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Falling Asia-Europe Spot Rates Threaten Peak-Season Surcharges

6/4/2012 11:27:23 AM

Spot rates on the westbound Asia-Europe trade fell for the fourth consecutive week, undermining carriers’ ability to nail down the peak-season surcharges they have said they will implement on that trade in June.

 

The World Container Index of spot prices in the trade from Shanghai to Rotterdam, which is compiled by Drewry and the Cleartrade Exchange in Singapore, dropped 3.15 percent last week to $3,295 per laden 40-foot container from $3,401 on May 24.

 

Last week’s WCI shows a drop of 15 percent in the last four weeks from the WCI of $3,878 per FEU on May 3 that followed carriers’ May 1 general rate increase of about $800 per FEU.

 

“Drewry believes spot freight rates have peaked and will soften through the second half of the year, though not by anything like the precipitous decline witnessed in 2011,” Drewry Supply Chain Advisors said in a bulletin Thursday.

 

“Carriers will continue to push for higher rates as each new month comes around. But the success of these attempts will diminish and prove short-lived,” Drewry said in the bulletin.

 

Carriers had been able to hold onto most of the four large GRIs they put into effect since the beginning of the year, because they have kept vessel capacity relatively tight. Last week’s WCI is 168 percent higher than the WCI of $1,230 per FEU on Jan. 4, which reflects the carriers’ discipline in maintaining those rate increases.

 

But spot rates now continue to ease from recent highs as idle capacity returns to the trade and carries deploy newly delivered ships. This will make it more difficult for carriers to collect peak-season surcharges of $250 to $400 per TEU they are seeking in June.

 

The Journal of Commerce Online

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