Container Rates from Far East Continue to Fall

Opinions Focus

  • Rates from East Asia to Europe and North America are still declining.
  • They are now 60% below levels in July.
  • The US East Coast remains a little congested.

The one-sided volatility in spot rates is currently evident on all trades, yet the difference in altitude is astonishing. With only two trades falling by a single-digit percentage, other trades have experienced a 30% fall in spot rates from just three months ago, during the usual peak season month. There is a clear indication that the cost of shipping containerized goods out of the Far East have fallen the most.

The buzz surrounding the deteriorating Transpacific head haul from the Far East to the US West Coast now seems well earned, as the spot rates have been sitting below USD 3 000 per TEU since early October after falling by 60% from early July levels.

While the drop in spot rates is substantial, the trend is less clear amongst the long-term contract rates on the same trades out of the Far East. Long-term rates have marginally increased on the trade lanes into the US since July, while the inbound trade lanes for the Mediterranean and North Europe have seen a decline of 14% and 30%, respectively.

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The short and long-term rates from the Far East to the Mediterranean are close to one another as opposed to the three other trades out of Asia.

The long-term rates into the US West Coast are right around where the spot market was three months ago, witnessing a spread of USD 4 600 per FEU by October 11. Opposite to the Transpacific trend, the trade lane from the Mediterranean to the congestion-marred US East Coast shows a spot market that still sits more than USD 2 000 per FEU above the contract rates.

As rates on the trade also lost altitude in October, its simultaneous nature has resulted in a roughly unchanged spread.

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Peter Sand

Peter Sand

Peter Sand joined Xeneta in 2021, as the Chief Analyst. Heading a team that delivers expert insights on container shipping and air cargo industries – from a logistics perspective. Focus on the essential drivers, demand and supply – an obviously the freight rates that impacts us all. Sand joined Xeneta after over a decade at BIMCO, where he was responsible for analysing commercial markets based on the global economic situation and its influence on trade. Prior to Sand’s Chief Shipping Analyst role at BIMCO, he worked with D/S NORDEN, a Danish shipping company operating in the dry cargo and tanker segments worldwide, as a Senior Analyst. Throughout his career, Sand has been regarded for his widely read articles and industry insights, as well as his regular appearances on global news networks such as CNN, BBC, CNBC and Bloomberg. He holds a Master’s in Economics from the University of Copenhagen. Eager to share insights, Sand is also: A widely used keynote speaker at shipping industry events. Setting the scene, with his perspectives on the global industry today and in future. A former teacher of Maritime Economics at the Danish Shipping Academy as well as guest lecturer at Copenhagen Business School – Blue MBA and Shipping bachelor.

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