News Content

Transpacific rates fall to 10-month low as north-south trades rise

FREIGHT rates have fallen to a 10-month low on transpacific trade lanes despite strong volume growth at the approach of the peak season.

Spot rates from Shanghai to North America have fallen to US$1,146 per FEU to the west coast and $2,081 per FEU to the east coast, wiping out all gains made since September 2016 when Hanjin's sudden departure resulted in a surge in spot freight rates, says Alphaliner.

Data from PIERS of IHS Media, show eastbound transpacific volume rising by 5.3 per cent between January and May.

Alphaliner said the May liftings numbers show that all the main container shipping lines (apart from Hapag-Lloyd and UASC) have capitalised on Hanjin's departure from the trans-Pacific trade with notable volume gains by new entrant SM Line, PIL (up 108 per cent), HMM (up 60 per cent), and OOCL (up 56 per cent).

The analyst said the three Japanese carriers - "K" Line, MOL and NYK - also achieved a 28 per cent combined gain and are set to become the single largest carrier on the transpacific when they merge their container operations in April 2018 under the trade name of Ocean Network Express (ONE).

While east-west rates remained under severe competitive pressure, even as the market heads toward the container shipping summer peak season, Alphaliner said the opposite was occurring on the north-south trades.

Spot rates from China to South America have risen to their highest levels since 2009 when the Shanghai Containerised Freight Index (SCFI) assessment was first published, reaching $3,551 per TEU.

Rates have more than doubled in just three months and they are light years away from the market bottom in early 2016, when containers were shipped from Shanghai to Santos for as little as $100 per TEU, the analyst said in its weekly newsletter.

Rates to Africa and the Middle East also recorded significant gains in the past three months, as capacity reductions on these north-south routes, introduced over the past 18 months, resulted in space shortages now that volumes have started to recover.