Spot container rates rise on major routes following latest GRI moves

According to Xeneta, spot rates have struggled for much of 2023 as hit by declining demand and volumes, combined with escalating overcapacity and continuing economic uncertainty. Spot prices are now back above long-term contract prices on all three routes, giving shippers, freight forwarders and carriers much to ponder ahead of upcoming, peak season contract tenders.

Fight for control

Peter Sand, chief analyst of Xeneta, commented: “We've grown accustomed to witnessing a protracted downward trajectory for ocean freight rates since last summer."

He added: "With spot rates falling below-contracted rates on key routes as carriers fight for volumes in a climate defined by weak demand. GRIs have been deployed time and time again by the carriers to try and 'right the ship', arresting declines and allowing them to regain a sense of control. However, as we've seen across the majority of lanes this year, that's failed to have the desired impact... until now."

Increasing steadily

Xeneta's real-time data, crowdsourced from top global shippers, shows that August's GRI helped boost rates on key routes from Asia to the US West Coast, Asia to Northern Europe and Asia to the Mediterranean.

The Asia to Nordic service has experienced the most impressive short-term price increase (since late July), up $500 from spot prices below $1500/FEU since early May. up 39.6%. This has also pushed the premium between this route and the already higher Asia-Mediterranean route to just $670 – the smallest difference this year.

Meanwhile, the Asia to US West Coast service has enjoyed a slightly more steady increase with GRI having a stronger impact in recent months. The average spot rate in the market here has increased by 51.5% since the end of June, up $470 from July 1 to August 1.

Peak timing

Sand commented: “With many carriers looking for GRI-driven increases in the range of US$1000 per FEU, these 'bumps' fall far short but, given the recent industry context, will no doubt be welcomed by carriers nonetheless."

"It's also important to note that the climbs come ahead of peak season and a new wave of contract tendering. Of course, whether the increases hold in an atmosphere of weak fundamentals remains to be seen – they certainly haven't done so earlier this year, but then we haven't seen climbs as pronounced as this either."

Uncertainty

Sand concludes that much will depend on whether these short-term boosts translate into long-term gains and how that affects the next GRI rounds in September.

He noted: "One thing's for sure, many of the shippers who have been taking advantage of the weak short-term market and delaying signing new long-term contracts will be eyeing developments nervously. Have they left it 'too late' to negotiate? Has the market bottomed out before a rebound? Or is this simply a false dawn for carriers? Time, and analysis of the latest data, will tell."

Read more:

• International shipping and logistics market update - Week 32/2023
• SCFI continues to rise for second consecutive week amid North American rate increase

Source: Phaata.com (According to Xeneta, ContainerNews)

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