All-inclusive rates stable as market awaits new direction

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All-inclusive container shipping rates from North Asia to North America held steady in the week to Feb. 25, but shipping lines were more bullish as cargo loading in China ramped up towards the end of the month.

Space on ships was still sometimes available from North Asia on a Freight All Kinds Basis, assessed by Platts to the West Coast at $9,500/FEU on Feb. 25, but almost exclusively from South China at that level, while rates from the north of the country hovered in the $11,000-$13,000/FEU zone.

By contrast, rates to the East Coast of North America soared to as much as $16,000-$22,000/FEU, depending on departure and arrival port. Since the queue of ships waiting to berth at the Los Angeles/Long Beach port complex peaked at 109 vessels on Jan. 9, more and more shippers and ocean carriers have sought out alternative avenues into North America.

“I don’t think premium rates will reach the levels we saw last year, like above $20,000 to the East or West Coast or above $30,000 to Chicago,” a US-based freight forwarder said. “The question now is if the market can go higher or lower from here. There are still so many vessels in queue.”

There were 31 ships anchored off the Port of Charleston on Feb. 22 while another 13 ships were waiting off the coast of Norfolk, Virginia, according to Platts cFlow trade analytics software. By contrast, the line up of ships waiting to berth at the Los Angeles/Long Beach port complex sank to its lowest level since October at 64 ships on Feb. 24.

But shippers had a moment of pause towards the end of the week after Russia invaded neighboring Ukraine, raising risks that increased fuel prices and other inflationary costs would accelerate the weakening of US consumer demand.

“We may see a pullback on orders. Food and fuel price increases are not a good combination,” another US freight forwarder said.

Uncertainty surrounds trade lanes from Southeast Asia

All-inclusive premium rates on the Southeast Asia-to-North America shipping lane remained largely stable during the week ending Feb. 25.

Rates from Southeast Asia including premium surcharges were heard at $16,500-$17,500/FEU for East Coast North America and $13,000-$15,000/FEU for the West Coast.

All eyes in the container freight segment are now on the potential impact of the Russian invasion of Ukraine, sources said.

Considering the consequences of the Russian invasion, a logistics provider based in Indonesia said there was no change yet in container booking rates, and some liners have even extended rates from Indonesia to North America until March-end.

“But we are uncertain of what will happen [even] next week – there could be severe implications on the supply chains,” the logistics provider said. “Many liners could blank sailings into Europe due to this issue, further clogging up the system.”

Platts Container Rate 25 — Southeast Asia to East Coast North America — was assessed at $10,500/FEU, while PCR23 — Southeast Asia to West Coast North America — was assessed at $9,500/FEU, both unchanged from a week ago.

On the Southeast Asia-Australia trade lane, demand continued to rattle the limited availability of equipment and space on vessels, sources said.

With carriers looking to focus on the more profitable US and Europe service lanes from Southeast Asia, all-inclusive booking rates to Australia were heard as high as $9,000/FEU this week, nearly double from a year ago. But even at these heightened levels, the sourcing of equipment remained a major challenge for Australian importers, market participants said.

Shipping lines compete for Europe-bound cargoes

Container rates from Asia to Europe exhibited some downside over the course of the week as post-Lunar New Year demand remained sluggish, leaving carriers to compete against one another for new bookings.

“It’s turned into a bit of a dog-eat-dog world to be honest,” said a freight forwarder source. “For the last 18 months the carriers have been holding firm with their approach, but now that cargo is going, the cracks are starting to appear.”

As a result, limited business was done on a premium basis for the Asia-Europe trade, with the lion’s share booked on an FAK basis.

Platts Container Rate 1 – North Asia-to-North Continent – fell by $100/FEU this week on the week to $14,300/FEU on Feb 25.

Source: Platts