Container rates on the US route dropped as shipping lines added more capacity
Freight rates on the trans-Pacific route are under great pressure as shipping lines begin to add more capacity.
A container ship is loading and unloading at a port (Photo: BBC)
The November 10 Shanghai Container Freight Index (SCFI) showed Shanghai-US West Coast container freight rates fell 12% to $1,843/FEU, while Shanghai-US East Coast rates fell 3%, to 2,354 USD/FEU.
Consulting firm Linerlytica said, “Zim’s re-introduction of its ZIM eCommerce Xpress (ZEX) in November came as a surprise, but more capacity to the US West Coast is due to be introduced by CMA CGM in December as these two carriers aim to pre-empt the diversion of cargo from the US East Coast to the West Coast due to more severe Panama Canal transit restrictions that will start from January 2024 as well as the potential disruptions from International Longshoremen Association contract negotiations to replace the current contract that expires in September 2024."
“These capacity additions will not help the carriers attempts to sustain the recent rate hikes.”
Restrictions on transit through the Panama Canal have resulted in minor delays for both southbound and northbound traffic but container ships continue to have priority passage with delays largely limited period of less than two days. However, the situation could get worse in the coming months as shipping limits are extended further into January and February 2024.
Meanwhile, Shanghai-Northern Europe rates were 5% lower, at US$722/TEU as carriers withdrew plans to increase freight rates of all types in November and reset the target of increasing rates in December. These efforts have been undermined by aggressive price increases by some carriers, with rates expected to continue falling over the next two weeks.
Linerlytica noted that idle fleets continued to decline despite forecast declines in profits, with carriers taking advantage of a 30% drop in charter rates since June this year to bolster their fleets.
Source: Phaata.com (According to ContainerNews)
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