Peak season prospects now looking ‘increasingly dim for carriers,’ according to Freightos.
Ocean rates are continuing to fall on Transpacific routes and peak season prospects appear to be growing bleaker for shipping lines, according to a leading digital rates specialist.
According to the latest Freightos Baltic Index (FBX) 40′ container core price update, China-US West Coast rates (FBX01) are $1,326/feu, 10% down on last week.
The company noted that the August general rates increase (GRI) “was a thing of the past by August 13, with prices 20% down from their July peak and a full 35% lower than the same time last year.”
China-US East Coast prices (FBX02 Daily) are $2,667/feu, down 3% from last week and 20% below the levels of a year ago.
“The big news this week is that two-thirds of the way through August, prices (and carrier expectations of peak season) are continuing to drop,” Eytan Buchman, CMO at Freightos, commented.
“Since many August orders were brought forward by apparently justified tariff fears, demand this month was strongly impacted. That’s not surprising, nor was the elimination of early August’s price increase as soon as August 9. Far more telling about peak season was the complete cancellation of mid-August price increases and ocean rates lingering 35% lower than the same time last year.”
He concluded: “Peak season prospects are looking increasingly dim for carriers. Luckily for them, a focus on efficiency improvements seems to be paying off for some, with Maersk’s half-year earnings reporting a 25% YOY (year-on-year) EBITDA improvement and an improved EBITDA margin on their ocean business.”
According to Drewry’s latest World Container Index (WCI), published today (22 August) covering eight major East-West trades, rates for a 40ft box from Shanghai to New York were down 5% compared to last week to $2,519/feu while rates from Shanghai to Los Angeles fell 4% to $1,393/feu.
The rates show a fall of 26% and 36% respectively year on year (YoY).
Rates from Shanghai to Rotterdam decreased by 5% over last week to US$1,644/ feu and are down 8% yoY.
However, on the Shanghai-Genoa route, rates were up 20% to $2,099/feu and have increased 10% respectively year-on-year.
Drewry said it expects rates to remain steady next week.
The WCI’s composite index decreased by 0.2% on the previous week to $1,454f/eu and was down 17.1% when compared with same period of 2018.
The average composite index of the WCI for year-to-date, is US $1,448 per 40ft container, which is $16 higher than the five-year average of $1,432/feu.
Source: Lloyd’s
