Liners Plan Further Rate Hikes as Container Spot Rates Continue to Slide

After a brief pause, container spot rates on the Asia-Europe trade have fallen again, with Shanghai-Rotterdam rates dropping 5%, while Shanghai-Genoa declined by 11%, according to Drewry’s World Container Index (WCI). Compared to last year, Asia-Europe spot rates are down nearly 28%, even lower than post-Chinese New Year pricing slumps.

Despite the rate decline, demand remains strong. Container Trade Statistics (CTS) reported a significant 18.2% year-on-year increase in volumes from the Far East to Europe in January, reaching 1.5 million TEUs. However, rising capacity is outstripping this growth, causing vessel utilization levels to drop earlier than usual.

In response, major carriers like Hapag-Lloyd and MSC have announced new Freight All Kinds (FAK) rate increases, between the Far East and North Europe starting April 1. However, with the Shanghai Containerized Freight Index (SCFI) showing further declines—15% on China-North Europe rates and 8% on China-Mediterranean rates—continued rate drops remain a concern.

On the transpacific routes, spot rates have also weakened, with Shanghai-Los Angeles falling 8% and Shanghai-New York down 7%. Forecasts suggest further rate declines, with SCFI data pointing to a 14% drop on the US West Coast and 10% on the East Coast next week.

One bright spot is the backhaul market, where rates on Rotterdam-Shanghai and New York-Shanghai routes inched up by 1% week-on-week. However, weaker Europe-Far East and North America-Far East volumes suggest continued challenges for carriers in the coming months. Meanwhile, transatlantic trade saw strong demand, with Europe-North America volumes up 10.8% year-on-year to 495,000 TEUs. Despite this, analysts expect a market correction, warning that the transatlantic trade cannot remain immune to supply-demand imbalances for long.