By Gavin van Marle

Spot freight rates on the Asia-Europe trade shot up on October 30, in advance of the next round of general rate increases (GRIs) due on November 1. The Shanghai Containerized Freight Index’s (SCFI) Shanghai-North Europe rate saw a near-fourfold increase, jumping to $988/TEU, an increase of $757/TEU from last week’s level of $231 per TEU.

That is highest SCFI North Europe spot rate for 13 weeks, although FIS container derivatives broker Richard Ward put it into perspective: “Despite the latest increase, rates still remain 25 per cent lower than the same period of 2014. “In fact, weekly rates on the route haven’t been above their corresponding period of 2014 at any point this year, reflecting the fundamentally poor market conditions.”

A similar increase was seen on the Shanghai-Mediterranean route, which leaped by $602/TEU from $202/TEU last week to $804/TEU on October 30.

On Sunday, carriers will present shippers with GRIs ranging between $950 and $1,200 per TEU, and have looked to support them with a series of blanked sailings. The G6 Alliance partners announced this week they would blank four Asia-Europe sailings in November (one a week), six in December and another five in January as the trade hits its traditional slack season.

The CKYHE Alliance has also announced seven void Asia-North Europe sailings before the end of the year, and nine Asia-Mediterranean sailings between now and mid-January. Meanwhile, the new Ningbo Containerized Freight Index (NCFI), which covers four routes for the port, to North Europe, the West Mediterranean, East Mediterranean and Middle East, is now in its second week and also recorded large increases. However, rate levels varied substantially compared with the SCFI. Although the NCFI’s North Europe route saw a week-on-week increase of 80 per cent, today’s spot rate was $342 per TEU.

How long the SCFI increases last is the main question for carriers, although they will have welcomed a recent mini-spike in demand. While forwarders reported strong booking numbers in the latter half of October, as shippers looked to take advantage of rock bottom rates before the GRIs are implemented, demand is also expected to fall off a cliff from mid-November to the beginning of December, as the one-month transit time means cargo would arrive during the Christmas holiday season.

Alphaliner said this week: “While the end of the Chinese National Day holidays, the subsequent resumption of factory production and the rush to ship cargo out before any GRI implementation, have boosted capacity utilization on the route, notably last week, it is still unclear how long this demand increase will last.”

Reprinted courtesy of The Loadstar (