight Index.)
After last week's positive index, it is business as usual for rates on the key westbound trades. NWE declined $86 to $1,156 per TEU, while the Med also lost ground, falling $84 to $1,263 per TEU. Facing the realization that the recent increases cannot be held, predictably, carriers have announced a further round of GRIs for May. At present, these range from $525 to $650, with implementation dates between May 1 and May 10. No doubt, we will see similar announcements from the majority of carriers in the days to come. Considering the abyss that lines faced post CNY, carriers have been relatively successful in keeping rates higher. Over the first quarter, the average spot rate on NWE was $1,347 per TEU compared to $1,258 during the same period of last year.
Worryingly for carriers, this is a trend that has not been reflected on routes outside of Europe due to continued pressure from cascading. Rates from Asia-ECSA are some 43 percent lower during the first quarter compared to 2013, while average rates to the Persian Gulf and Hong Kong are down 28 percent and 29 percent respectively. With ultra large container ships continuing to hit the water, this trend is surely set to continue, placing further pressure on carrier's balance sheets. Along with cost-cutting, one might have assumed that the ability to reduce these declines would have been high on carriers' list of priorities. Currently, the FFA market is pricing the remainder of the year at $1,130 per TEU on the Asia-NWE trade, presenting carriers with the opportunity to post income that is higher than last year's average rate of $1,090.