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All-inclusive rates continue decline as demand pulls back

As demand for cargo into the US remained dampened after the Lunar New Year holiday in China, the lion’s share of spot market activity out of North Asia was heard at Freight All Kinds, or FAK, levels.

“Lots of Covid-19 outbreaks in China…short term impacts on factory production,” one US-based freight forwarding source said, noting the lack of strong demand for space. “I’ve yet to hear any importers saying March and April volumes are crazy.”

During the week ended March 11, S&P Global Commodity Insights heard all-inclusive rates to the US East Coast settling around $13,000/FEU, a spread of $2,000 over the going FAK assessment of $11,000/FEU.

On the Pacific Coast, few premium bookings were heard, and one shipowner was heard offering space at $8,000/FEU for a sailing during the week of March 14, well below the Platts assessment of $9,000/FEU on that route.

Most sources expected rates into US Pacific Coast gateways to remain under pressure through March, as demand had yet to come roaring back from the holiday break in Asia, while USEC markets were expected to see some support on rising congestion levels.

Elsewhere in South America, bookings into both Atlantic and Pacific Coast destinations were heard at $1,000 to $3,000 above base FAK rates as the Latin American market still grappled with widespread capacity shortages, due in part to vessel repositioning into the North American market.

One freight forwarder offered rates of $12,000/FEU from China to West Coast South America on a prompt basis, $1,600 above the FAK rate of $10,400/FEU assessed March 10.

Weaker demand pressures Southeast Asian market

Container premium rates for Southeast Asia to North America witnessed a decline during the week ended March 11 on account of weak demand from US retailers, sources said.

The rates were heard in a $15,000/FEU-$16,000/FEU range for East Coast North America and $13,000/FEU-$15,000/FEU for the West Coast March 11. The prices were recorded at $15,000/FEU-$18,000/FEU for East Coast and $13,000/FEU-$16,000/FEU for West Coast a week ago.

“Rates on East-West trades have somewhat dropped as demand remains weak, the co-loaders are actively chasing the shippers with promotional rates, but that’s mostly on the China-West Coast route,” a Singapore-based cargo owner said. The carriers were holding onto March rates as the base for 2022-2023 trans-Pacific contract negotiations, the source added.

The co-loaders were also offering a lot of promotional bookings at cheap rates, but the service quality remained a concern, sources said.

Despite the current weakness, market participants expected prices to increase towards the end of the month because of likely increases in the offtake by stockists.

Meanwhile, rates on intra-Asia and short-haul trade lanes remained firm due to equipment shortages and higher bunker fuel costs amid the ongoing war between Russia and Ukraine, sources said.

“Crude prices are on a boil, leading to increase in bunker fuel costs,” a source active on the India-Middle East trade lane said. “While the rates have been stable in the last one week, we expect carriers to levy surcharges in the coming days.”

Prices for West Coast India-Middle East most recently hit $2,100/FEU, nearly three times higher than prices a year ago, sources said.

Source: Platts

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