Freight prices soar! Both the East and the West exceeded double-digit growth

Just now, the World Container Composite Index (WCI) released by Drewry rose 4% this week, the first increase in 15 weeks. Routes from China to Northern Europe, the US West and the …

Just now, the World Container Composite Index (WCI) released by Drewry rose 4% this week, the first increase in 15 weeks. Routes from China to Northern Europe, the US West and the US East are all showing signs of rebound. Freight rates on the East-West and East-West routes both reached double-digit growth, with the Nordic and Mediterranean routes remaining flat and rising slightly respectively. This Friday’s latest Baltic freight index FBX West Coast shipping rates soared 71% and East United States rose 16%; Xeneta’s XSI freight index West United States rose 38.51% and East United States rose 7.20%. The latest Drewry WCI Composite Index rose 4% this week to $1,773.58/FEU, ending 15 consecutive weeks of decline. That’s down 77% from the same period last year and 83% below the peak of $10,377 reached in September 2021.

The spot freight rate for the US-Western route from Shanghai to Los Angeles rose sharply by 11% this week, or US$182, to US$1,856/FEU. This was the first increase in the US-Western route in several months.

On the US East Route from Shanghai to New York, the freight rate rose sharply by 12%, or US$297, to US$2,849/FEU this week.

The spot freight rate for the Nordic route from Shanghai to Rotterdam is basically the same as the previous period at US$1,605/FEU.

The Shanghai-Genoa freight rate increased slightly by 1% to US$2,268 per 40-foot container.

In addition, Xeneta’s XSI index Asia-US West freight rate increased by 38.51% this week to US$1,604/FEU, and Asia-US East freight rate increased by 7.20% this week to US$2,547/FEU.

The Baltic Freight Index (FBX) index showed that the freight rate of the US West route soared 71% to US$1,724/FEU, and the US East route also surged 16% to US$2,510/FEU.

The short-term surge in freight rates, coupled with tighter shipping lines’ capacity, may prompt BCOs to return to the negotiating table to sign new annual contracts effective from May 1, rather than try their luck in the spot market – which will increase the number of containers The risk of late work.

At present, many shipping companies have issued notices to increase the GRI on the Far East-North America route from May 1, with the cost ranging from US$9,000 to US$1,000 (see article: Freight rates increased twice a month! Shipping companies will charge additional GRI in May Surcharge! The increase is as high as 60%). According to an overseas NVOCC, there are rumors in the market that shipping companies will charge a one-time GRI of US$1,000/FEU; or a US$500 GRI starting from May 1, and then a further US$500 on June 1.

In other respects, on the Asia-Europe trade route, shippers will also prepare for a significant increase in GRI for direct cargo from May 1. Shipping companies on the Asia-North Europe route have set the tone for this by selectively booking cabins (for example, refusing to accept low-value heavy boxes).

Some industry insiders believe that there are currently three major factors that are driving up freight rates: time, location, and people. The recent slight increase in U.S. cargo volume has coincided with a surge in shipments before the May Day holiday. As shipping companies vigorously reduce shifts and reduce cabins, the effect As well as the withdrawal of small and medium-sized shipping companies from the trans-Pacific route, it is a rare opportunity for medium- and large-sized shipping companies headed by the three major alliances to have a “tacit understanding” to stop bargaining for goods and instead work together to strive for reasonable freight rates.

The reason behind the tacit understanding between shipping companies, calling for increases and reductions at the same time, is mainly for the long-term contract price of the US line in the new year starting in May. Shipping companies have increased spot freight rates, increased bargaining chips, and accelerated contract negotiations. It is reported in the market that the long-term contract prices for a few very large direct customers in the United States are about US$1,500 and US$1,600. Once finalized, medium and large customers will use this as a basis to negotiate upward prices and continue to sign contracts.

Xie Zhijian, former chairman of Evergreen and Yang Ming, said that regardless of the trend of SCFI, including other major indexes, or the success of GRI price increases, it all depends on market supply and demand, and ultimately we will see a natural increase in U.S. wire shipments. According to estimates by the National Retail Federation (NRF), retail sales fell by 23% and 16% in the first and second quarters, and fell by 2.4% in July, which means that the inventory has been almost digested. In August, import restocking and preparation of new orders for the year-end holidays began. . It is estimated that real recovery will occur in the second half of the year.


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Author: clsrich