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Market continues lull amid Chinese output slowdowns

The all-inclusive spot market into the US was level during the week ending April 1 as post-Lunar New Year demand had yet to recover and North Asian cities remained largely under lockdown as coronavirus cases spread.

The Asia-US premium spot market has been in decline in recent months, as the Lunar New Year and Beijing Olympics put a hold on US import demand, which has yet to return in full force as the market is in the seasonal spring off-period.

But intermodal issues persist as landside market forces have yet to find balance amid a dearth of chassis and non-fluid rail networks.

“In my opinion, the only market force that could realistically push rates down is lower volume,” said a US-based freight forwarder. “There is a lull from CNY return.”

During the week ending April 1, S&P Global Commodity Insights heard market value rates into the US West Coast at the $8,000 to $10,000/FEU levels as wider pockets of FAK space opened up, while some premiums were closer to $13,000/FEU for rapid loadings.

The USEC and Gulf markets remain under pressure, however, amid strong demand and widespread congestion at key ports such as Charleston, South Carolina, Norfolk, and Houston.

Similarly, the FAK spot rate from North Asia to North America held firm during the week, and PCR13—Asia to USWC—was assessed March 31 at $8,000/FEU, a discount of $4,000/FEU to North Asian cargoes bound for the US Atlantic Coast.

“As of late, not a lot of premiums,” said another US freight forwarder. “There’s still some, but it’s been a lot less than what it was. We anticipate that tide to begin to turn as we turn the corner to peak.”

Southeast Asia stable

The all-inclusive premium rates were stable in the Southeast Asia-to-North America trade lane as lower manufacturing in China was offset by concerns of supply chain disruptions and higher fuel costs, sources said.

The average freight for Southeast Asia to North America was heard at $17,000-$18,000/FEU for East Coast and $15,000-$16,000/FEU for West Coast, unchanged from a week ago.

“The demand is rather weak as many manufacturing units in China have come to a halt amid ongoing COVID shutdowns …we are also getting some discounted rates from carriers like OOCL but, overall, there is no decline in prices due to anticipation of a cargo backlog and port congestion when lockdown is lifted,” a source based in Singapore said.

The truckers’ shortage in not just China but also the US, the UK, and Canada, continue to stress the supply chain further, the source added.

Meanwhile, some carriers also announced GRIs of 2,700/TEU and 3,000/FEU on the Asia-North America route, effective May 1, two sources said.

“The carriers are trying to push GRIs expecting heavy cargo volumes in May but it’s unlikely that such steep increases will materialize,” a freight forwarder based in India said.

Container rates on the Indian Subcontinent-to-East Coast North America trade route remained stable at elevated levels as equipment shortage and blank sailings continue to plague the market, sources said.

On the first day of its launch, Platts Container Rate 39—Indian Subcontinent-to-East Coast North America—was assessed at $13,000/FEU and PCR40—East Coast North America-to-Indian Subcontinent—at $1,500/FEU.

“Most carriers have reduced capacity allotment[s] in India despite a slowdown in global trade amid the ongoing Russia[-Ukraine] war and China shutdowns … there is no clear explanation but they keep using capacity crunch as an excuse to quote high rates,” a freight forwarder based in India said.

The rising bunker fuel costs may usher in more troubles, the freight forwarder added.

To complement the spot container freight rate on the route, S&P Global Commodity Insights has also launched two daily Platts container freight bunker charge assessments and two daily Platts container bunker excluded assessments for the Indian Subcontinent to East Coast North America shipping lane, effective April 1.

Source: Platts

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