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Asia-N America spot rates rebound, but expected to remain volatile

ASIA to North America spot rates rebounded in the last week of May, reversing a long period of decline.

Asia-US east coast spot rates rose by 8.9 per cent to US$2,428 per 40 FEU on the Shanghai Containerised Freight Index (SCFI), while the transpacific Asia-US west coast rates increased by 11.8 per cent to $1,413 per FEU.

According to chief operating officer Thomas Sorbo of freight rate benchmarking platform Xeneta, the past 12 months had seen some "extremely aggressive" general rate increases (GRIs) between China and the US west coast.

"These have lost momentum but there has been a general trend," Mr Sorbo was quoted as saying in a report by The Loadstar. "As to whether rates will continue to rise, I expect continuous volatility."

Asia-US west coast rates rose by 6.2 per cent to $1,431 per FEU, according to Xeneta, compared to just $1,005 per FEU last year.

Mr Sorbo said with contract negotiations now completed, long-term rates were spread "extremely" wide, and at a higher level than in 2016.

"There would appear to be a lot of insecurity among US forwarders," he added. "With a wide spread between the most competitive."

Senior manager for container research at Drewry Maritime, Simon Heaney, said he had yet to see an uptick in freight rates - partly due to the Drewry's assessment method - but an increase would not surprise him.

"The Transpacific routes have been buoyant compared to where there were last year and in 2015," said Mr Heaney. "Rates from Asia to the US west coast are up 55 per cent on last year, and the increase on US east coast is 46 per cent."

"The fourth quarter's strong demand has carried over into this year," he continued. "And carriers have combined this by curbing capacity."

June's capacity to the west coast is down 6.9 per cent compared to last year, while on the east coast capacity has been cut by 1.7 per cent, according to Mr Heaney.

Nonetheless, last week's SCFI spot rates were still below the levels desirable to shipping lines. CMA CGM has planned to introduce from June 1, transpacific FAK increases of $1,650 per FEU to west coast ports and $2,650 per FEU for Asia-US east coast, representing a difference of 15.3 per cent and 10 per cent on Xeneta's current rates respectively.

Figures from Hyundai Merchant Marine (HMM) showed the rate increase was the result of a significant uptick in demand, with April's volumes from Asia to the US west coast up 73 per cent year on year.

The carrier said by the end of April it had been handling 13,186 TEU a week, compared with the 7,604 TEU in 2016, noting the growth was linked to its cooperation agreement with the 2M alliance. Volumes for HMM's routes from Asia to the rest of the US rose at a comparable degree, up 67 per cent to 17,932 TEU a week.

Maersk capitalised on heightened demand by increasing reefer rates from the US to the Far East by $500 per FEU from US east coast ports, and $200 per FEU from inland locations.