Weekly GRI roundup
Hapag-Lloyd will increase cargo rates on all container types from East Asia to the Arabian Gulf on May 1. Rates will increase $300 per TEU.
COSCO will increase cargo rates from the Far East to East Coast South America on May 15. Rates will increase $750 per TEU; $1,500 per FEU; and $1,500 per 40-foot highcube container.
On Friday, April 25, the Shanghai Container Freight Index was set at 1068.18, up 20.21 points from April 18. The SCFI components for cargo moving to the U.S. were $1,922 per FEU, down $1 to the West Coast; and $3,328 per FEU, no change, to the East Coast.
SCFI Analysis (Richard Ward of Freight Investor (UK) provides occasional analysis and insight into the Shanghai Container Freight Index.)
This week has been somewhat of a surprise, with rates to NWE jumping $7 to $1,084 TEU. This represents the first since early 2012 that the SCFI has recorded a jump without it being attributed to a GRI.
Market feedback indicates that an unexpected increase in cargo demand has caused a spike in load factors, with those to the Mediterranean particularly strong. With the May GRI looming, carriers will be hopeful that they can capitalize on the positive momentum and push through at least a material proportion of the planned increase. One limiting factor, however, is the differing implementation dates across carriers, with some proposing an increase from May 1 while others wait until May 10. However, despite this factor, if carriers can continue to hold utilization rates at levels above 90 percent, then no doubt, they will manage to gain an increase in revenue come May.
The US trades have been somewhat uneventful, with rates to the USWC showing just a $1 decline to USD 1,922 FEU. With the TSA's planned mid-April GRI come and gone, rates are just 6 percent higher when compared to the start of April, indicating a very limited positive impact for carriers. Rates are still 9 percent lower when compared to the same period a year earlier, outlining the difficulties faced on this route.
In the FFA market, there has been continued focus on the deferred periods, with November, December and January 2015 seeing most of the action. Shippers are taking advantage of what is available in the FFA market to guarantee their spot costs at $1,200 per TEU and below as they look to minimize their risk and avoid the situation we saw last year, when on average over the period, rates spiked to over $1,400 per TEU. For carriers, this has presented them the opportunity to secure a proportion of their spot income at profitable levels in a market that remains anything but certain.