CARGOCONNECT-MAY23 - Flipbook - Page 48
FEATURE : OCEAN FREIGHT RATES
Although not specifically discussed at the S&P
Global TPM contract sessions, several shippers
expressed concerns about the fragility of the AsiaEurope trade lanes. Numerous annual contract
negotiations, which normally occur in November
and December, have been put on the back-burner,
while volatility in the market persists.
Drewry’s World Container Index (WCI) Asia to
North Europe reading in the first week of April was
a bit of a mixed picture, says Lars Jensen, CEO and
Partner of Sea Intelligence Consulting. “The Asia to
North Europe market clearly remains under pressure.
Rates dropped another 4 per cent compared to last
week. Looking at it in a slightly longer perspective,
the spot rate here is down 13 per cent compared to
the end of December 2022 – which is quite different
48 | CARGOCONNECT MAY 2023
from the Asia to Mediterranean market which in the
same period is down 22 per cent. This is because the
spread in rates between the two partially overlapping
trades is gradually normalising,” read a post by Jensen
that was published on LinkedIn.
“This effect is even clearer in the Pacific. The Asia
to US West Coast rate has held fairly stable in 2023
thus far and is now down 5 per cent compared to
end-December 2022. At the same time the Asia to US
East Coast rate is down 33 per cent, rapidly eroding
the price premium the East Coast had commanded
for quite a while,” it added.
“On the Atlantic head haul from Europe to US, the
normalisation continued this week as rates dropped
5 per cent and are now down 28 per cent compared
to the end of December.”
On the transatlantic side, indeed the ‘jewel in
the crown’ for carriers, the Xenata XSI reading was
stable at US$5,173 per 40ft. Nevertheless, Xeneta’s
Chief Analyst Peter Sand ascertains that it is only
a matter of time before the inflated rates fall back
to the historically stable US$2,000 level.
“My best guess is that transatlantic rates will
normalise within the next six months,” Peter updated
the attendees, during a ‘trade-lane deep-dive’ session,
at The Loadstar Podcast TPM special.
Some companies expect to cut ocean-freight rates
by half or more, which in turn could permit retailers
to slow down, or cease the price hikes for goods.
Dr Aditya Gupta, Chief Operations Officer at
the Supply Chain Management Centre of the Indian
Institute of Management (IIM) Bangalore states,
“Once all the COVID-19 induced disturbances settle
down, we expect the overall freight rates to settle
and sustain close to the 2019 pre-pandemic rates.”
The importers expect this year’s contract talks to
be different. Many retailers have retreated on their